Military complaints about mortgages on the rise – CFPB

by Ryan Smith30 Mar 2016
Servicemembers, veterans and their families are unhappy with their mortgage options, according to the Consumer Financial Protection Bureau.

The CFPB recently released its fourth annual report on complaints by military members, veterans and their families, and mortgages were among the top issues about which the agency received complaints, surpassed only by debt collection.

The agency received about 2,800 complaints about mortgages in 2015, according to the report. That’s a 10% increase from 2014. In particular, servicemembers complained about loss mitigation options when military orders required them to relocate. But complaints about the origination process were also up slightly.

One origination issue specifically noted in the report involved loans guaranteed by the Department of Veterans Affairs. In general, veterans who receive a VA loan are charged a funding fee ranging between 1.25% and 3% of the total home loan. However, a veteran with a service-related disability isn’t obligated to pay the fee. If the veteran is charged in error, the lender is obligated to provide a refund or a principal reduction if the fee was financed.

Some companies appear to be giving veterans the runaround when it comes to returning that fee, according to the report.

“As a 100 percent disabled US combat veteran, I am informed by VA that the terms of my VA mortgage entitle me to a refund of the funding fee the mortgage provider received when I took out the loan,” said one veteran quoted in the report. “… Now, (the lender), despite numerous phone calls and requests for update, as well as an in-person meeting and referrals to VA contacts, has not returned this funding fee to me. I need help with (this company), which (is) in my view taking money from veterans in order to further their own gains.”