Racial disparities in mortgage outcomes have shaped the American housing landscape for generations. When those inequities appear within the VA Home Loan Program—an earned benefit intended to provide financial stability and generational opportunity to those who served—the consequences become more severe and more unjust. Black, Hispanic, and other minority veterans continue to face disproportionate barriers in mortgage origination, underwriting, servicing, assumption processing, and foreclosure prevention (Consumer Financial Protection Bureau [CFPB], 2024).
The historic $113 million settlement between Freedom Mortgage Corporation and the U.S. Department of Justice reveals the scale of potential risks when servicers across federally backed lending programs fail to follow the law (U.S. Department of Justice [DOJ], 2016). While that case centered on FHA loans rather than VA loans, the documented misconduct mirrors the same patterns of noncompliance reported today by veterans—including veterans of color—whose financial stability has been compromised by improper servicing actions and federal oversight failures.
2. The DOJ Case: A $113 Million Warning
In 2016, the DOJ announced that Freedom Mortgage Corporation would pay $113 million to resolve allegations that it knowingly originated and underwrote FHA-insured mortgages that violated federal guidelines, while failing to report material defects as required (DOJ, 2016). Between 2006 and 2011, Freedom Mortgage did not report a single improperly underwritten loan to HUD, despite clear evidence that such loans existed.
Although this case involved FHA loans, the systemic weaknesses it exposed—failure to comply with federal standards, failure to self-report, and failure to remediate material deficiencies—demonstrate how easily vulnerable borrowers can be harmed when servicers evade oversight. Given that marginalized communities, especially Black borrowers, face disproportionate harm in mortgage markets, these patterns are especially troubling for minority veterans relying on the VA Home Loan Program (Housing and Urban Development [HUD], 2023).
3. Racial Disparities Among Veterans
Racial inequities in mortgage lending persist even among veterans—despite the uniform nature of military service and the theoretically race-neutral structure of VA home loan eligibility. National research confirms that Black and Hispanic borrowers experience higher rates of:
Mortgage denials Higher interest rates and fees Servicing errors Negative credit reporting Modification denials Wrongful foreclosure actions Rejected loan assumptions
These patterns remain even after controlling for credit score, income, and loan characteristics (CFPB, 2024; Urban Institute, 2024).
Disparities specific to veterans
Black veterans have significantly lower homeownership rates than white veterans, despite similar eligibility (HUD, 2023). Hispanic veterans face disproportionate challenges accessing streamlined and affordable refinancing programs (HUD, 2023). Complaints submitted to the CFPB show that veterans of color often experience more obstacles in loan modification approvals, forbearance exits, and the correction of servicer errors (CFPB, 2024).
HUD’s 2023 Equity Action Plan further documents persistent disparities in access to refinancing, modification approvals, and servicing outcomes, underscoring the need for stronger guardrails within federal lending programs.
4. What VA Circulars Reveal
COVID-19 protections and early servicing concerns
During the COVID-19 emergency, the VA issued Circular 26-20-10, outlining foreclosure moratoriums and borrower protections designed to ensure veterans were not penalized for pandemic-related hardship. The circular emphasized that servicers must prioritize accuracy, fairness, and borrower relief during periods of national crisis.
Assumption failures and VA Circular 26-23-27
As widespread complaints emerged regarding VA loan assumptions—particularly delays, denials, and improper credit reviews—the VA responded by issuing Circular 26-23-27 on December 20, 2023. This circular directly addresses noncompliance in the processing of VA loan assumptions.
Circular 26-23-27 clarifies that servicers:
Must process assumption requests in full compliance with VA statutes and regulations; May not impose duplicative or improper “creditworthiness” reviews on borrowers already legally obligated on the loan; Cannot unreasonably delay or refuse to process an assumption; May face VA action—including limitations on liability—if they willfully refuse to follow federal law.
Veterans across the country have reported precisely these issues. Black and Hispanic veterans have disproportionately experienced assumption delays, duplicative credit requirements, unexplained denials, and mishandled assumption documentation—all outcomes the VA has now explicitly identified as violations.
These failures parallel the behavior documented in the Freedom Mortgage settlement: an institutional pattern of noncompliance and disregard for regulatory obligations that disproportionately harms vulnerable households.
5. A Long History of Inequity
Racial disparities in mortgage outcomes did not begin with Freedom Mortgage or with the VA Home Loan Program.
Contemporary analyses confirm that Black and Latino borrowers continue to face:
Higher denial rates (CFPB, 2024) Higher mortgage pricing (CFPB, 2024) Reduced access to refinancing opportunities (HUD, 2023) Higher rates of servicing errors (Urban Institute, 2024)
These disparities persist despite decades of civil rights legislation and federal oversight. When the VA Home Loan Program—one of the most successful wealth-building tools available to veterans—fails to insulate borrowers from racial inequity, the harm is especially profound.
6. Why the Let Freedom Ring Amendment Is Necessary
The patterns documented by federal agencies, researchers, and veterans themselves reveal a need for stronger enforcement, clearer standards, and greater accountability in mortgage servicing. The Let Freedom Ring Amendment seeks to address these failures by requiring:
Stronger and more consistent borrower protections; Transparent and fair assumption processing; Prohibition of improper or duplicate credit reviews; Independent audits of VA mortgage servicers; Penalties for discriminatory or negligent servicing conduct; Federal reporting requirements to reveal racial disparities in outcomes.
For veterans of color—already disproportionately harmed by existing inequities—such reforms are essential.
7. The Path Forward
Veterans deserve mortgage systems that honor their service and protect their rights. Achieving racial equity in the VA Home Loan Program requires:
Stronger federal oversight and enforcement; Transparent data on assumption processing, modification approvals, and complaint outcomes; Remediation of servicing errors; Accountability for servicers who violate VA regulations; Policy reforms that ensure equitable treatment for all veterans.
It is time for systemic change.
It is time to Let Freedom Ring.
References
CFPB. (2024). Fair lending report of the Consumer Financial Protection Bureau, 2023.
HUD. (2023). Equity Action Plan (Executive Order 14091).
Urban Institute. (2024). Evidence of disparities in access to mortgage credit.
VA. (2020). VA Circular 26-20-10: Lender guidance for borrowers affected by COVID-19.
VA. (2023). VA Circular 26-23-27: Noncompliance in processing assumptions.
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