New Bill Aims to Protect Military Homeowners from Predatory Lenders
By Aubrey Sitler
Less than eight months into her first term as a U.S. Senator, Kyrsten Sinema (D-AZ) has already authored a bill that has become law. The bipartisan Protecting Affordable Mortgages for Veterans Act aims to protect military veteran homeowners from predatory lending practices and help them access the veterans’ homeowner benefits.
“I’m proud to have worked with Arizona veterans and my colleagues on both sides of the aisle to get this bill signed into law and ensure our veterans have full access to the homeowner benefits they’ve earned,” Sinema said.
Specifically, the Act fixes a problem in pre-existing law that made accessing the U.S. Department of Veterans Affairs (VA) Home Loan Guaranty Program to refinance mortgages incredibly challenging for veterans. Sinema’s interest in this issue arose when G-II Varrato II, an Air Force veteran and the Arizona state director of the Veterans Association of Real Estate Professionals, approached Senator Sinema to address the problem.
Apparently, veterans’ lack of access to the VA home loan guaranty resulted in a slew of predatory lenders targeting and approaching veteran homeowners pretending to peddle VA mortgages and refinancing options. They would approach veteran families with the promise of lower mortgage rates for refinancing multiple times as soon as they moved into new homes, leaving veterans who opted into these programs with huge debt.
The VA and Consumer Financial Protection Bureau (CFPB) were aware of this problem and issued official warnings to veteran households to beware of these illegitimate and predatory lending practices. They told veteran homeowners to be skeptical of “home loan refinancing offers that sound too good to be true,” specifically calling out some of the most common predatory practices to lure people in: offers to skip one or two mortgage payments, offers to receive an escrow refund, low interest rates without specific terms, and aggressive sales tactics.
Varrato says “[it] was easy money for these lenders to continue to churn and churn and churn, and they could tap a single veteran in a number of months and have him load tens of thousands on top of his loan.” The two worked on drafting the bill together.
“I applaud Senator Kyrsten Sinema for her diligent work to ensure all American veterans retain one of the cornerstones of financial security and community building: the power of homeownership,” Varrato said upon the bill being signed into law. He says he hopes this prevents predatory lenders from targeting and taking advantage of veterans when they move into their homes.