Deciphering the VA Lender’s Handbook Chapter 12 Part 1
Chapter 12 is all about the VA’s minimum property requirements. In this article, we’re going to be talking about the purpose of the MPRs, their scope, their variations, and their exemptions. All of this information will be very valuable to you as the borrower so you can look for a home that meets the MPRs, and if you want an exception to an MPR, you’ll know how to get one. The first thing we’re going to talk about is the definition of the MPRs and their purpose.
The VA’s minimum property requirements are general criteria that a home must fill in order to be eligible for the VA guaranty. From the Handbook: “VA Minimum Property Requirements (MPRs) provide general acceptability criteria for properties which will become the security for VA-guaranteed loans. The purpose of the MPRs is to provide a baseline of quality for homes that veterans are purchasing with their benefits. It is very important to the VA that the use of a veteran’s benefits does not result in the veteran being in a worse situation than he or she was before. The VA wants to make sure that a veteran is able to purchase a home that will suitably meet their needs at better terms than they could otherwise get. The MPRs are meant to determine that the home is safe, structurally sound, sanitary, and that it, “meets the standards considered acceptable in a permanent home in its locality.”
The scope of the MPRs discussed in this chapter usually includes existing construction and proposed construction. There are some MPRs that only apply to proposed construction, but those will be clearly defined. Also, there are additional MPRs that apply to homes in the Specially Adapted Housing Program. We’ll talk about all of the specific requirements in the MPRs in future articles, including the SAH MPRs. Any type of home you are able to purchase with a VA loan will be subject to the MPRs, so as far as scope goes, the MPRs cover every VA loan purchase.
There are some variations in the VA MPRs, however, that are usually based on geographic location. There are some cases where the VA has agreed to modify the MPRs due to certain conditions that affect all the properties in a certain geographic area, or even just on the site itself. These variations are usually in place where compliance with the normal MPR would either be impractical or impossible, and the adjustment of the MPR does not affect the livability, safety, or stability of the home. We’ll talk more about specific variation in a future article on this chapter. Different from variations are exemptions from an MPR.
Exemptions are done on a case-by-case basis, where variations are usually pre-established for a certain area or situation. Exemptions need to be specifically requested by the veteran and lender in order to be evaluated, and must meet certain conditions. The decision is made by the VA field ofice and can be made if the following four conditions are all met:
- a veteran is under contract to purchase the property, and
- the veteran and lender request the exemption in writing, and
- the property is habitable from the standpoint of safety, structural soundness and sanitation, and
- the VA is satisfied that the nonconformity has been fully taken into account by way of depreciation in the VA valuation.
As the fourth bullet touches on, an exemption from a VA MPR is likely to have a negative effect on the valuation of the property. This is one of the main reasons you don’t want to request for exemptions for every little thing, the other one being that there has to be solid reasoning that the home is still safe, secure, and sanitary even without compliance to the MPR in question.
Starting in the next article, we’re going to go over all of the MPRs for different types of construction. The article titles will accurately represent what each article covers, and you can take a look at whichever article(s) apply to the type of home you are looking to purchase. There are a few obvious reasons why you would want to be aware of the MPRs, and a few less obvious ones.
- You need to be able to pick a home that is going to fulfill the MPRs
- You need to be able to read and understand the appraisal in case there is legitimate reason to challenge it
- You may be able to talk the seller into making repairs on the home because you can throw the book at him/her.
- You’ll increase your overall understanding and knowledge of what makes a home a good buy, even if you don’t use your VA loan benefits in the future.