Roughly one month ago, Ginnie Mae announced that it was launching an investigation into mortgage lenders that were aggressively targeting servicemembers and military veterans for quick and potentially risky refinances of their mortgages.
The investigation came on the heels of a letter from Sen. Elizabeth Warren, D-Massachusetts, who cited a report from the Consumer Financial Protection Bureau, which covered complaints received from veterans about Department of Veterans Affairs mortgage refinancing.
Warren’s letter claimed that there may be lenders “aggressively and misleadingly marketing the refinancing of mortgages backed by the Department of Veterans Affairs, generating fees for themselves at the expense of veterans and American taxpayers.”
Now, Ginnie Mae and the VA are launching a task force to “address mortgage refinancing issues” surrounding VA loans.
The task force, which is called the “Joint Ginnie Mae – VA Refinance Loan Task Force,” will focus on “examining critical issues, important data and lender behaviors related to refinancing loans and will determine what program and policy changes should be made by the agencies to ensure these loans do not pose an undue risk or burden to Veterans or the American taxpayer.”
But more specifically, the agencies say that the task force will review the “aggressive and misleading refinancing” marketing practices of certain lenders, and will address “loan churning and repeated refinancing.”
Loan churning is the practice of convincing an existing borrower to refinance their mortgage.
When announcing the investigation, Michael Bright, the acting president and chief operations officer of Ginnie Mae, said that the market for VA loans that is “somewhat saturated with lenders and brokers making dozens of calls and sending dozens of letters to veterans” trying to get them to refinance their mortgages.
And now, Ginnie Mae and the VA are working to address the issue.
“Both agencies agree that VA and Ginnie Mae programs work best when they are used by market participants in ways that provide a benefit to Veteran borrowers and, ultimately, lower Veterans’ costs,” Ginnie Mae said in an announcement.
According to Ginnie Mae, the task force has already started its work by examining data and information to “ensure loans provide a net tangible benefit to Veteran-borrowers, and consider establishing time frames regarding recoupment of fees associated with refinancing loans.”
Ginnie Mae said that the task force will also examine the impact of “establishing stronger seasoning requirements for VA-guaranteed loans that are securitized into Ginnie Mae Mortgage Backed Security pools.”
Additionally, Ginnie Mae said the task force will work to “ensure Veterans understand the costs and benefits of refinancing, and ensure robust borrower outreach and education programs are augmented for this purpose.”
The agencies also plan to arrange “joint discussions with individual lenders whose demonstrated origination practices may negatively affect Veteran borrowers or increase program costs and risks.”
The agencies also say that the task force will continue its work until “concrete solutions” are found that will “eliminate lender behavior that is unhelpful to Veterans and harmful to the American taxpayer.”