Prior to working as a VA Loan Specialist, I didn't have a clue about mortgages. I didn't understand the difference between an origination and a refi; I couldn't tell you the relationship between your interest rate and paying points; and I certainly couldn't identify whether a junk fee charged in closing was compliant with regulations. I was ignorant about these things, just as many homeowners are.
That changed when the VA hired and trained me to underwrite and audit mortgages. I was one of roughly a hundred Loan Specialists across the country that underwrote and audited mortgages for the VA. The Consumer Financial Protection Bureau (CFPB) does not, nor did the Department of Housing and Urban Development (HUD) before them, proactively audit mortgages for regulation compliance. Think about that for a moment. Collectively, VA Loan Specialists audit a fraction of the mortgages guaranteed by the VA; currently, that is a mere 5%. Meanwhile, no one was or is proactively auditing mortgages for the CFPB (nor HUD, before them).
I recall my VA supervisors stating that it is the consumer's responsibility to identify fraudulent fees (unlawful junk fees) and report them to the appropriate government agency. Be that as it may, didn't we have an obligation to the American public to report the meager effort our resources would allow? It bothered me so much that I began to question my role in the problem. Was I contributing to a false impression that the government was actually regulating the mortgage industry? Having consumers believe that we were effective in policing mortgage fraud?
It was easy to rationalize that I was doing more good than harm, because that was the narrative promoted at the office. I became skeptical; the initial proof was right under my nose. There wasn't a day where some of the audited mortgages didn't have fraudulent junk fees; and the same was true for my colleagues. Folks, it was occurring everyday. On mortgage after mortgage, regulation violations were identified by the national team of VA Loan Specialists. We weren't cherry-picking these mortgages, these were, and still are, randomly-selected mortgages for audit.
I think it's important to note that during my tenure, I NEVER witnessed NOR heard of a single lender being penalized for their violations to the regulations, regardless of their frequency or egregiousness; lenders were only required to refund the fraudulent charges, that's it. Additionally, I NEVER witnessed NOR heard of a lender contacting the VA to inform us that they identified fraudulent fees from an internal audit, and that they wanted to correct the record and refund the Veteran - NEVER EVER.
In an independent study1 of 1,981 randomly-selected mortgages, presented to my supervisors, the following was uncovered:
I was given the oportunity to work at the VA to help Veterans and I took pride in doing so. However, once the truth was revealed, I could no longer in good concious contribute to the problem that my VA supervisors conciously chose to ignore. I set-out on a quest to develop a solution...