Home > Mortgages > VA Home Loan Changes: Cutting the Red Tape?

Comments 4 Comments

Whenever Duan Rockette meets a prospective client, the St. Louis real estate agent asks a simple question: Did you serve?

That isn’t a question many real estate and mortgage professionals asked just a few years ago. But VA home loans, which require 0% down, have boomed since the housing crash, driven by a combination of tight credit and sputtering incomes.

Lenders funded an all-time record $39.6 billion in VA loans in the second quarter of this year, according to Inside Mortgage Finance. This program, which is part of the original GI Bill, is on pace to have its second-biggest year ever.

As VA loans have had a reputation for red tape and bureaucracy, Rockette often finds himself explaining that today’s VA loan program is a lot different than some veterans might remember.

Conventional loans remain the gold standard when it comes to swift closings, but the government-backed options have closed the gap. During the past 12 months, the average conventional purchase loan closed in 40.8 days, compared to 41.8 days for VA and 42.3 days for FHA, according to data from mortgage software firm Ellie Mae.

But more automation and efficiency in recent years is helping the 71-year-old VA loan program keep pace with other loan products. And in some key areas, including foreclosure avoidance, VA loans have become an industry leader.

“The biggest technology my grandfather had when he was interacting with the VA home loan program was a pen and a stamp,” Mike Frueh, the head of the VA loan program, said recently during a conversation at the U.S. Navy Memorial in Washington, D.C. “Technology has come a long way since then. We’ve developed a lot of systems, and we have access to a lot more information than we ever had before.”

(You can watch the conversation here in its entirety.)

Closing Speed

New tools have helped the VA increase turnaround times for appraisals, long a sore spot for buyers, agents and lenders alike. The agency has also pushed to add more third-party appraisers to the fold.

“We’ve added technology to make the analysis of the appraisal quicker,” Frueh said. “We know something about almost every parcel of real estate anywhere in the country that a veteran wants to buy, which allows us to get a value from the appraisal much faster than we ever could before.”

Nationally, the VA says its appraisals are coming back in under 10 days on average, although it can take longer in more remote areas. That’s on par with the typical turnaround time of about a week for most home appraisals, according to National Mortgage News.

Eligibility Automation

Improvements in automation are also helping veterans and service members get critical paperwork faster. VA buyers need to obtain a Certificate of Eligibility to verify they can use this type of loan.

A decade ago, veterans and service members had to fill out and send away forms to their VA regional office. The process could take weeks. Today, nearly 90% of Certificate of Eligibility requests from veterans and lenders are fulfilled in seconds using an online portal, Frueh said.

Foreclosure Avoidance

The VA has also invested in technology and personnel to help keep more veterans in their homes. Frueh and his staff get monthly updates on each of the 2.3 million active home loans.

Foreclosure specialists then contact borrowers who get more than 60 days behind on their mortgage. They work with lenders and servicers on behalf of troubled homeowners to find alternatives to foreclosure, such as a loan modification or a repayment plan.

“I’ve had a lot of talk with other federal agencies about what we do, and they say, ‘That’s an outstanding model. We’d like to adopt it,’” Frueh said. “It’s really nice to be part of a federal program that’s actually been in front of the private sector.”

More on Mortgages & Homebuying:

Image: Fuse

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

  • Stephan Malick

    I became sick and fell behind on my VA mortgage and SBA disaster loan after Hurricanes Rita and Ike. Mortgage company would compromise but SBA virtually ignored VA. Lost my home in May 2015. VA is great, but ineffectual. I had a great rep with VA and my mortgage company at least worked with me. SBA on the other hand, I have very few nice things to say. It’s a shame when one governmental agency won’t work with another.

  • Mike Yanczysin

    Man, I guess my experience a couple of years ago was unusual. Forty days would have been great – my bank took six months to approve my loan. The loan officers dragged their feet on every issue from the biggest to the most trivial, and toward the end, lost interest and left it to me to get paperwork pushed through the bureaucratic maze. I couldn’t count the number of times a realtor, loan officer or other paper pusher told me the loan would never go through, but through perseverance, and occasional yelling, I finally got the thing approved.

    • http://www.credit.com/ Credit.com Credit Experts

      Good for you. Thanks for sharing.

  • Lonnie McKim

    It took 2 months to get an appraisals , we are still trying to get a VA loan.

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team