Tags: Veterans | veterans affairs | risky mortgage | vets

VA Failed to Protect Vets From Risky Mortgages

VA Failed to Protect Vets From Risky Mortgages
(AP)

By    |   Friday, 10 November 2017 11:54 AM

The evolving housing market has led to veterans being sold risky mortgages that bury them in more debt — and the Department of Veterans Affairs knows about it and has done nothing to protect those affected.

According to Politico, lenders have taken advantage of interest rate reduction refinance loans, which give them the ability to sell to VA home loan borrowers loans with lower interest rates. With that refinancing process, however, comes hidden fees and, in some cases, rising rates if the customer chooses an adjustable-rate mortgage.

Veterans, Politico reported, are often bombarded with emails soliciting their business from these lenders. Some now find themselves buried in debt because of the situation.

VA spokesman Curt Cashour told Politico the agency knows about the refinancing scheme and has been working on a solution for about a year and a half.

"VA is aware that some lenders have chosen to pursue a market niche in serial refinancing," Cashour said. "The department is currently evaluating potential regulatory or policy changes that may help ensure that interest rate reduction refinance loans are beneficial to borrowers and do not have undue negative effects on other key stakeholders."

Ted Tozer once worked as the president of Ginnie Mae, which manages mortgages supplied by the government. He told Politico veterans are getting a raw deal.

"Lenders are abusing veterans," he said. "It's predatory. These veterans keep going further and further in the hole."

The issue of "serial refinancing" was discovered last year, when Wall Street started to see VA home loans being paid off much quicker than normal. The scheme is so deep that it is now impacting certain types of bonds and funds. It is also raising interest rates for new VA loans.

Acting Ginnie Mae president Michael Bright said, "The right way to do it would be for VA to tighten up their loan program. I'm on the tipping point of frustrated."

The Washington Post reported this week, meanwhile, that the number of veterans taking out VA home loans is on the rise. In 2016, there was a record 740,000 of them.

VA home loans offer lower rates and do not require large down payments for qualified veterans.

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The evolving housing market has led to veterans being sold risky mortgages that bury them in more debt - and the Department of Veterans Affairs knows about it and has done nothing to protect those affected.
veterans affairs, risky mortgage, vets
363
2017-54-10
Friday, 10 November 2017 11:54 AM
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