The Consumer Financial Protection Bureau (CFPB) and the Department of Veterans Affairs (VA) have issued a “warning order” to both service members and veterans with VA home loans. This order went out in November 2017 and addresses the solicitation promises that are being made by some lenders.
Here are some examples of solicitation promises:
- Extremely low interest rates
- Thousands of dollars in cash back
- Skipped mortgage payments
- No out-of-pocket costs
- No waiting period
Below are a handful of offers and tactics to watch out for:
- Offers to skip one or two mortgage payments – VA prohibits a lender from advertising the skipping of payments as a means of obtaining cash in an Interest Rate Reduction Refinance Loan (IRRRL).
- Offers to receive an escrow refund – Promises are being made to service members/veterans to a specific dollar amount they will receive at loan closing. In actuality, the refund turns out to be much lower than promised, or the refinanced loan results in a higher monthly mortgage payment.
- Low-interest rates without specific terms – Don’t assume the low-interest rate is for a 30-year fixed-rate mortgage. In most cases the loan is for a 15-year fixed-rate mortgage, or an adjustable rate mortgage; discount points may have to be paid, as well.
- Aggressive sales tactics – Mortgage lenders may constantly call or mail solicitations to get your business– before responding contact a VA home loan specialist at the phone number below.
To help avoid making a refinancing mistake, you may wish to contact a VA home loan specialist at 1-877-827-3702. Published hours of operation are Monday through Friday, 8:00 a.m. to 6 p.m., Eastern Standard Time. If you experience a problem with your VA mortgage refinance, or if you have other mortgage complaints, you may contact the CFPB online at https://www.consumerfinance.gov/complaint/ or by calling 1-855-411-2372.
The preceding was adapted from an original work composed by Paralyzed Veterans of America Senior National Service Officer, Tami Anderson, located at the Minneapolis, Minnesota Service Office. To locate a Paralyzed Veterans' National Service Officer to answer any questions you may have please visit Find an NSO.