{"id":31579,"date":"2018-06-18T13:42:36","date_gmt":"2018-06-18T13:42:36","guid":{"rendered":"https:\/\/one.sightlinemg.com\/airforcetimes\/uncategorized\/2018\/06\/18\/feds-restrict-2-more-lenders-in-fight-against-va-loan-churn\/"},"modified":"2026-08-08T02:43:22","modified_gmt":"2026-08-08T02:43:22","slug":"feds-restrict-2-more-lenders-in-fight-against-va-loan-churn","status":"publish","type":"post","link":"https:\/\/one.sightlinemg.com\/airforcetimes\/home-hq\/2018\/06\/18\/feds-restrict-2-more-lenders-in-fight-against-va-loan-churn\/","title":{"rendered":"Feds restrict 2 more lenders in fight against VA \u2018loan churn\u2019"},"content":{"rendered":"\n

Regulators<\/a> have taken action against two more lenders in their efforts to curb alleged \u201cloan churning<\/a>\u201d practices of VA home loans that harm military and veteran borrowers.<\/p>\n\n\n\n

Ginnie Mae, a government corporation that oversees the process for ensuring the success of the government\u2019s mortgage-backed securities guarantee, has restricted Freedom Mortgage Corporation and SunWest Mortgage Company, Inc. from Ginnie Mae\u2019s main securities programs, according to a Ginnie Mae announcement.<\/p>\n\n\n\n

The companies still can sell their VA-backed loans into Ginnie Mae custom pools, but they won\u2019t be able to place them into pools with other lenders. That likely means terms on their loans won\u2019t be as good for borrowers.<\/p>\n\n\n\n

Their restriction is effective July 1 and concludes in January, assuming they demonstrate that pre-payment speeds of loans<\/a> are \u201csubstantially more in-line\u201d with others in the industry, and that they can sustain the improved performance, according to the Ginnie Mae announcement.<\/p>\n\n\n\n

Freedom Mortgage \u201cstands firmly against the practice of loan churning and is committed to acting in the best interests of our nation\u2019s veterans,\u201d said Stanley Middleman, CEO of Freedom Mortgage, in a statement. He noted the company welcomes the increased transparency and has been \u201cworking closely and cooperatively with [Ginnie Mae] to make sure that Freedom\u2019s prepay speeds are in line with other market participants.\u201d<\/p>\n\n\n\n

Officials at SunWest did not immediately respond to requests for comment.<\/p>\n\n\n\n

Regulators, veteran advocates and many in the lending industry have expressed concern about the practice of \u201cloan churning,\u201d where veteran borrowers are pushed to refinance their VA loans. These borrowers are targeted with an onslaught of mortgage-refinance solicitations, often shortly after they\u2019ve closed on a home loan. Some borrowers have been convinced to refinance their loan multiple times in a year, often with little or no financial benefit. Fees attached to the deals increase the overall loan amount each time it\u2019s refinanced.<\/p>\n\n\n\n

In May, President Donald Trump signed a law <\/a>that includes provisions to help make sure veterans are getting a tangible financial benefit when they refinance their VA loans. VA has implemented the rules for all applications for VA loan refinance applications on or after May 25.<\/p>\n\n\n\n

About 99 percent of VA loans are secured into a Ginnie Mae mortgage-backed security and then sold in the secondary mortgage market with a full faith and credit guaranty from Ginnie Mae, which is also responsible for policing their program to protect against loss.<\/p>\n\n\n\t