VA refines home loan program for pandemic era

For veterans and active servicemen competing for homes in what is still the hottest real estate market in decades, the U.S. Department of Veterans Affairs has refined its loan program with several key adjustments, winning praise from veterans, real estate agents and lenders.

The VA Loan is a privately funded, ministry backed mortgage loan and is known to allow veterans to purchase a home without a down payment. It also has some of the lowest interest rates among the loans. About 25 million have received VA loans since their inception in 1944.

But in today’s seller’s market, where bidding wars between cash-flush buyers have pushed home values ​​far beyond their appraised value, it’s a tough time for addicted veterans. VA loans, as is the case with any buyer on a budget.

“It drives me crazy,” said Bobby Middleton, a real estate agent who frequently works with buyers using VA loans. “The average veteran is overpriced for their accommodation in San Antonio. “

“It has been difficult to get a VA loan, especially if it is a multiple offer situation,” said Norris Boyd, a veteran and real estate agent with Lifetime Real Estate Services. “But with so many changes in pricing, the VA has seen how difficult it is for veterans to return home. They lined up and it got easier in some cases.

The coronavirus pandemic has created a growing demand for housing, as buyers looked to take advantage of low mortgage rates, and the proliferation of remote working has made it possible for many people in expensive housing markets like Austin and Denver to sell their homes for a bigger one in relatively affordable markets like San Antonio.

Even though home sales have stabilized, supply remains tight. The median price of a home in the San Antonio area hit nearly $ 300,000 in September, a 15% increase from the same month last year, according to the San Antonio Board of Realtors. And houses always go fast. Homes spent an average of 27 days on the market in September, up from 53 days in the same month in 2020.

In response, the VA instituted a number of adjustments, some large and some small, during the pandemic. John Bell, deputy director of the Veterans Affairs Loan Guarantee Service, presented the San Antonio report through a few of them.

VA appraisers can now consider the price trajectory of pending sale prices in the area, although they still cannot use those prices as comparable properties. And the comparables they use can now be generated automatically by a computer, as opposed to being searched manually.

Appraisals can be done from the outside of a home alone, without the need to go inside. And overall, more reviewers have been brought into competitive markets where volume has grown, speeding up the process in markets where delays can kill a deal.

Outside of VA, real estate agents and lenders have noticed that the loan process is becoming more flexible for buyers.

Ben Suttin, a mortgage manager for Caliber Home Loans, said the VA was more likely to adjust values ​​when challenged in recent months. He said in a recent case an appraisal was below the asking price. Although the appraiser wouldn’t budge, he said, the VA canceled it and increased the appraisal by $ 16,000.

“It helped the buyer a lot,” Suttin said.

These pandemic-era adjustments build on two decades of reforms to the VA’s home loan program, once notorious for the bureaucratic excesses that made appraisals strict, loans complicated, and the whole process susceptible to failure. collapse in the days leading up to a deal.

“It was true, at least in the past,” said Tasha Curtin Koltermann, real estate agent at Jadestone Real Estate. Koltermann said his latest VA buyers “didn’t really have a problem, and we were able to find homes for them very quickly.”

Today, VA loans are closing at a higher rate than conventional mortgages. For any home purchase in August 202167% of VA loans were successfully closed, compared to 51% of all mortgages, according to Ellie Mae, a mortgage application software company. However, these loans took an average of 53 days to close, which is five days longer than conventional loans.

Additions in recent years, such as the “Tidewater” program, which allows appraisals to be appealed that do not match the sale price, and an automated eligibility process have made these loans much more streamlined.

But many realtors say mistrust of loans persists among other agents, even in San Antonio, where the the city government has registered the “Military City USA” label. There are disagreements, however, over who these agents of prejudice are.

“These are usually agents with less experience,” said Maynard “Doc” Stephens, real estate agent at Keller Williams.

“These are older, more experienced real estate agents with outdated notions,” Suttin said.

Either way, the loans continue to be very popular with the veterans themselves. Bell of the VA said that for the fiscal year that ended in September, a record 450,000 veterans used them to buy homes.

In San Antonio, mortgage service companies regularly hold public seminars on VA loans to crowded audiences, where sales agents present the details of the program with the glowing enthusiasm of a Baptist revival.

At one such seminars last week at Chicken N Pickle in northwest San Antonio, Ashley Edmond, in the Army National Guard for more than ten years, said she had no used the VA loan to buy her first home but would like to do it for her. second.

She is looking for a multi-family property on the northwest side to rent in part.

The VA loan, she said, “looks like a good deal.”