WASHINGTON, D.C. – Today, Senator Thom Tillis (R-NC), a member of the Senate Banking Committee, applauded the Senate passage of the Economic Growth, Regulatory Relief, and Consumer Protection Act, bipartisan legislation to improve our nation’s financial regulatory framework and promote economic growth. Included in the legislation is the Protecting Veterans from Predatory Lending Act of 2018, bipartisan legislation Tillis introduced with Senator Elizabeth Warren (D-MA), which would protect veterans from targeted predatory home loan practices by requiring lenders to demonstrate a material benefit to consumers when refinancing their mortgage.
“Passage of this bill is proof that Congress can come together on a bipartisan basis and pass meaningful legislation on behalf of the American people. The inclusion of bipartisan legislation I introduced to protect veterans and servicemembers from predatory home-lending will also help families from being targeted by bad actors abusing the VA home loan program, and is a win for the military community,” said Senator Tillis. “Over the last three years, I have heard from financial institutions across North Carolina about the impact of burdensome regulations, which has restricted access to capital for Americans all across the country. Dodd-Frank’s harmful one-size-fits-all approach has proven to be a failure, and this legislation will help ensure farmers, small-business owners, and first-time home buyers have the resources they need to allow our economy to thrive again. I look forward to this legislation being signed into law, and believe it is an important step—building on the economic growth being generated from the tax reform law Congress passed late last year.”
Background on the Protecting Veterans from Predatory Lending Act of 2018:
The Department of Veteran’s Affairs (VA) home loan program was designed to provide veterans and servicemembers with the opportunity to purchase their own home through a VA insured mortgage from a private lender. VA loans have lower credit score requirements than other mortgages, and often don’t require down payments. Since its inception, it has insured more than 20 million home loans to help veterans become homeowners.
However, today a small number of lenders are abusing the program by utilizing misleading advertising tactics and engaging in a practice known as “churning” – the refinancing of a home loan over and over again to generate fees and profits for lenders at the direct expense of veterans and their families, often without their knowledge.
Over a period of time from April of 2016 through August of 2017, over 1,000,000 VA home loans were made, including 50,000 loans in North Carolina alone, and almost half of those were refinanced VA loans. The vast majority of those refinanced loans are being originated by good actors, but this legislation addresses a pool of refinanced VA loans—over 40,000 nationwide and 1,000+ in North Carolina over the aforementioned time period—wherein veterans may have been subjected to abusive lending practices by some in the marketplace who engage in “churning.”