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NAR Talking Points ~ DVA Home Loan Guaranty Program
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The home loan
guaranty program administered by the U.S. Department of Veterans
Affairs(DVA) is, unquestionably, a vital homeownership tool. It provides
veterans a centralized, affordable, accessible method of purchasing
homes in return for their service to our nation. The NATIONAL
ASSOCIATION OF REALTORS® believes the DVA home financing
component is an entitlement that should be administered under the
auspices of VA to provide veterans with a single point-of-contact to
meet full benefit needs. Since its establishment as a veteran's entitlement in 1944, the VA home loan guaranty program has helped more than 15 million veterans to purchase and maintain homes. The program's no-down payment feature is a primary reason for its success. This feature enables users to obtain mortgages up to $203,000 without making a down payment. VA has changed the loan guaranty program over the years to keep pace with marketplace changes. For example, VA recently deregulated the interest rate charged for mortgages it guarantees. Prior to deregulation, VA capped the interest rates that could be charged in the program. But, when the VA-approved rate lapsed below the market rate charged for other types of mortgages, lenders often needed to charge loan discount points to make VA mortgages attractive to investors. Because veterans were prohibited from paying points, sellers were forced either to pay the extra costs or to disregard offers involving VA financing. The change to a negotiated rate helped make the program more attractive. Currently, the home loan program is open to people who have served in the nation's reserve forces or the National Guard, and who have been honorably discharged. However, the program is open to reservists only through September 2003. NAR supports making reservists' eligibility a permanent feature of the program because their participation has helped to reinvigorate the program. At the conclusion of a three-year VA demonstration program in 1995, VA's authority to guarantee ARM loans was not renewed by Congress. NAR supports reviving the ARM option to better meet the borrowing needs of veterans. Modifying the fee panel appraisal system would expedite the appraisal process for transactions involving VA financing. Current law requires that appraisers be assigned fromVA's list of appraisers on a rotational basis. NAR believes the panel should be expanded to address imbalances in different regions of the country. NAR supports the elimination of all funding fees for veteran and reservist homebuyers and of the prohibition on buyer representative fees. Currently, veterans and reservists pay a sliding-scale fee based on the down payment amount. Additionally, VA policy prohibits veteran-purchasers from paying a brokerage commission or other fee. NAR believes the VA fee system should be deregulated to limit the amount of cash necessary at closing and to provide veteran-purchasers freedom of choice in buyer-broker situations. Reproduced from www.realtor.org "For The Record": Spring/Summer 1999 - Talking Points for Association Executives Record": Spring/Summer 1999 - Talking Points for Association Executives |
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