Will VA loans stand the test of time?

 VA loans and their ability to survive new regulations

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 subprime and/or option ARM bandwagon, 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 subprime 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.

Let’s now fast forward to 2009 and the soon to be 2010. Option ARM loans are nonexistent, subprime 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 lawmakers 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


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 another 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.


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

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 bailout 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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