American Legion Director of Veterans Employment and Education Joseph Sharpe testified Dec. 8 before the House Veterans Committee’s Economic Opportunities subcommittee on the barriers veterans face. are facing on the way to homeownership.
Since the Department of Veterans Affairs (VA) home loan program was created as part of the original GI Bill in 1944, VA has guaranteed more than $ 26 million in veterans home loans over the past 77 years. Seen as a path to homeownership for middle-class Americans, the VA Home Loan program is not without its hurdles. Home loan buyers in VA have found it difficult to compete with conventional loan home buyers due to biases, restrictions and inflexibilities.
The surge in home buyers in 2020 has resulted in a 20% price hike. This, coupled with a limited supply of properties, has prevented many potential buyers from using the VA home loan to acquire a home. With an increase in the number of sellers receiving cash offers, VA homebuyers were often seen as the last ones.
“According to a 2021 survey by the National Association of Realtors, 89% of sellers were likely to accept an offer from a buyer with a conventional loan, and only 30% were likely to accept an offer from a buyer using a VA loan. Sharpe told lawmakers. According to the same survey, 59% of sellers’ real estate agents said that more stringent home inspection requirements reduced the attractiveness of buyers using the VA home loan, and 38% of sellers surveyed were concerned about the low values of evaluation and long closing times. “
The bias against potential buyers using a VA home loan is visible in the current market data. VA home loans fell 1.2% despite an expanding real estate market. These problems can be alleviated by certain actions by Congress and the VA, Sharpe told lawmakers.
“Congress and the VA should consider adding flexibilities to the VA home loan for extremely competitive markets,” he said. “Lender’s staff appraisers should be able to issue waiver of value notices up to 5% above or below the appraiser’s estimate of the fee, provided that the adjustment is justified by the real estate market. “
This would prevent veterans from having to pay the difference when a valuation does not match the reality of the current market.
Another solution, Sharpe said, is to increase support for VA-approved assessors and equip them with accessible information and education. Standardizing fees and expectations for assessment fee schedules would allow VA to build confidence in VA assessment assignments.
“Our service members, veterans and their families shouldn’t have to worry about finding suitable accommodation, whether they are moving duty stations, leaving the military or just buying a new home,” Sharpe concluded.
Watch the full audience here.