As CEO of NewDay, I’m seeing a disturbing trend within our mortgage industry that hurts veterans through their Department of Veterans Affairs home loans — the very loans intended to reward these patriotic citizens for their service to our nation.
Veterans with VA loans are being hurt by a few lenders offering to save them money on their monthly mortgage payments. On the surface, these offers sound appealing. In reality, veterans and active military will lose money. Here is how this predatory lending practice works.
The VA loan offers tremendous benefits in helping veterans and their families realize the American dream of home ownership. This loan is helpful because it is guaranteed, backed by the Department of Veterans Affairs. It allows veterans to purchase a home without a down payment. Since the Department of Veterans Affairs Established the VA Home Loan program in 1944, more than 20 million VA home loans have been guaranteed under the program.
But a harmful lending practice called “loan churning” occurs when lenders make repeated offers to lower a veteran’s home loan interest rate by a negligible amount, often times by a quarter percentage point or so. The veteran is also told they can even skip a month or two of mortgage payments while his loan paperwork is processed. The veteran believes he is saving money, but the offer is too good to be true.
It sounds too good to be true because, in fact, it is not true.
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01.22.2025