Junk Mail…

If you have a VA loan, you’ve gotten lots, and lots, and lots of mail about refinancing.  Probably starting within days of your purchase.

Much of that marketing comes from a handful of lenders who specifically target veterans with deals that sound great.  However, those deals often have little benefit to the veteran but make the lender lots in fees.

“Increased attention” and “subject to sanctions”

Ginnie Mae, the government owned corporation that guarantees payment on $2 Trillion-worth of mortgage-backed securities including most VA loans has issued an All Participants Memorandum (link is external) (APM) warning to lenders on Dec 7th.  The memorandum says: “performance that appears out of step with market peers will receive increased attention and engagement” and “any issuer that does not comply with the program requirements will be subject to sanctions.”

Ginnie Mae confirmed that some veterans were refinanced multiple times within a few months. In some cases, they wound up with only a modest rate decrease that would not justify the refi fees. In other cases, veterans have been moved out of a safe fixed-rate loan into riskier adjustable-rate mortgages, where they could ultimately pay significantly higher rates

‘Just Not at our expense’

Will this stop the hounding you get to refinance.  Probably not, since the lenders doing this are making money doing so.  According to a Bloomberg Article on Dec 7^th (link is external), one lender’s Chief Executive Officer said: “We are really aligned with wanting the investor [Ginnie Mae] to be happy and really aligned with wanting the customer to be happy, just not at our expense.” And followed that with “If we’re vulnerable, we’re going to have to defend ourselves.”

What should you do with all that Junk Mail?

The marketing pieces seem like they’re too good to be true, send it to us.  We’ll dissect the fine print for you so you’ll know if it’s really a good deal, or just a way to make some lender more in fees.