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Beware of VA IRRRL Scams

We get plenty of reader comments and questions, but we’ve noticed a trend in the comments about a possible scam targeting people with VA mortgages. There’s been an increase in questions asking about third-parties who contact home owners about their mortgages.

One example we were sent:

"I received a letter stating my VA-guaranteed loan had been targeted for inclusion in a VA IRRRL program…It includes a note implying that this program is tied to the Economic Stimulus Program. Can you give me some information about this?"

Borrowers should always be suspicious of communications like this–a note you get in the mail with language such as “your mortgage has been targeted for inclusion in this special program” could be an attempt to get additional information from you.

It could also be a scam artist’s way of trying to start a conversation with you. VA IRRRL paperwork is initiated by the borrower, not the government or a third party. It’s an option the VA borrower has at his or her disposal and isn’t a program the government uses to “target” home owners as part of an economic stimulus package.

How to Avoid VA Loan Scams

Some home owners have a very good rule of thumb–they automatically disregard any offers or third-party contact about refinancing or “help” with their mortgages that the borrower did not initiate themselves. Your lender may periodically send you information on refinancing terms, special rates or other details–that’s not the sort of contact that suspicious.

But when an unrelated third party (not your lender or the Department of Veterans Affairs) tries to convince you to initiate refinancing, a foreclosure avoidance arrangement or other agreements, it’s best to contact the VA and your lender directly before proceeding.

Not all third-party companies that try to reach you are scammers or con artists. But there are plenty of scams waiting to trap unsuspecting homeowners. When in doubt, always contact the Department of Veterans Affairs first to ask about the terms and conditions of a particular offer–you’ll be glad you did. You can contact your nearest VA Regional Loan Center to learn more on housing scams and related issues.