A bill intended to protect veterans from predatory loan practices has gained the support of Sen. Joe Donnelly, D-Indiana.
The Protecting Veterans from Predatory Lending Act of 2018 would require home loan lenders to demonstrate how borrowers would benefit from refinancing their loans, according to a Jan. 18 release from Donnelly's office.
Donnelly joined Sen. Thom Tillis, R-North Carolina; Sen. Elizabeth Warren, D-Massachusetts; and eight other senators in sponsoring the bill.
In the release, Donnelly said he was proud to support the bill led by Tillis and Warren.
"This common sense legislation would ensure that service members and veterans can continue to obtain affordable mortgages, while putting a stop to a predatory lending practice targeting those who have served our country," Donnelly said in the release.
Predatory lending involves lenders using unfair practices that harm the borrower. This can be through coercion, misleading or deception, among other things.
Currently, a small number of lenders abuse the Department of Veteran's Affairs home loan program, which was designed to help veterans by creating loans with lower credit score requirements and no down payment.
The lenders who have abused the program use misleading advertising tactics and "churning," the practice of refinancing a home loan multiple times to generate fees and profits for lenders, according to the release. This directly affects veterans and their families by forcing them to pay higher loan amounts and putting families in worse financial situations.
More than one million VA home loans were made between April 2016 and August 2017, including 21,232 in Indiana, according to the release. Almost half of these were refinanced, according to the release. More than 40,000 of those could have been subject to "churning."
The bill would work to eliminate these practices.
The American Legion, Veterans of Foreign Wars of the U.S. and the Mortgage Bankers Association all support the efforts to address the issue, according to the release.
"The government shouldn’t be backing lenders who exploit veterans just to line their own pockets," Warren said in the release.
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