The federal government is investigating a number of predatory lending schemes targeting thousands of veterans who have Veterans Administration mortgages. Officials say the scams aim to convince borrowers to repeatedly refinance, ultimately paying more on their loans. Some lenders also are being accused of using teaser interest rates, “cash out” windfalls, and lower monthly payments, using marketing materials that sometimes resemble Department of Defense information, the Chicago Tribune reports.
Veterans reportedly are being overwhelmed with misleading refinance offers—sometimes refinancing properties multiple times in a year. “We’re seeing borrowers refinance three times in less than six months, and their loan balances are going up,” says Michael R. Bright, acting president of VA loan giant Ginnie Mae. The Department of Veterans Affairs has teamed with Ginnie Mae to create a task force to investigate such cases.