U.S. Sen. Thom Tillis (R-NC) has unveiled a bipartisan measure to ensure American military veterans don’t get taken advantage of when they refinance their federally guaranteed home loan.
“I hope Congress will consider this bill quickly so we can protect those who have sacrificed so much to protect us,” said Sen. Tillis, who teamed up with U.S. Sen. Elizabeth Warren (D-MA) on Jan. 11 to introduce the Protecting Veterans from Predatory Lending Act of 2018, S. 2304.
S. 2304 focuses on the predatory lending practices that may have impacted borrowers in roughly 40,000 refinanced mortgage cases that originated in the U.S. Department of Veterans Affairs (VA) Home Loans program during April 2016 through August 2017, according to a statement from Tillis’ office.
The VA Home Loans program allows veterans, service members and eligible spouses to purchase or refinance home loans, among other housing-related business, via private lenders. Because the VA guarantees a portion of each loan, private lenders offer more favorable terms, such as lower credit score requirements or zero down payments.
But, said Sen. Tillis’ office, some predatory lenders participating in the VA Home Loans program have started exploiting unknowing veterans, service members and their families who aren’t aware of what’s called “churning.”
In the mortgage industry, churning refers to lenders repeatedly soliciting existing borrowers to refinance current mortgages for a better deal with the same or a different lender. Borrowers get forced into relentless loan cycles whereby they are mainly paying fees and interest while barely reducing the principal owed on the loan, according to Debt.org, which says the practice is illegal in certain states and unethical in virtually all of them.
“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,” said Tillis, a member of the Senate Veterans’ Affairs Committee.
S. 2304 “would protect veterans from targeted predatory home loan practices by requiring lenders to demonstrate a material benefit to consumers when refinancing their mortgage,” according to the statement from Tillis’ office.
The lawmaker added that he’s proud to partner with Sen. Warren on the bipartisan legislation calling for an end to such predatory practices, and Warren reiterated a need for the proposal.
“The government shouldn’t be backing lenders who exploit veterans just to line their own pockets,” she said. “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.”
U.S. Sens. Dean Heller (R-NV), Shelley Moore Capito (R-WV) and Richard Burr (R-NC) were among the 11 lawmakers who signed on as original cosponsors of S. 2304.
Sen. Heller noted the value of the VA loan program for his home state, saying it “has assisted countless military veterans, including those in Nevada, in their pursuit to become homeowners. I’m proud to cosponsor this bipartisan bill to help protect veterans from predatory lenders.”
In that vein, Sen. Capito said it’s important for Congress to ensure support for those who selflessly serve the country. “That includes protection from those who are looking to take advantage of them,” she said.
Sen. Burr called VA loans an important benefit that U.S. military veterans have earned, while cases of predatory lending are unacceptable.
The bill awaits consideration by the Senate Veterans’ Affairs Committee.