Just 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."

Lorraine 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.