When the new federal budget was recently passed by Congress, there was a provision pertaining to VA loans that could eventually make it easier for veterans and active duty military personnel to compete in the tight housing market.
Under the provision, the Secretary of Veterans Affairs (VA) is required to come up with some solutions to address the challenges that veterans are having in purchasing homes , especially in a very competitive housing market. The VA must present their proposed policy changes within a 90-day period from the time the budget was passed.
What Problems Are Veterans Reporting?
Many veterans report that their offers are being turned down time and again by sellers because the real estate agents involved just don’t want to deal with the hassles associated with VA loans or because they view other types of loans as being less risky.
According to one mortgage specialist quoted in Tacoma, Washington’s The News Tribune, “In multiple-offer situations in this housing market, listing agents prioritize most financing above VA loans.” She said that offers are preferred in this order: cash, conventional loans with large down payments, VA loans, and then last, federal loans.
The article said that selling agents, who may advise their sellers on which offers are strongest, may also mistakenly view buyers using VA loans as being less qualified because these loans require no down payments. The agents may also have had past issues with getting real estate appraisals for VA loans performed quickly which can cause closings to take longer.
What Do Appraisals Have to Do with It?
According to an article published in Realtor Magazine last year, there are not only appraiser shortages in general, but many appraisers are also reluctant to work with the VA because of the lower compensation and stricter guidelines. The VA sets limits on both how much an appraisal can cost as well as how long it can take to return the appraisal report.
The VA has since raised the limit on appraisal costs, which can vary by state. In Washington state, for example, the fee that can be charged for an appraisal for a VA loan has increased from $500 to $800. The VA also increased the amount of time for the appraisal to be delivered, from 10 days to 14 days.
But while these changes may make a small difference, the consensus in the nation’s capital seems to be that the VA can do more to change its policies to help veterans and military personnel better compete when they’re trying to buy homes, especially in this tight market.
Acuity Real Estate Solutions
Acuity National Real Estate Solutions is a national title agency offering cutting-edge tools to help lenders reduce costs, streamline closings and increase compliance. If you’re a lender who would like more information, please contact us today!