UPSTATE – On Thursday, Sen. Tim Scott, chairman of the Banking Subcommittee on Housing, Transportation, and Urban Affairs, joined Sen. Thom Tillis and Sen. Elizabeth Warren to introduce the Protecting Veterans from Predatory Lending Act of 2018.
This bipartisan legislation would protect veterans from targeted predatory home loan practices by requiring lenders to demonstrate a material benefit to consumers when refinancing their mortgage.
Senators Dean Heller , Jon Tester, Shelley Moore Capito, Joe Manchin, Richard Burr, Brian Schatz, Dan Sullivan, Chris Van Hollen and Joe Donnelly are all original co-sponsors of the legislation.
The Department of Veteran’s Affairs (VA) home loan program was designed to provide veterans and service members with the opportunity to purchase their own home through a VA insured mortgage from a private lender.
VA loans have lower credit score requirements than other mortgages, and often don’t require down payments. Since its inception, it has insured more than 20 million home loans to help veterans become homeowners.
However, today a small number of lenders are abusing the program by utilizing misleading advertising tactics and engaging in a practice known as “churning” – the refinancing of a home loan over and over again to generate fees and profits for lenders at the direct expense of veterans and their families, often without their knowledge.
Over a period of time from April of 2016 – Aug. 2017, over a million VA home loans were made. Almost half of those were refinanced VA loans.
The vast majority of those refinanced loans are being originated by good actors, but this legislation addresses a pool of refinanced VA loans — over 40,000 nationwide over the aforementioned time period—wherein veterans may have been subjected to abusive lending practices by some in the marketplace who engage in “churning.”
“Our service members do so much for us and it should be our responsibility to look out for their well-being whenever possible,” said Scott. “It is simply unconscionable that there are people out there who are willing to take advantage of our men and women who served in uniform for their own financial gains. Many see home ownership as a central component of the American Dream, and incentives like the VA loan program afford our veterans the unique opportunity to reach that sought after goal. Any attempt to tarnish this initiative should be aggressively struck down, and I am glad to join this bipartisan group who have decided to stand up on behalf of our veterans — it is what they have both earned and deserve.”
“The VA home loan program was designed to give veterans and service members the opportunity to become homeowners as they raise their families and it has proven to be a great success,” said Tillis. “Unfortunately, a few bad actors are taking advantage of the program as home lenders have begun targeting veterans and service members to generate profit and fees at their expense, often leading to higher loan amounts and putting families in a worse financial position than they started off. Our men and women in uniform deserve better, and I am proud to partner with Senator Warren on this bipartisan legislation that will end these predatory home lending practices. I hope Congress will consider this bill quickly so we can protect those who have sacrificed so much to protect us.”
“The government shouldn’t be backing lenders who exploit veterans just to line their own pockets. All three of my brothers served in the military and I understand the incredible sacrifices made by those who fight for our country – they deserve better,” said Warren. “I’m glad to work with Senator Tillis to crack down on lenders engaging in predatory practices that hurt veterans, their families, and American taxpayers.”
“The VA home loan program has assisted countless military veterans, including those in Nevada, in their pursuit to become homeowners. Recently we’ve learned some lenders are taking advantage of this important program and using veterans in order to earn a quick profit,” said Heller. “I’m proud to cosponsor this bipartisan bill to help protect veterans from predatory lenders. It is my hope that Congress will send a strong message to these bad actors by swiftly approving our bill, and I look forward to working with my colleagues on both sides of the aisle to do just that.”
“This common sense legislation would ensure that service members and veterans can continue to obtain affordable mortgages, while putting a stop to a predatory lending practice targeting those who have served our country,” said Senator Donnelly. “I am proud to support this bill led by Senators Tillis and Warren.”
The American Legion, Veterans of Foreign Wars of the US (VFW), and the Mortgage Bankers Association (MBA) are all supportive of efforts to address this issue.
“We appreciate the thoughtful approach that Senators Tillis and Warren have taken in addressing the abusive lending practices that are targeting our nation’s veterans,” National Commander Denise H. Rohan of The American Legion stated. “We believe that this is a measured approach and are encouraged by the bipartisan group that the senators have fostered. We look forward to working with all parties as Congress continues to address this important issue.”
Patrick Murray of the VFW said predatory lenders “must not be afforded the opportunity to take advantage of veteran homeowners.”
“The Veterans of Foreign Wars is committed to working with Congress to ensure reasonable protections are put in place to prohibit bad actors from preying upon veterans and thank Senator Tillis for his leadership in addressing this important issue,” he said.
According to the U.S. Census Bureau, there are nearly 8,000 veterans living in Pickens County.