Ginnie Mae is conducting an investigation to determine if lenders have been using aggressive sales tactics to convince veterans and active duty military personnel to obtain unnecessary mortgage refinancing.
According to a Bloomberg report
, the probe involves unnamed lenders that may have been coercing veterans and servicemembers into refinancing mortgages that were later bundled into Ginnie Mae securities. This leaves the borrowers with higher loan balances while enabling lenders to charge higher fees.
The investigation was sparked by concerns raised by Sen. Elizabeth Warren (D-MA), who wrote to Ginnie Mae’s Acting President Michael Bright and the Department of Veteran Affairs about the issue. Last November, the Consumer Financial Protection Bureau said it had received 1,800 complaints from servicemembers, veterans or their families about high-pressure efforts from lenders to pursue mortgage refinances.
“There are clearly some Ginnie Mae-approved issuer companies who appear to be taking advantage of the VA program to aggressively market and churn loans in our securities,” Bright wrote in a letter to Sen. Warren, adding that his agency and the VA jointly created a Lender Abuse Task Force to determine the depth and scope of the matter.