VA and the Consumer Financial Protection Bureau warn against home loan refinancing offers that sound too good to be true

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This VA home loans and Consumer Financial Protection Bureau blog originally appeared at the Consumer Financial Protection Bureau.

Situation

The Consumer Financial Protection Bureau and VA are issuing their first, “Warning Order,” to service members and Veterans with VA home loans. If you have a VA home loan, then there is a good chance that you have already come into contact with unsolicited offers to refinance your mortgage that appear official and may sound too good to be true.

Many of these solicitations promise:

Extremely low interest rates Thousands of dollars in cash back Skipped mortgage payments No out-of-pocket costs No waiting period

Don’t be fooled. Before responding to any unsolicited offers, here is what you need to know.

Operational environment

Some lenders marketing VA mortgage refinances may use aggressive and potentially misleading advertising and sales tactics. Lenders may advertise a rate just to get you to respond, or you may receive a VA mortgage refinance offer that provides limited benefit to you while adding thousands of dollars to your loan balance.

How will you know if the offer is too good to be true? Here are some offers and tactics to watch out for:

Offers to skip one or two mortgage payments – Lenders sometimes advertise this as a benefit of a VA mortgage refinance; in fact, VA prohibits a lender from advertising the skipping of payments as a means of obtaining cash in an Interest Rate Reduction Refinance Loan (IRRRL) . Certain lenders nevertheless use this as a selling point when they are unable

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