Two agencies of the federal government have combined forces to deal with excessive churning of mortgages that are guaranteed by the Department of Veterans Affairs.
Late last year, the Government National Mortgage Association changed its program rules to address
rapid refinance and loan churning on VA mortgages.
But the issue remains a problem for Ginnie Mae and has caught the attention of Sen. Elizabeth Warren (D-Massachusetts), who sent a letter last month to Ginnie about the problem.
In its response to Warren’s letter, Ginnie noted that was forming a lender abuse task force with VA.
On Friday, the government-owned corporation issued a statement indicating that it has formed the
Joint Ginnie Mae – VA Refinance Loan Task Force.
The task force
will examine critical issues, important data and lender behaviors tied to refinances and determine what program and policy changes should be made.
“More specifically, the task force will examine aggressive and misleading refinancing propositions, as described by the Consumer Financial Protection Bureau, and will address loan churning and repeated refinancing,” Washington-based Ginnie stated. “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.”
The task force reportedly has started
examining data and information to ensure loans provide a net tangible benefit to Veteran-borrowers.
It will additionally examine the impact of establishing stronger seasoning requirements for VA-guaranteed loans that are included in Ginnie Mae mortgage-backed securities.
