Deciphering the VA Lender’s Handbook Chapter 17 Part 9
Much like when the VA imposes sanctions on a program participant for unfair or unethical marketing practices or contracts, sanctions can also be imposed on any VA loan program participants who do not comply with all of the laws that relate to housing. These laws include the Equal Credit Opportunity Act, the Fair Housing Act, section 527 of the National Housing Act, and VA Regulations at 38 CFR 36.4363. We’ll talk about what these laws mean to the VA loan program, and how the VA keeps track and makes sure that program participants stay compliant with all of these laws. We’ll also touch on how these regulations affect you as a borrower.
The VA does not tolerate discrimination when it comes to building, selling, or approving a loan for a home under their program. The VA reserves the right to impose sanctions on any program participant who declines to build, sell, or approve a home because of the veteran’s race, color, sex, handicap, familial status, religion, or national origin. This requirement is over any party involved or financially interested in the construction or sale of a property and is certainly not specific to the VA; discrimination of this kind is illegal no matter what type of loan you are getting. However, those operating under the VA loan program have an extra layer of accountability, and therefore an extra layer of penalties if they are found to be violating these laws.
The VA keeps track of program participants by requiring an Equal Housing Certification from any party that request an appraisal for a house that has not been previously occupied. Sellers of homes that have been previously occupied are usually either individuals who are not heavily monitored on this issue or a corporation who is accountable via other means. Lenders are not required to submit a special Equal Housing Certification because they already certify that they are complying with all of the VA’s rules and regulations when they submit the Lender’s Certification with each and every VA loan submission they make to the VA. So, this Equal Housing Certification is required primarily of builders and other parties that are selling brand-new houses that have never been lived in. The certification states that the builder or other party will not discriminate against potential buyers based on race, color, religion, sex, or national origin.
But what about you as the borrower? Here’s an interesting fact: you have to certify that you’re not going to discriminate, too. You also have to make an Equal Housing Certification that states that if and when you sell the home sometime in the future, you will also not decline a prospective purchase based on any of the factors mentioned above. This certification is on VA Form 26-1820, if you’re interested in reading more about it. Ironically, while sellers and builders face severe penalties if they discriminate against potential buyers, buyers are perfectly allowed to discriminate however they wish against potential sellers; nothing stops a prospective customer from choosing not to buy a house because of the previous owners’ skin color. So in other words, discriminate all you want when you’re buying, but know that you won’t be able to discriminate when it’s your turn to sell.
This concludes our articles on Chapter 17 of the VA Lender’s Handbook. This chapter covered all of the VA’s possible sanctions against program participants and their causes. It also covered the , and talked about how you as the borrower might be affected if one of the program participants you are working with has sanctions imposed on them. If you want to be confident in knowing that your lender and all program participants your lender works with are reputable and trustworthy participants, then work with us here at LowVARates to get your VA loan or refinance done. You can contact us over the phone or through our website, and we’ll be happy to answer any questions about the VA loan program you may have. Also, feel free to go back and read the rest of the articles on Chapter 17, or articles about earlier chapters in the VA Lender’s Handbook.