Paycheck Chronicles

New VA Policy to Protect Veterans from Predatory Lending


VA has issued a new policy implementing the May 2018 Economic Growth, Regulatory Relief, and Consumer Protection Act, to protect veterans who apply for a VA-guaranteed refinance loan

The act helps protect veterans and service members from the dangers associated with repeatedly refinancing their home loans.

“We want to ensure veterans have the informed ability to take advantage of economic opportunities and make sound decisions that enable them to prosper when using their benefits,” said Acting VA Secretary Peter O’Rourke. “This is yet another tool that will help veterans meet their personal goals.”

Among the changes which became effective May 25, 2018:

  • The interest rate on a new fixed loan must be at least half a percentage point less than the previous loan. Adjustable-rate mortgages must be at least 2 percentage points less.
  • The lender must certify that all costs and fees will be recouped by the borrower within 36 months of the loan date.
  • Veterans can’t refinance to another VA-backed loan for 210 days (up from 180) or the date on which the sixth monthly loan payment is made, whichever is longer.

VA-backed home loans generally do not require a down payment, have low closing costs, and are the lowest rates among all loan products in the marketplace. VA does not issue the loans, they only guarantee to the lender that you are a good credit risk for the loan. 

Check out our VA Loan Center for everything you ever wanted to know about VA Home Loans.

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