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Posts Tagged ‘va benefits’

History of the VA Loan

Tuesday, August 3rd, 2010

A VA loan is a mortgage loan that is guaranteed by the US Departments of Veterans Affairs. The VA loan program assists Veterans who have served in the armed services become homeowners. The basic intention of the VA direct home loan program is to supply home financing to eligible veterans in areas where private financing is not generally available and to help veterans purchase properties with no down payment.

The Current VA loan mortgage is a byproduct of the Servicemen’s Readjustment Act, more commonly called the GI Bill of Rights, which was passed by Congress in 1944. Harry W. Colmery, a World War I Veteran, wrote the first draft of the G.I. Bill. The G.I. Bill provided college or vocational education for returning World War II veterans, one year compensation for out of work veterans and also provided different loan types to Veterans to buy homes or start business. The G.I. bill provided low interest, zero down payment home loans for serviceman. The G.I. bill was created to prevent a repetition of the Bonus March of 1932, in which World War I Veterans marched on Washington DC demanding payments of their World War I bonuses. The Bonus March was dispersed by the army and the Veterans were not paid.

The G.I. Bill is considered one o the most significant pieces of legislation ever passed by the U.S. Congress. The education benefits opened College education to the masses, in 1947, veterans made up almost half of the nation’s college students. It allowed millions of families to purchase their first homes and moved many families out of urban apartments and into suburban homes and resulted in the suburbanization of the American in the 1950’s and the postwar baby boom. Prior to the war suburbs tended to be the homes of the wealthy and upper class. The G.I. bill effectively created the American middle class that we know today.

The Success of the 1944 G.I. bill prompted the government to offer similar measures to later generation of Veterans. The Veterans Adjustment Act of 1952 offered veterans of the Korean Conflict that served for more than 90 days, similar benefits that were offered through the G.I. Bill. These bills eventually lead to the Veterans Readjustment Benefits Act of 1966. Whereas the G.I. Bill of 1944 and 1952 compensated veterans of wartime service, the new bill extended benefits to Veterans who served in war and peace.

Further acts were passed in Congress in following years. The Veterans Housing Act of 1970 removed all termination dates for applying for VA housing loan and also provided VA loans for mobile homes. The Veterans Housing Benefits Improvement Act of 1978 expanded and increased previous benefits given to Veterans. In 1992, the VA loan guarantee program was enlarged to include Reservists and National Guard personnel who served honorably for at least six years. In association with the VA’s program, the Servicemembers’ Civil Relief Act protects service members from financial woes on their home loan that may occur as a result of active duty commitments, freezing their interest rates at 6%. These acts have allowed Veterans through the years to buy homes when the might not have been able to on their own.

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Posted in Uncategorized, VA Interests, VA Loan, Veteran Service | No Comments »

Leave no Man Behind

Monday, April 12th, 2010

These immortal words have become part of the American lexicon. Though the phrase has become synonymous with the US Armed forces, there is some debate as to the origin of its use. The film “Black Hawk Down” lays claim to these words as the motto of Delta Force, the legendary (and still officially unrecognized) special forces unit, a claim supported by Chuck Norris, starring as a Delta Force operative in the eponymous 80’s action flick. Despite this, a simple Google search of the phrase reveals that many contest this fact, including but not limited to Marine Reservists serving in Iraq, Army Rangers, and even armchair historians who claim that the earliest derivation of phrase was coined by none other than Alexander the Great. Whatever the source, the message seems to resonate most with those who have served in combat. With reverent stoicism, it is a pledge of allegiance to the fraternity of soldier hood. Their fears are less tied to notions of self preservation than how they cherish the lives of their friends, for some the last family they will ever know, and thus the truest reminder of home. They are not motivated by the protection the unit offers, as much as they are compelled by the nobility of their membership to it. Theirs is a nobility born amid chaos, when the trappings of their normal lives erode, and their consciousness distills into a clear purpose. They serve our country, they serve our values, but most of all, they serve one another.

These tough economic times have made the line between soldier and civilian blurry at best, particularly when one thinks of “leaving no man behind”. Don’t our veterans deserve better than this? What about the veteran borrower returning home after his second tour in Afghanistan, only to find that the home he bought in Detroit for 80k is now worth less than $15k and the manufacturing job he was counting on died with the rest of the city’s work infrastructure. As he falls behind on his payments, how can he not feel even just a bit slighted by the system?

The intent of this post is to offer a hand out to government loan borrowers wishing for assistance on their va loans. Though there are many options available, few are being utilized effectively. Even if you are only using this post as a means to expand and clarify your options please feel free to contact James at any time and I’d be happy to answer them.

I. COMMON ALTERNATIVE OPTIONS TO FORECLOSURE THAT WORK

“An ounce of prevention is worth a pound of care.” Benjamin Franklin

Before exploring any foreclosure option, I would recommend checking out the free credit repair for veterans. This is an internal division that provides basic credit management education, and assists borrowers with disputing and updating their reports to the greatest point of accuracy. It is said that 70% of all credit reports have errors on them and an astonishing 1 in 4 have errors on them serious enough to prevent someone from getting the credit they are rightfully entitled to.

