As a former Department of Veterans Affairs (VA) Loan Specialist (Underwriter), I used to review files for regulation compliance. Recovering
thousands of dollars daily for Veterans became the highlight of my job. However, similar to other government regulatory departments and
agencies, our resources were limited. We reviewed a mere 5% (down from 10% in 2013) of VA guaranteed mortgages in a given year. It certainly
didn't appear that we were helping too many Veterans at this rate, and probably were not very effective in regulating the Program.
Having earned an advanced degree in Applied Statistics, I decided to put my education to use and determine just how effective we were. I wanted to
know how many mortgages (or Veterans, as the case may be) were "falling through the cracks" of needed regulation. So, I self-initiated a
study of 1,981 randomly-selected mortgage files spanning an eighteen-month period. The data revealed the following:
(sample size 1,981; std deviation 3; confidence level 99%; confidence interval 2.9)
My suspicion verified - we were not very effective at enforcing regulations, nor were lenders effective at complying with the
regulations. VA managers often cited a comparitive low default rate to the national average as success of the Program, but the data above
doesn't support their claim, and I could only conclude that making such a comparison is baseless rhetoric. Morgan Snyder responsibly addresses
the claim made by VA managers in the article:
"The Real Reason Low Downpayment VA loans don't default like comparable FHA loans"
I believe it's worth noting that, to date, there have been no significant policy changes or procedural improvements in the Program's management
since this study (2014).
When shopping for a mortgage, lenders will often inform the borrower (homeowner) that closing costs will be roughly 3-6% of the loan amount; but what
they won't tell you is that there are tolerance limitions and non-allowable fees defined by regulations. Additionally, there is another side of excessive
fees addressed by Craig Donofrio in the article
"Just Say No to Mortgage Junk Fees" (many others
have written about these excessive fees as well). Of the following fees, can you determine which have tolerance limits, are not allowed, or are "junk" fees?
(these are but a few of the possible fees that you may be charged)
You expect and trust your lender to know these tolerance limitations and non-allowable fees and to not overcharge you; yet it happens and
you, the homeowner, are paying the price!
Interestingly, on two separate occasions, different supervisors of mine [VA Regional Loan Center (RLC) Loan Production Officers (LPOs)] rationalized
our ineffectiveness to recover more overcharges for Veterans by stating that, "The responsibility rests with the Veteran [Consumer] to prevent from
being overcharged." And when presented with the data above, another more senior supervisor [Loan Guaranty Officer (LGO)] stated, "I don't doubt the
accuracy of your data, but I have no mechanism to report it," absolving himself of any responsibility to address the problem to his supervisors.
Some might say, what's the big deal, a few dollars here and there is little harm to hiring more regulators and having to pay higher taxes,
right? I agree, no one wants to pay higher taxes or increase the size of government, however, let me reframe the problem in a slightly
different way... Veterans, and Veterans alone, pay a projected:
Sucks to be a Veteran participating in this program, right?! Well, non-VA mortgage borrowers (conventional, FHA, etc.) are not immune to the impact
of this study, these are the same lenders providing non-VA mortgages. Moreover, if caught, lenders are only required to
repay the overcharge - without penalty! Hardly incentive to comply.
I think it's important to recognize that there are many employees of the federal regulatory departments and agencies (VA, HUD, FHA, FHFA, CFPB),
as well as, lender employees that take pride in their work and they do a great job, but are limited due to constraints beyond their control
or find themselves in a work culture not rewarding of ethics. The goal here is not to criticize these employees, but rather to reveal an ongoing
problem requiring a solution. When brought to their attention, these employees will recover overcharges for the consumer.
Action needed: Provide a service to empower consumer participation that will also assist lenders and regulators in the focused
enforcement of federal regulations on mortgage fee compliance.
Federal regulators have an obligation to review your mortgage fees based on a valid claim; Mortgage Whistle provides
the basis of such a claim. Developed by a former VA Loan Specialist (Underwriter), Mortgage Whistle is 100% accessible,
easy to use, and cost effective. As a web-based service, it can be used on any desktop computer or mobile device; In three (3) easy steps you'll get
your results; and it's nominally priced, making it cost effective.
Additionally, Mortgage Whistle incorporates The Real Estate Settlement Procedures Act (RESPA) Regulation X, The
Consumer Financial Protection Board's Integrated Mortgage Disclosure Rules, 38 Code of Federal Regulations (CFR) 36.4313, and The Department of
Veterans Affairs (VA) Pamphlet 26-7 & VA Circulars in its formulas, making it fully compliant with federal regulations.
Furthermore, Mortgage Whistle provides an accurate itemization of excessive and non-allowable mortgage fees paid,
regulation references for the identified overcharge(s), and guidance on how to recover these overcharges.
Mortgage Whistle has additional benefits too:
Mortgage Whistle is not a collection agency and it is not new regulation - it is a service to permit full participation in the enforcement
of federal regulations to ensure mortgage fee compliance.
Mortgage Whistle is applicable for all types of mortgages: Purchases, refinances, cash-out refinances, streamlines and Interest Rate
Reduction Refinance Loans (IRRRL), construction, jumbo, and Native American Direct Loans (NADL). Additionally, because your mortgage is a
contract, as such, and as long as it is in effect, you may be able to recover excessive and/or non-allowable mortgage fees regardless if you
have closed on your loan recently or if you've closed 15 or 30 years ago.