How to Avoid Veteran Mortgage Scams
In February of 2023, the Consumer Financial Protection Bureau (CFPB) announced it had taken punitive action against Majestic Home Loans and its parent corporation RMK Financial for deceptive practices aimed at military homebuyers trying to purchase homes with their VA loan benefits.
RMK Financial and Majestic Home Loans were prohibited from ever doing mortgage loan business again, effectively removing the danger for military consumers…from that company.
But there are still plenty of ways others can use the same tactics the CFPB warns were used by Majestic Home Loans. How can you avoid getting scammed out of your VA home loan benefits by a predatory lender?
>> Interested in a VA home loan? You may be eligible for no PMI and possibly zero down payment. For a no-obligation, free consultation regarding your VA Loan eligibility, please go here.
Don’t Take Unsolicited VA Loan Advertising at Face Value
If you contacted a lender and asked for a quote, that’s one thing. But when you did not reach out to a third party, and that third party has contacted you, the danger of a scam is relatively high.
- The CFPB alleges that RMK “sent advertisements that misrepresented that RMK was, or was affiliated with, the VA” or that the Department of Veterans Affairs was responsible for the unsolicited offers.
- The CFPB press release states, “Military families or others who view such advertisements may decide to purchase the advertised mortgage based on the trust they have in the government agencies.”
- Any offer you did not ask for may be the first stage of a home loan scam. Treat them all with the same suspicion.
Don’t Review a VA Home Loan Offer Without Comparing It to Other Lenders
CFPB accusations against RMK Financial and Majestic Home Loans include deceptive and illegal practices in the display of interest rates and terms.
According to CFPB, “RMK’s advertisements illegally disclosed a simple annual interest rate more conspicuously than the annual percentage rate, illegally advertised unavailable credit terms, and used the name of the homeowner’s current lender in a misleading way.”
- Sometimes, detecting a scam is possible by comparing a too-good-to-be-true interest rate to other, more established lenders.
- Be sure to explain the offer you have gotten to other lenders, ask to match or beat the offer or explain why they cannot.
- According to the CFPB complaint against RMK Financial, “Consumers who view such advertisements may be misled about the terms being offered or mistakenly believe their current lender is sending the advertisement.”
- Double-check with a lender by calling the main phone number (not the one on the advertisement) and ask to be put in touch with a mortgage lender so you can verify the offer.
Get a free, no-obligation consultation regarding your VA Loan!
Don’t Be Fooled by Too-Good-to-Be-True VA Loan Refinance Options
Is someone offering you a no-appraisal cash-out refinance? That’s a scam to beware of, especially in light of the CFPB’s action against RMK Financial, for reasons that include the following:
- According to CFPB, “RMK’s advertisements misrepresented that military families could obtain VA cash-out refinancing loans without an appraisal.”
- Furthermore, the lender offered these loans with ”no minimum credit score and no income verification” required to qualify for VA Cash-Out Refinancing.
- None of those things are possible with legitimate VA Cash-Out Refinancing.
- Compare any such offer to established VA lenders you have heard of, or contact the main branch of the lender using its main contact number (not the phone number in the advertisement) to verify the offer. Remember, if it sounds too good to be true, as mentioned above, it likely is.
The key to many of the issues related to veteran mortgage scams? The unsolicited contact, ad, or message. It’s safer not to respond to any third party who contacts you without you having contacted them first.
About the author
Editor-in-Chief Joe Wallace is a 13-year veteran of the United States Air Force and a former reporter/editor for Air Force Television News and the Pentagon Channel. His freelance work includes contract work for Motorola, VALoans.com, and Credit Karma. He is co-founder of Dim Art House in Springfield, Illinois, and spends his non-writing time as an abstract painter, independent publisher, and occasional filmmaker.