Lawmakers fear VA home loans won’t keep up with boiling housing market
A bipartisan group of House lawmakers is urging Veterans Affairs officials to consider quick fixes to the department’s home loan program to ensure users can compete in the still-booming housing market.
“Historically, VA mortgages have been attractive and competitive to sellers,” the group wrote in a letter to VA Secretary Denis McDonough on Thursday. “Unfortunately, the current housing market and the increase in cash and conventional loans with waived contingencies may prevent veterans from competing with other buyers. … It is imperative that veterans receive a competitive loan that gives them the opportunity to buy a house.
According to statistics from the National Association of Realtors, the median selling price of a home in the United States in February 2022 was up 15% from the previous year.
Lawmakers — led by Rep. Guy Reschenthaler, R-Pa., a Navy veteran — said they’re concerned the VA home loan benefit hasn’t kept up with demands from home buyers and sellers and risk of forcing eligible people to give up the benefit to secure a home purchase.
“VA borrowers fare less well than borrowers using conventional lending products, with 11% of VA borrowers switching loan products during their home search, compared to just 1% of conventional borrowers switching funding methods,” wrote the lawmakers.
In fiscal year 2021, ministry officials guaranteed more than 1.44 million loans worth about $447 billion, a record high and a 15% increase from the previous year.
In a VA home loan, the federal government does not provide money to the buyer but agrees to guarantee the loan against the possibility of default. This allows veterans to avoid having to pay money on the purchase of their home and to avoid certain other costs associated with buying a home.
But this requires special qualification and valuation rules, which can slow down the completion of a home purchase.
In testimony before the House Veterans Affairs Committee in December, VA officials said the average wait time for an evaluation from the department was about 15 business days. For non-VA loans, this process typically takes about two days.
Witnesses said the department is looking for ways to streamline the process, but not at the risk of defaulting on more loans or placing veterans in substandard housing.
Lawmakers who wrote to McDonough this week are asking VA officials to consider improvements to ease the burden on buyers and sellers involved in the program, as well as ways “to improve public perception of the mortgage program.” GO”.
Outside groups said realtors looking for quick and easy sales can often overlook VA home loans because of the extra work involved in the process.
In March, the National Association of Realtors and VA released a series of videos for buyers, sellers and realtors designed to dispel myths around the program and explain how the process differs from conventional loans.
Leo covers Congress, Veterans Affairs and the White House for Military Times. He has covered Washington, DC since 2004, focusing on military personnel and veterans policies. His work has earned him numerous accolades, including a 2009 Polk Award, a 2010 National Headliner Award, the IAVA Leadership in Journalism Award, and the VFW News Media Award.