Taking Advantage of Veterans and their Families during the home loan process is just flat wrong on so many levels. I have noticed a drastic increase of lenders that are either inexperienced or deliberately taking advantage of our Vets during the home loan process. I will describe 5 situations that I see on a weekly basis.
The situation starts out most frequently like this:
- Loan Officer says "Mr or Ms Veteran here is your good faith estimate and Truth in lending statement. As you can see the fees are quite low and you can easily qualify for this loan."
- Veteran (vet) Says: "What are these fees here I didn't know that I have to pay that? I have a list here and those fees are not allowed to be charged to the vet"
- Loan Officer (LO) "Oh don't worry about that those the Seller is paying those for you and you responsible for paying for them."
How it plays out:
- Loan Officer goes to their supervisor (super) and says I was talking to the Veteran and they said something about VA Non-Allowables and on this loan they are over $2,000. What's all that about?
- Super says "Well LO since you don't have seller contributions to cover it and if the property won't appraise for more then it is coming out of your commission."
- At this point the LO starts to completely freak out because non only will they have to give up their commission but they will have to pay their employer to do the loan.
Rather than get into the details of advanced sausage making that occurs next I will describe what I see when the vet contacts me.
Scenario 1:
- Vet says "I'm not happy with the way my loan is going my LO keeps sending me papers to sign and my fees keep going up and my LO says no problem we just need these papers signed so we can get this to underwriting. I keep asking the LO why my numbers keep changing they saying that they are just getting more accurate numbers."
- I ask for a copy of the contract and say are you aware that there is no seller contributions to cover the VA Fees that you are prohibited from paying? Vet Says "That's not what my LO told me! They told me the seller was paying for it!"
- I say to the Vet I think I know what is happening. You see your current LO is increasing other fees to cover these charges because they will have to pay them if someone else doesn't.
Scenario 2: Starts out like #1 except the Vet has credit near the edge of what you can do a VA loan for and the Vet has been to numerous lenders attempting to get the lowest fees only to find that most of the lenders have fees with a variance of about $500. They tell me nothing of their shopping even when asked and after I've pulled the credit it's all over but the shouting. Their FICO is now below the minimum to do a VA loan and they are stuck paying the higher fees from a LO or walk away from the purchase .
Scenario 3: Similar to #1 except I start out with the Vet and say to the Vet we need to get with the seller because there are no seller contributions to cover the fees the Vet won't pay. We can ask your agent to seek an amendment to the contract to get those paid for you. The Vet says "That's not acceptable a VA loan is 100% financing and I'm not paying anything more for the house than my offer."
Within a few days the Vet notifies me they are going with another lender. You think that would be the end of it. I see the Vets Real Estate Agent a while later and ask "So how did your closing go?" The Real Estate Agent responds something like this: "Well it didn't happen. My buyer went with another lender as you know and they quoted some ridiculous low rate and fees that my buyer jumped at the opportunity. Then a few days before closing the lender send to my buyer some papers to sign. I think they called it a change situation or something like that and my Buyer saw the interest rate was higher and they had to bring thousands more they they were promised originally. The deal blew up less than a week before closing."
Scenario 4: Seller either refuses to accept a contract where the buyer is going to use their VA entitlement because they will have to pay some of the fees. So a Vet who has served who wishes to use their entitlement is quietly being discriminated against.
Scenario 5: Vet contacts a lender and asks about the texas vet loan program and they are told one of two things
- The Texas Vet Loan program can be used to refinance and there will be just too many delays to make this worthwhile at this time. In one year you can refinance with the Texas Veterans Land Board. Actually the Texas Vet Land board states explicitly that it is NOT a refinance program.
- We can get you a lower rate with a normal VA Loan than you can with a Texas Vet loan. Sometimes true but what they are not telling you is that their compensation is drastically limited by offering this program and it behooves them to steer you to a normal VA loan where their compensation is not restricted so much. You can only make a decision when you are fully informed with a side beside comparison of the fees and rates.
In the end while there is nothing specifically illegal or provable about any of these situations they are in essence taking advantage of a veteran and that is highly unethical. In my mind once a vet has served our country they are entitled to purchase a home using the VA or the Texas Vet Loan program and Loan Officers Can't offer that to them then the Vet need to seek a lender who can assist them.
More info for veterans and how to qualify can be found on our Texas Veterans Land Board Mortgage Qualification page.
Sincerely,
Henry Daniels - Sr. Mortgage Banker & CMPSI Certified Mortgage Coach
(832) 303-5693
Henry Daniels, Senior Mortgage Banker & Certified Mortgage Coach for Premier Nationwide Lending specializes in Texas Vet Loans. If you, a friend, a family member or a colleague have served, you can confidentially contact him at (832) 303-5693 or at the email on the Right.
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