Are VA Loans Getting A Fair And Just Place In Homebuying Transactions?

I pretty much chalk this post up to ignorance. Not bad ignorance – just the kind of ignorance that stems from some real estate agents not knowing all that they need to know to properly serve their Military/Veteran clients. Clients here are either buyers who want to use their VA loan eligibility to purchase a home or to sellers who unknowlingly get steered away from dealing with a VA loan eligible buyer.
In Redfin, an online real estate brokerage serving a handful of states, I was reading a question from a visitor to their site that was asking the question: "Why does a VA loan not get treated equally as a cash, or large down conventional loan?" and I thought to myself – now that is a really good question. And I thought to myself, I got some really good answers.
First and foremost – not all loan officers do VA loans. VA loans do take a little extra work on the part of the loan processor and the loan officer to make sure that the Vet really does qualify. The VA loan is the only loan that actually figures in housing expenses based on family size in a way that limits the loan amount that a Vet can qualify for.
Huh, a loan program that actually considers living expenses versus all the other loan programs that only consider institutional debt like credit cards and car loan payments…sounds like a pretty good idea to me. It also sounds like a requirement that other loan backers like Fannie Mae, Freddie Mac and FHA should consider adopting.
Second – with not all loan officers doing VA loans, not many mortgage personnel and real estate agents are trained in what it really takes to get a VA loan approved. For example, one of the respondents in the Redfin article that I was reading was pointing to the idea that VA appraisals and the VA appraisal process are more arduous and difficult than other loan program appraisal processes.
Okay, I throw the penalty flag on this assessment. Untrained mortgage and real estate folks are still operating from age old information about the VA loan appraisal process while ignoring the newer Fannie Mae and Freddie Mac appraisal ordering processes that have been in place since somewhere around May 2009 (See HVCC FAQ’s).
Back in 2009, dramatic changes were made in how appraisals for Fannie Mae and Freddie Mac appraisals are ordered. This change has brought the Fannie Mae and Freddie Mac appraisal process much closer in "effect" to that of the VA loan appraisal process than ever before.
However, is this really being considered given we still get contributor comments like I found on the Redfin website alluding to the differences between the VA loan appraisal process and the conventional loan appraisal process as a valid reason for why VA loans get a bad rap? Sure there are differences, but they ain’t like they used to be.
Further, talk to any loan officer or even any real estate agent and they may mention the fact that in general most deals in today’s current real estate market in 2010 are falling apart in many cases because of the appraisals and appraisal process. I don’t think this has to do with VA loans.
I’ll stop here with why VA loans and the VA loan appraisal process get a bad and unjust rap as I don’t want to upset the apple cart any more than I already have. I only hope that as we move forward I hear less and less grapevine conversations suggesting that VA loans are harder and more arduous and hear more and more that VA loan eligible home buyers are actually getting the opportunity to purchase more and more homes using the VA loan program. We’ll have to just sit back and see what happens.