Minneapolis, MN: The Consumer Financial Protection Bureau (CFPB) has been receiving a large number of complaints about misleading advertising for VA refinance loans.
The Bureau reviewed about 1,800 of these complaints received since record keeping started in 2012, all of them about refinance transactions.
VA loan refinancing has two great option, the most popular one known as a VA Streamline Refinance, or IRRRL Refinance (Interest Rate Reduction Refinance Loan). The streamline refinance, just as the name implies, is easier, requires less documentation, and generally also does not require an appraisal.
Due to the ease of the loan, and the ability for mortgage companies to buy lists of existing VA loans, our military personal are highly targeted with mailings, telemarketing, and even television infomercials to entice existing VA loan holders to refinance.
Many of these lenders are very aggressive, they do not bother, or do not fully explain the program and how it works, and sometimes, the loan may not even be financially beneficial to the homeowner.
Many of these lenders are also agressive about 'churning' loans, which is an illegal practice of getting consumers to do multiple refinances with little to no real benefit to the homeowner.
The CFPB has taken notice
I personally have seen many TV commercials, and some of these infomercials myself, and wondered how the CFPB could allow these companies to market the way they have been, as at best, many of the claims are clearly skirting the edges of the truth, while some are down right illegal.
The government financial watchdog agency has now taken notice, and appears to be rightfully going after these companies engaging in bad faith practices with cease and desist orders, and large fines.
What Can Veterans Do
Make no mistake about it, the VA home loan, both for buying and refinancing an existing loan, truely is a great benefit for your service to this country. Lower interest rates than conventional loans, no mortgage insurance ever, mandated lower closing costs, and even allowing up to 100% cash-out refinance.
My advice has always been the same, be it a VA home loan, or any home loan. Never respond to telemarketers, throw away the too good to be true offer that shows up in your mail box, avoid the giant internet VA lenders, and forget about calling some 800 phone number from some infomercial.
The choice of a mortgage lender should be your choice.
Instead, contact your local mortgage broker who does VA loans. Someone who lives and works in YOUR community with a local reputation to protect. Someone with years of mortgage industry experience with VA loans who will take the time to answer all your questions, and would never push you into a loan you shouldn't be doing.
There is NOTHING some outstate internet lender can offer you for buying or refinancing with a VA loan that you can't get from the guy down the street.
Joe Metzler is a Senior Mortgage Loan Officer for Minnesota based Mortgages Unlimited. He was named the 2014 Minnesota Loan Officer of the Year, and Top 300 Loan Officers in the Nation for 2010, 2015, 2016. He provides Home Mortgage Loans, including VA loans, and VA streamline refinance loans, in MN, WI, and SD. He can be reached at (651) 552-3681. NMLS 274132