Consumer complaint received 2025-12-02 00:00:00
Product: Vehicle loan or lease — Loan
Issue: Problems at the end of the loan or lease — Problem related to refinancing
Company: NAVY FEDERAL CREDIT UNION
State: AL

Complaint narrative:
On XX/XX/year>, Navy Federal Credit Union ( NFCU ) issued a joint-payee refinance payoff check made payable to XXXX XXXX XXXX AND XXXX XXXX . 

I mailed the check in good faith to XXXX XXXX published lockbox address. Soon after, XXXX XXXX continued to send me payment notices, indicating they had not received the payoff. 

On XX/XX/year>, I called NFCU and reported that something appeared to be wrong. I was told that the check had been cashed and that everything was fine. No one verified the endorsements, no one confirmed the depositing bank, and no investigation was opened. I was told to wait. 

On XX/XX/year>, after more payment notices from XXXX XXXX, I called again. I was told that NFCU could not do anything for 90 days, and I was sent an image of the processed check. The endorsement side only shows my signaturenot XXXX Capitals, even though the check required both endorsements by law. This is a major red flag under XXXX XXXX, because XXXX XXXX accepted a joint-payee check without all the necessary endorsements. 

During this call, I made it clear that XXXX XXXX never received the payoff, the check image shows no endorsement from XXXX XXXX, and the depositing bank was XXXX XXXX, not XXXX XXXX. 

I also submitted a fraud investigation request form through NFCUs instructions, but nothing happened afterwardno updates, no confirmation of an investigation, no timeline, no explanation.

Despite being fully notified, NFCU did not open or confirm any formal investigation into the misdirected funds, did not trace the item through the Federal Reserves clearing channel, and did not request an endorsement record.

Instead, on or around XX/XX/year>, NFCU sent me a message stating that my loan would be cancelled, even though I NEVER requested a cancellation. They provided : No reason for the cancellation, No explanation of what happened to the missing payoff funds, No information on whether the two payments already withdrawn from my account would be refunded, And no confirmation that XXXX XXXX had been paid.

At the same time, NFCU continued deducting payments from my account for the refinance loan, even though the payoff check was missing and my original lienholder had not been paid.

This situation now involves three banks, and NFCU has failed to take responsibility as the issuing institution.

Legal duties NFCU has violated : UCC 4-202 ( XXXX XXXX ) : NFCU failed to act with ordinary care when notified of a misapplied or improperly negotiated check.

Regulation CC ( 12 CFR 229.35 ) : NFCU failed to promptly investigate and communicate with the depositary bank ( XXXX XXXX ) after being notified of improper endorsement.

UCC 3-420 ( Conversion ) : The check appears to have been improperly deposited at XXXX XXXX without the required endorsement from XXXX XXXX . NFCU failed to challenge or investigate this.

Electronic Fund Transfer Act ( 15 U.S.C. 1693e ) : NFCU continued withdrawing payments from my account even though the loan payoff is unresolved, and the investigation was never opened or completed. 

As of today, XXXX XXXX has still not been paid ; XXXX XXXX improperly accepted a joint-payee check ; and XXXX XXXX has provided no investigation results or explanation for the unauthorized loan cancellation.

I am a federal employee, and this unresolved issue poses a serious risk to my financial standing, deployment eligibility, and credit. XXXX XXXX continues to send billing notices, and my credit is now at risk of negative reporting entirely due to NFCUs inaction.

Company public response: Company believes it acted appropriately as authorized by contract or law
Company response to consumer: Closed with explanation