II. COMMON ALTERNATIVE OPTIONS TO FORECLOSURE THAT WORK

If you wish to stay in your home but have fallen behind on your VA mortgage payments there may be a way to save you from foreclosure. Contrary to popular belief, most lenders don’t want to have to resort to a costly and time intensive foreclosure process, particularly in a housing market such as this one. The following alternatives have been recommended from the VA Borrower Delinquency Page

A. Repayment Plan – The borrower makes regular installment each month plus part of the missed installments.

B. Special Forbearance – The servicer agrees not to initiate foreclosure to allow time for borrowers to repay the missed installments. An example of when this would be likely is when a borrower is waiting for a tax refund.

C. Loan Modification - Provides the borrower a fresh start by adding the delinquency to the loan balance and establishing a new payment schedule.

D. Additional time to arrange a private sale – The servicer agrees to delay foreclosure to allow a sale to close if the loan will be paid off.

E. Short Sale – When the servicer agrees to allow a borrower to sell his/her home for a lesser amount than what is currently required to payoff the loan.

F. Deed-in-Lieu of Foreclosure – The borrower voluntarily agrees to deed the property to the servicer instead of going through a lengthy foreclosure process.

III. Non-VA SPECIFIC ALTERNATIVES TO FORECLOSURE

A. Service Members Civil Relief Act (SCRA SCRA may provide a lower interest rate for up to one year, and provide forbearance, or prevent foreclosure or eviction up to nine months from period of military service. In order to qualify for certain protections available under the Act, his or her obligation must have originated prior to the current period of active military service.

B. If VA is not able to help a veteran borrower retain his/her home (whether a VA-guaranteed loan or not), the HOPE NOW Alliance may be of assistance. HOPE NOW is a joint alliance consisting of servicers, counselors, and investors whose main goal is to assist distressed borrowers retain their homes and avoid foreclosure. They have expertise in financial counseling, as well as programs that take advantage of relief measures that VA cannot. HOPE Now provides outreach, counseling and assistance to homeowners who have the willingness and ability to keep their homes but are facing financial difficulty as a result of the crisis in the mortgage market. The HOPE NOW Alliance can be reached at (888) 995-HOPE (4673), or by visiting www.hopenow.com.

IV. DIRECT ASSISTANCE with non- VA Guaranteed Home Loan Veteran’s Affairs

A. For a veteran or service member who may have obtained a conventional or sub-prime loan, VA has a network of eight Regional Loan Centers and two special servicing centers that can offer advice and guidance. Borrowers may visit VA’s Loan Guaranty website at www.homeloans.va.gov or call toll free (877) 827-3702 to speak with a VA Loan Technician. However, unlike the case of a veteran or service member with a VA-guaranteed home loan, VA does not have the legal authority or standing to intervene on the borrower’s behalf. Therefore, it is imperative that a borrower contacts his/her servicer as quickly as possible.

B. VA Refinancing of a non-VA Guaranteed Home Loan

C. Veterans with conventional home loans now have new options for refinancing to a VA-guaranteed home loan. These new options are available as a result of the Veterans’ Benefits Improvement Act of 2008, which the President signed into law on October 10, 2008. Veterans who wish to refinance their subprime or conventional mortgage may now do so for up to 100 percent of the value of the property, which is up from the previous limit of 90 percent.

D. Additionally, Congress raised VA’s maximum loan amount for these types of refinancing loans to $729,750 depending on where the property is located (this limit is significantly higher in Guam, Alaska, and Hawaii). These changes will allow more qualified veterans to refinance through VA, allowing for savings on interest costs and avoiding foreclosure. A VA refinancing loan may help a veteran who is facing a big payment increase.

V. DIRECT ASSISTANCE on VA Guaranteed Home Loan Veteran’s Affairs

C. When a VA-guaranteed home loan becomes delinquent, VA provides supplemental servicing assistance to help cure the default. The servicer has the primary responsibility of servicing the loan to resolve the default. However, in cases where the servicer is unable to help the veteran borrower, Loan Guaranty has Loan Technicians in eight Regional Loan Centers and two special servicing centers who take an active role in interceding with the servicer to explore all options to avoid foreclosure. Veterans with VA-guaranteed home loans can call (877) 827-3702 to reach the nearest Loan Guaranty office where loan specialists are prepared to discuss potential ways to help save the loan.

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Banks usurping VA authority BAD for Vets

Wednesday, October 28th, 2009

Over the past few months, as the credit crunch has deepened, lenders have become increasingly strict with VA home loans. Instead of sticking to the VA guidelines, lenders are now implementing their own policies. Gone are the days when no credit is needed. gone are the days when an appraisal is not necessary for a VA streamline. Gone are the days when service to our country is the major prerequisite for a VA loan.

