Office of Rep. Derek Kilmer announcement.
Tacoma, WA – On Thursday, U.S. Representatives Derek Kilmer (WA-06) and Guy Reschenthaler (PA-14) led a bipartisan letter signed by more than 60 of their colleagues to the U.S. Department of Veterans Affairs (VA) Secretary Denis McDonough, urging the VA to improve its mortgage loan to make homeownership more attainable for America’s veterans. Specifically, the lawmakers asked the Secretary to explore how VA mortgage loans can compete in today’s marketplace and ensure veterans have negotiating power throughout the home buying process.
“If you serve this country, the federal government ought to have your back. That means that every veteran should receive the benefits that they have earned and deserve – including when it comes to housing,” said Rep. Kilmer. “I believe that every veteran should have a home, and it shouldn’t be under a freeway overpass. That’s why I’m helping to lead the bipartisan effort to make homeownership more attainable for our nation’s veterans and to improve the VA mortgage loan process. We’ve got to make progress to ensure that every veteran has a fair shot.”
“Our nation’s proud and deserving veterans are struggling to secure a home in today’s market using their VA mortgage benefits,” said. Rep. Reschenthaler. “As a Navy veteran, I believe the VA needs to examine its mortgage loan process and implement reforms necessary to ensure that veterans can compete and purchase a home in today’s highly competitive housing market.”
“Our nation’s veterans have provided an invaluable service to protect our freedoms and American way of life. It is only fitting we ensure they receive the benefits they deserve,” the lawmakers wrote. “We call on your department to improve the VA mortgage loan process and ask for a report on the steps the VA is taking to increase loan competitiveness. It is imperative veterans receive a competitive loan that provides them the opportunity to purchase a home.”
The full text of the letter can be read here and below.
Background:
According to the National Association of Realtors, the median home sale price is up 15% year-over-year, and inventory was down 0.3 months from February 2021. This marks 120 consecutive months of year-over-year increases, the longest-running streak on record.
The rise in cash and conventional loans with waived contingencies has decreased veterans’ ability to compete in the current housing market. VA borrowers are less successful than borrowers using conventional loan products, with 11% of VA borrowers changing loan products during their housing search, compared to only 1% of conventional borrowers who change financing methods.
The letter was also signed by: Reps. Brian Fitzpatrick (PA-01), Eric Swalwell (CA-15), Fred Keller (PA-12), Mike Kelly (PA-16), Vicky Hartzler (MO-04), Brian Mast (FL-18), Doug LaMalfa (CA-01), Juan Vargas (CA-51), Dina Titus (NV-01), Tom O’Halleran (AZ-01), Eleanor Holmes Norton (DC-AL), Rodney Davis (IL-13), Stephanie Bice (OK-05), Adriano Espaillat (NY-13), Yvette Herrell (NM-02), Mike Turner (OH-10), Raul Grijalva (AZ-03), Chris Pappas (NH-01), Jahana Hayes (CT-05), Mariannette Miller-Meeks, M.D. (IA-02), Dan Meuser (PA-09), Susie Lee (NV-03), Glenn “GT” Thompson (PA-15), Scott Franklin (FL-15), Ed Case (HI-01), Jay Obernolte (CA-08), Michael Waltz (FL-06), William Timmons (SC-04), Cathy McMorris Rodgers (WA-05), Fred Upton (MI-06), Jake Ellzey (TX-06), Tim Ryan (OH-13), Ben Cline (VA-06), Katie Porter (CA-45), Henry C. “Hank” Johnson, Jr. (GA-04), Adam Smith (WA-09), Elaine Luria (VA-02) Mario Díaz-Balart (FL-25), Gus M. Bilirakis (FL-12), Jaime Herrera Beutler (WA-03), Rashida Tlaib (MI-13), Cindy Axne (IA-03), David Kustoff (TN-08), Debbie Lesko (AZ-08), David G. Valadao (CA-21), Ted W. Lieu (CA-33), Sam Graves (MO-06), Peter Meijer (MI-03), Michael F.Q. San Nicolas (GU-AL), Ken Calvert (CA-42), Bill Johnson (OH-06), Tracey Mann (KS-01), Ralph Norman (SC-05), Angie Craig (MN-02), Suzan DelBene (WA-01), Carlos A. Gimenez (FL-26), Kim Schrier, M.D. (WA-08), Brad Sherman (CA-30), John Carter (TX-31), Richard Hudson (NC-08), Ed Perlmutter (CO-07), Elise M. Stefanik (NY-21), and Linda T. Sánchez (CA-38).
