VA refinance

Beware of VA IRRRL Scams

February 23, 2015

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Beware of VA IRRRL Scams

VA Loan application formsWe 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: “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.

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.

About Joe Wallace

Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association.

7 Comments
  1. Alisa Asquith

    I have received two letters regarding IRRRL refinance program, saying the inclusion of my loan into the program was part of the "economic stimulus program." I called and was told my new mortgage payment would be as indicated in the letter I received, but I could read about it when a loan officer showed up at my house in a few days. I agreed but the gentlemen who showed up at my house was only a notary. I asked what my monthly payment would be, and he obviously had no clue. So we called back the gentlemen with whom I originally spoke. He was a fast talker and was saying stuff like "it's all written there in the paperwork" and "just look over and sign the paperwork." So I hung up on the man. He called back, and explained that my monthly payment would actually be over $500 MORE than what was stated in the letter, and that what's in the letter is only an approximation. I pointed out that my letter said exactly what the new principal and interest payment was "calculated at." Didn't matter. This is a scam because the man tried to get me to rush sign the refinancing without taking the time to go through the documents or even answer my questions. Had I not hung up on him the first time with his notary sitting in my kitchen, he never would have told me what my "new low monthly mortgage payment" would have been. I would save maybe $50 a month, but add years onto my mortgage for refinance costs, which they would pocket.

  2. John Domino

    We just got this letter about the VA IRRRL program. It says that the number to call is 1-800-949-0101 ext 2316. The notice number is VA 11023693. My wife and I are both retired Majors and have delt with scams before and we don't mess around. But if this is a VA program that is for real we would like to know. Thank you, John M Domino, Major (ret.) USAF Elizabeth E Domino, Major (ret.) USAF

    • Joe Wallace

      Call the VA directly at 1-800 827-1000 to get more information--unfortunately there's no way to tell anything from just the 1-800 number you provide.

  3. Martha K Cusack

    I recently received this notice from VA IRRL benefits. At the bottom in small letters it states that SMI Lending is an Approved/Sponsored lender of the Veterans Affairs Dept. However, I receive letters at least 2 times a week claiming that they can save me money on my VA loan. Wish there was some way that we could stop all this bogus mail being delivered to my home. If these people are approved, why doesn't the letter come directly from SMI?

  4. Michelle Bragg

    I received a letter that states it is from the IRRRL Dept and called about refinance info and am starting to wonder if this is a legitimate. They have the orginal bank I used and it has been sold neumerous times and is now with Wells Fargo. This says it is a third party offer. Have any of these offers been linked to fraud? Thanks for any information that can be given.

  5. steven bickel

    I refinanced with a broker through Wells Fargo using the IRRRL.They charged $6000. Later I was told that all they could charge was .5% of the total cost of the loan ($217,000) which comes to around $1100. What can I do?

    • Joe Wallace

      Contact the VA directly for assistance at 1-800 827-1000.

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