New Home Loan Programs Should Be Available to All Veterans

2020 has undoubtedly been a year of firsts. For the first time this century, a global pandemic has ground the economy to a halt. Families across Americans who felt secure six months ago now find themselves struggling to make ends meet, putting off major purchases, and uncertain about the future of their jobs and their communities. And nearly five million Americans are behind on their mortgage payments.

In an effort to help mitigate some of the economic fallout, the Federal Reserve lowered its target interest rate to 0.25 percent, down from 2.50 percent a year ago. This, in theory and practice, reduces interest on borrowed money across the board to consumers. In general, this makes more capital available for spending as "the price" of money is lowered. This can have an impact on credit cards, personal loans, and mortgages.

Banks and other lenders typically increase their marketing efforts attempting to capture customers with lower interest rates. But as with so many other products and services, it's often the case of reading the fine print.

Take, for example, a mortgage brokerage firm in Michigan that offered veterans looking to buy a new home or refinance a rate as low as 2.25 percent.

But unfortunately, the company, United Wholesale Mortgage (UWM), is only offering this rate to new customers. So, a veteran who had already done business with the company would be locked out of the opportunity to get this discount, lower her mortgage, and have more money available for other expenses.

At a time of such economic uncertainty it seems unfair that veterans who have served this country, would be excluded from a chance to have a lower interest rate. Instead, the program would keep veterans who already have UWM mortgages locked into their higher rate.

Many veterans return from deployment with the dream of purchasing a home — and mortgage lenders should do their part. Specifically, veterans who are minorities face more barriers when purchasing homes. According to a 2020 report from the Urban Institute, there is a significant racial disparity in veteran home ownership rates. The report shows that among 35-54 year-old veterans, white veterans own homes at a rate of 76 percent, while black veterans have a rate of 58 percent.

With mortgage availability credit hitting a 5 year low this past April, getting a loan is becoming harder for prospective homeowners. In addition, loans backed by the Federal Housing Administration and Department of Veteran Affairs decreased by 6.6%. This leaves veterans at risk and many looking for new lender options. All veterans should have the opportunity to finance their home at the best rate possible, especially in the current economic state. Hopefully UWM will consider allowing all veterans to take part in their loan program.

Kevin Kimble, Esq is founder and board chair at Financial Services Innovation Coalition.