The Honorable Denis McDonough
Secretary
U.S. Department of Veterans Affairs
810 Vermont Avenue NW
Washington, DC 20420
Dear Secretary McDonough:
Thank you for your work to ensure the men and women who served our country receive the benefits they have rightfully earned. It is with those efforts in mind that we write to ask that your department work to make homeownership more attainable for our nation’s veterans. Specifically, we believe the Department of Veterans Affairs (VA) should explore how VA mortgage loans can compete in today’s marketplace and ensure veterans have negotiating power throughout the home buying process.
As you may know, buyers are facing an incredibly competitive housing market and have been for some time. According to the National Association of REALTORS®, February 2022 saw a median sales price of $357,300 and 1.7 months of inventory. The median sales price is up 15% year-over-year, and inventory was down 0.3 months from February 2021. This marks 120 consecutive months of year-over-year increases, the longest-running streak on record. Sellers have benefitted the most from this intense housing market, typically earning their full asking price[1].
Historically, VA mortgage loans were appealing and competitive to sellers. Unfortunately, the current housing market and the rise in cash and conventional loans with waived contingencies can leave veterans unable to compete with other buyers. VA borrowers are less successful than borrowers using conventional loan products, with 11% of VA borrowers changing loan products during their housing search, compared to only 1% of conventional borrowers who change financing methods.[2] This is particularly concerning given the alarming levels of veteran homelessness in our nation. In 2021, 19,750 veterans experienced homelessness[3].
Our nation’s veterans have provided an invaluable service to protect our freedoms and American way of life. It is only fitting we ensure they receive the benefits they deserve. We call on your department to improve the VA mortgage loan process and ask for a report on the steps the VA is taking to increase loan competitiveness. It is imperative veterans receive a competitive loan that provides them the opportunity to purchase a home. To gain a better understanding of the issue, we request answers to the following questions:
- How is the VA working to improve appraisal policy and procedure, such as minimum property requirements, to improve the ability of veterans to compete, while also maintaining appropriate levels of protection to the loan guaranty program and veteran home buyers?
- What level should the funding fee be set at to strictly cover the risk of default and the 25% guaranty payments in the home loan program?
- Does VA have the resources it needs to commission a study identifying what percentage of VA funding fee is currently dedicated to the home loan guarantee program, and what percentage is being diverted to other programming?
- How is the VA working to improve the public perception of the VA mortgage loan program?
- How can Congress assist the VA in its efforts to improve the competitiveness of the mortgage loan program?
We look forward to your response and to working with you to address this important issue for our veterans.
I bought my first house in 1989 as a newly-minted Army Sergeant (E5), using a VA loan.
Although I had to pay a couple of points, which were rolled into the loan, and an interest rate of 10.5%, I did not have to put any money down. That is what made the deal possible as I didn’t have much money to contribute beyond my Army paycheck.
It was an old house built in 1931, but it had good bones and was zoned commercial, so I could start a business on the side, earning extra income to meet my obligations.
I paid $55,000 for that house, and $20,000 for the lot next door on a personal contract with the heir of the estate.
I had to invest in several things that needed fixing, as one would expect in that price-point, even then.
After 11 years, I moved to a different house and my business to a different location as well.
I rented that old house to military friends over the years, who came and went through Fort Lewis.
Today I rent it to a disabled Marine and his family, for less than half of market rate – because I can.
I am humbled by the memory of that decision long ago, to become a property-owner and build equity in my future.
That decision forced me to do the hard right things, rather than piss my money away on frivolous things, as so many do.
Home ownership is more than a place to live – it is a mind-set.
I have many fond memories in that old house because it was earned and not taken for granted.
I support housing for veterans, especially those who are truly disabled from their service, as they have paid it forward.