VA home loan program expands to help vets facing pandemic lockdown
At the Department of Veterans Affairs, one of its oldest and most successful programs is getting an update, due to the pandemic creating new stresses for those who use it. The VA Home Loan program has announced that it will expand its services to help homeowners facing foreclosure due to the pandemic, and also to help those looking to buy as many areas face limited housing stock. To learn more about this effort, Federal Drive with Tom Temin spoke with Jeffrey London, executive director of the VA Loan Guarantee Service.
Eric Blanc: At the Department of Veterans Affairs, one of its oldest and most successful programs is receiving an update due to the pandemic creating new stresses for those who use it. The VA Home Loan Program is announcing an expansion of its services to help homeowners facing foreclosure due to the pandemic, and also to help those looking to buy as many areas face limited housing stock. To learn more about this effort, I spoke with Jeffrey London, who is the Executive Director of the Loan Guarantee Service at the Department of Veterans Affairs.
Jeffrey London: So the VA home loan program has been around since the original GI Bill in 1944. So 77 years old, and still going strong. And one of the features of the VA home loan program is the no down payment option. It has been available since 1944. The good news, too, is that the VA has the lowest interest rates in the mortgage industry. So if a veteran or military qualifies for this program, this is the best deal, bar none. There is no private mortgage insurance, which can cost an additional $ 200 or $ 300 a month and has no real benefit for the veteran. And we also have low closing costs. And the good news is, it’s a lifetime benefit that can be used over and over again to buy homes or refinance an existing VA loan.
Eric Blanc: And so I understand that, as everyone is facing economic turmoil right now, there is an update that all of you are doing to this program. How did it happen? And what is it exactly?
Jeffrey London: Yes, so because of the pandemic, as you know, unfortunately many people have been affected whether or not they have lost their jobs or have had a reduced income. So one of the things Congress did was pass what’s called the Cares Act last year, which allowed borrowers facing financial hardship due to the pandemic to enter this that’s called a forbearance, which means they wouldn’t have to make their mortgage payments for up to 360 days, if they were actually affected. So what the VA did was review their program, we knew the veterans were going to be able to get back on their feet. So we wanted to ease the financial burden of having to repay those missed payments. So VA has established a program where, on behalf of the veteran, VA will reimburse these missed payments to the mortgage company at 0% interest. And it will become a second loan to the property and the veteran will not have to repay the VA until he has sold the house or refinanced that loan. So that’s a lot to help veterans get back on their feet.
Eric Blanc: Have you had the opportunity to speak to one of the benefactors themselves? And if so, what have you heard from them about this update?
Jeffrey London: Well, the good news is that it has certainly taken, as I said, some of the financial burden that these veterans and their families may be facing. But the good news is, we even have an additional program because this particular program that I referred to is for a veteran who can continue with the same mortgage payment he had before the abstention. loan. Unfortunately, there are veterans who can no longer pay their current mortgage. So, listening to veterans and mortgage industry stakeholders, we actually have another program where we can help veterans who need to lower their monthly mortgage payments, in addition to paying off missed payments. So now, on behalf of the veteran, VA will pay off the loan principal balance at 0% interest to help this veteran have a more affordable payment. So we’re looking for at least a 20% reduction in their monthly payment to help them navigate the murky waters they may have.
Eric Blanc: Get a little more information on mortgage loan guarantees for veterans. What, in particular, among veterans, makes them a little more vulnerable when there are economic events or things like that? Whether it’s the 2008 housing crisis, or what we’re going through right now,
Jeffrey London: The good news is that I think our veterans and military are extremely resilient. And I think that’s a testament to the service they’ve done to our nation. So you mentioned the mortgage crisis of 2008. In fact, VA loans have performed better than any other mortgage in the entire industry because vets are a good deal because it is never a deal. good business to bet against the veterans of our country. And so they are able to navigate the difficulties even better than some, but for those veterans who need help, VA has always been there. And since 2008, we’ve helped over 900,000 veterans avoid foreclosure when they were in financial trouble.
Eric Blanc: We speak with Jeffrey London. He is the Executive Director of the Loan Guarantee Service at the Department of Veterans Affairs. Can you tell me a bit about the financial stability of the VA home loan program itself? How is it going and is it sustainable at this point?
Jeffrey London: In fact, it is sustainable. VA has the lowest foreclosure inventory rate in the entire mortgage industry, we have the second lowest serious delinquency rate, and that’s for loans that are 90 days or more past due. The only loans that perform better than the VA are the blue chip loans where the borrowers have the best credit and have assets in the bank. So the veterans outperform their counterparts and the VA home loan program is actually extremely sustainable, where we operate and don’t lose money from a government perspective as the veterans, again, are a good one. bet.
Eric Blanc: Give me a little more of the story. It is one of the oldest programs that is still used so actively today. What does it look like today compared to its first implementation?
Jeffrey London: Sure. What’s interesting is that since 1944, VA has guaranteed over $ 27 million in loans for our country’s veterans and military personnel. And that’s totally over $ 3 trillion. So you might just think about the impact this has not only on veterans and their families, but also in helping to build communities across the country. And last year we had a record year where we guaranteed 1.2 million loans for $ 375 billion. This is more than double the previous record we had in 2017. And this year alone, we have already surpassed last year’s record where we guaranteed 1.3 million loans, and we still have a little more month, and we’re at the height of the home buying season. And we’re about to have a banner year for veterans using the benefit to purchase a loan. So it is an extremely popular program and it is becoming more and more popular because the secret is out. This is the best deal for veterans and military personnel, bar none.
Eric Blanc: It was therefore created in 1944. After World War II, of course, there was a sharp increase in the number of young men looking to buy a house. So far, are you still seeing those same peaks? Obviously, completely different situations? But things end in Afghanistan, Iraq? Do these events also affect and do you see spikes when people return home from deployments? Or is it just some kind of apple with oranges?
Jeffrey London: Well, one of the cool things about this particular benefit is that you don’t have to be a “veteran” to qualify for this program. If you are in uniform today, after 90 days of active service, you are in fact eligible for this program. So we see a lot of soldiers who are maybe on their second or third tour and they are starting families and they want to establish roots for their families. In fact, they are using this program while they are still serving in uniform. And as you mentioned, there are certainly people who leave the service every year, approximately 250,000 soldiers who leave the army. And so this advantage is there to wait for them. But the good news is, this is a lifetime benefit. So some transitional service members may want to focus on their education and use their GI Bill education benefits. But when they are ready to buy a home, the VA home loan program is there for them.
Eric Blanc: Yeah, please. I got you. Is there anything else we haven’t covered that you want to make sure people know?
Jeffrey London: Yes, one of the things I want to touch on – thanks for the question, Eric – is that there are a lot of myths about the VA home loan program. This is not your father’s VA, the VA home loan program has spent significant resources modernizing the program. VA loans close as fast as other loan products. And as I mentioned earlier, there is testimony to that and the cost to veterans. VA actually has the lowest interest rates in the entire mortgage industry. So don’t believe the myths that are circulating. Please check out the program if you are eligible, because when you compare it to other loan products, this is the best deal bar none. So don’t let anyone deny you your benefits if you qualify for this program.