days after Ginnie Mae issued a Request
for Input seeking advice on ways to tighten its regulations in regard to VA
loans, it appears the government is taking stronger action. Ginnie Mae was
pointing to higher than acceptable prepayment rates among streamline refinancing
VA loans included in one of its securitization programs, especially those with
high loan-to-value (LTV) ratios.
Politico reported on Tuesday that investigators
from the Veterans Administration have been issuing subpoenas to several
mortgage lenders “seeking information on delinquencies and payments.” The VA has been watching the frequent serial refinancing
of its loans for several years and has taken action to curtail some of the streamline
refinancing, threatening to sanction some of its lenders for what it calls “churning.”
Woellert, writing in Politico, says
the VA’s Office of Inspector General, working with the U.S. attorney for the
Eastern District of New York has asked at least eight VA lenders (Inside Mortgage Finance puts the number
at 12) to turn over files on hundreds of VA loans made between 2013 and 2017. Quoting
two people with knowledge of the actions, Woellert said the lenders have been questioned
about quality control and loan audits.
It appears the
VA is particularly interested in loans made through its Interest Rate Reduction
Refinance Loan, or IRRRL program which allows existing VA borrowers to
refinance without an appraisal or additional underwriting. One source however
told Woellert that the requests go beyond that program and Inside
Mortgage Finance said a source told them that the inquiry was focused on delinquencies
and foreclosures, at least initially.
Woellert said persons she contacted at both the VA and the
Eastern District declined to comment.