New task force to crack down on VA loan ‘churn’

by Ryan Smith29 Sep 2017
Ginnie Mae and the Department of Veterans Affairs are cracking down on unscrupulous VA lenders.

Ginnie Mae, a government-owned corporation that guarantees some kinds of mortgage securities, and the VA have formed a “Lender Abuse Task Force,” according to a Wall Street Journal report. The aim is to target lenders who push veterans to refinance their home loans unnecessarily, sometimes sticking borrowers with thousands of dollars in fees they wouldn’t have had otherwise.

Michael Bright, Ginnie Mae’s acting president, told the Journal that refi “churning” – pushing loans to be refinanced more often than usual – has consequences across the mortgage industry. Churning, Bright said, could cause higher prices for borrowers and uncertainty for investors.

Ginnie Mae has already enacted ruled to curb churning this year, according to the Journal. But Bright wrote in a recent letter to Sen. Elizabeth Warren that some lenders were actively evading efforts to stem rapid refinancing.

“When people say the mortgage industry has learned its lesson, this seems to suggest that that may not be the case,” he said.

The new task force plans to discuss refi practices with lenders it believes have a high “churn” rate. It’s also considering taking legal action against some lenders, the Journal reported.

Related stories:
Company makes construction-to-permanent loans available for military families
Only a fraction of veterans take advantage of VA loans


  • by Randi Mills | 9/29/2017 4:52:51 PM

    I have 2 friends that did not benefit from refinancing with a large VA geared lender. In fact, the one borrower in Galveston County had to sell their home due to the fact their lender told them they did not need windstorm insurance. I pointed out to the lender and the title company (both which were sent the previous windstorm policy) and they were too financially deep into the process to back out. By the way, the investor who purchased the refinanced the same mortgage required windstorm insurance on the first mortgage. I am a lender and this was a "bait and switch" tactic. Once the windstorm shortage was added to their mortgage payment, they were forced to sell and take a loss. We requested the closing instructions from the lender and title company and the instructions did not include windstorm as a requirement. We notified the lender and title company and my clients concerns were dismissed. What do you think is my client's best resource to recoup the thousands of dollars they lost due to this error? Thank you.


Should CFPB have more supervision over credit agencies?