Now, to make matters worse lenders are pulling the rug out form under the nations veterans. Recently, AME Financial Corp decided that not funding loans already closed by veterans was in their best interest. Yes, that is correct. Loans that have CLOSED but not FUNDED will not be funded by AME. This means that Vets are left in a lurch on their VA loans. The locks that were guaranteed, are no longer valid. All time low rates are lost due to ineptitude on the part of the lender. A press release can be found here.

What does this mean for the everyday veteran?

It means that taking advantage of all time low rates just got that much more difficult. Sadly this sort of behavior is not uncommon of banks that are ready to implode. ml-implode.com tallies a running list of failed banks, and do not be surprised when AME becomes the next.

What you can do.

Start the process now to take advantage of historically low rates. We may never again see fixed rates below 5%. Take advantage before further tightening occurs. Contact your LowVARates.com preferred lender, Flagship Financial Group, as soon as possible to get started. The Streamline loan process takes about 5 weeks start to finish and can save you hundreds each month. And with the holidays upcoming you can forgo 1-2 mortgage payments with no penalty.

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Posted in Loan Processing, VA Loan, VA Refinance, VA Streamline Refinance, underwriting | No Comments »

Will VA loans stand the test of time? VA loans and their ability to survive new regulations.

Wednesday, September 30th, 2009

If you would have asked me a year ago if VA loans would see massive amounts of overhaul and guideline changes, I would have laughed at you and said “NO WAY”! You see I have been in the mortgage industry since 1997; I have been doing VA mortgage loans the entire time also. As the housing market heated up and everyone was jumping on the sub prime and/or option arm band wagon, I stood my ground and built my business around good old fashioned VA home loans. It was a regular occurrence in my office to have representatives from banks, mortgage lenders, and all types coming into our office to try to convince me and my loan officers to start “pitching” or “selling” these unique new and “profitable” loans. I never once swayed. A good friend of mine named Garret had stopped doing VA loans and began building a very successful mortgage operation around the option arm loan. We had many opportunities to change our model from VA loans to something else, and frankly I may have made a lot more money in the short term. I however, was not purely motivated by money like many that were doing loans at that time. Was an option arm or a sub prime loan good for the homeowner? Those loans kind of came out of nowhere and what would happen if they disappeared one day? When I looked at VA loans I realized they were cut and dry, black and white and had stood the test of time and it didn’t matter if you were talking about a Georgia VA loan, North Carolina VA loan, or any other kind of VA loan. I enjoyed serving American soldiers both active and retired and had confidence in knowing I was offering these people a solid loan that I could count on never going away or changing.

Lets now fast forward to 2009 and the soon to be 2010. Option arm loans are non existent, sub prime loans are shunned and gone.  VA loans are more popular than ever and are being utilized like never before.  Do you think my ideas and thoughts on VA loans have been unscathed or unchanged in light of the mortgage meltdown or real estate implosion? They have changed quite a bit! I still think the VA loan is the best loan by a long shot. If you are an eligible veteran, then you should always use your VA entitlement and get a home with the help of a VA loan. However, I sometimes feel at this point that the never changing, black and white, old fashioned VA loan will change and could essentially fall from grace if the big wig government law makers keep trying to get involved in mortgage regulations.

Here is a short list of POSITIVE attributes of the VA loan program as it was/is and a list of what possible changes may be coming/already have come

Positive Attributes of the VA Loan Program

Current Status

Comments

100% no money down purchase option

Still available

FHA canceled the no money down option and some think VA may follow suit.  Let’s hope not.

No minimum fico score required

all major banks and lenders require a 620 score.  VA does not take a stance but is allowing banks to add this requirement.

We feel this is a HUGE slap in a veteran’s face.  Suppose the VET got hurt in battle and has medical expenses that are hurting his/credit but all other accounts are to date and clean.  In the past banks took that into account and now they don’t.

Streamline refinancing with no appraisal or employment verification.

Most banks or lenders want an appraisal or other form of verification of property value.  Wells Fargo is a big proponent of this dumb rule.

You cannot name a single city in out country where the home has NOT lost value.  Why allow a veteran to buy a home with no money down, then force them into a high rate during low rate periods, by telling them, “sorry your home is not worth what it used to be!”  Give me a break.

1-2 30 day late payments are okay on your mortgage if you want to refinance.

NON EXISTENT.

Why are we seeing all this talk about bail out the home owner and make housing more affordable, yet America’s veterans can not get a break?  In the past banks were ok with a late or two if the veteran was current at the time of refinance.

NO employment verification on VA streamline refinance.

almost non existent, banks and lenders are all verifying employment.

On a streamline as long as the veteran is making payments on time they should be allowed to refi to a lower rate.  Un employment is at an all time high and we need to help those that are still making payments and trying to keep their houses.

So veterans if you are reading this, please don’t be bummed out but please be alarmed.  Your hard-earned VA benefits are being jeopardized by people in Washington and Big Banks that took bail out money.  I will fight this fight along with many others to protect your hard-earned benefits and I will keep doing loans for Veterans as long as the market allows and tells us loan officers that Veterans deserve special treatment!

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