On this Veterans Day, the Consumer Financial Protection Bureau (CFPB) is reminding all veterans and servicemembers that offers from lenders to refinance their Veterans Affairs mortgages may not always be in their best interest, as some of these offers may have hidden features or fees.
As the CFPB points out, veterans have earned the right to access affordable home loans through the Department of Veterans Affairs (VA). However, navigating the crowded market of lenders offering to refinance these loans can sometimes put veterans at a disadvantage – especially if they don’t fully understand their options or rights as consumers.
Since launching its consumer complaint database in 2012, the CFPB has received more than 12,500 complaints from servicemembers, veterans and their families regarding mortgages, the bureau says in a release. In a recent analysis of about 1,800 of those complaints, many veterans report that the solicitations and advertisements they receive from lenders are often misleading. Many also complain that lenders fail to deliver on the promises made during the application process.
Part of the problem is the fast processing of VA refinances. These loans are usually expedited more quickly than other types of refinance loans because they do not necessarily require an appraisal or conventional underwriting. This can result in a borrower failing to clearly understand important loan details, such as how the new escrow account will be set up.
The bureau is urging all veterans not to respond to these often-official-sounding offers in haste. If a veteran wishes to refinance, he or she should check out every offer thoroughly before signing any agreements.
That includes taking a close look at how long it will take to pay the new loan and whether the interest rate will change, not just the monthly payment.
In addition, when perusing various offers, veterans must be aware of specific terms and conditions that can sometimes be hidden within the advertisements.