America’s Credit Unions and other organizations wrote the Department of Veterans Affairs (VA) to urge it to align its VA Home Loan Guaranty Program minimum property requirements (MPRs) with the property condition standards of Fannie Mae and Freddie Mac (GSEs). The letter comes in response to the VA’s advance notice of proposed rulemaking to gather information regarding its MPRs.
“We have observed over the years, based on the experience of many stakeholders across the housing finance system, that the VA MPRs are of the most significant impediments to the utilization of VA financing by prospective homebuyers,” the groups wrote. “The standards impose an additional set of requirements that do not reduce the lenders’ collateral risk or in most cases improve the overall soundness of the property. Instead, the MPRs delay and prevent consummation of sales transactions, making purchase offers based on VA financing less desirable than offers that rely on conventional mortgage loans.”
They noted the requirements and burdens can make other home financing options seem more attractive. However, if the VA aligned its MPR requirements with conventional financing, such as the GSEs’ policy, the VA could better fulfill “its mission of serving those who have honorably served us.”