MBA Urges Clarity on VA Lending

The Mortgage Bankers Association, in testimony yesterday before a House Veterans Administration subcommittee, recommended VA take action to ensure clear, bright lines for lenders who engage in VA lending.

James Danis II, CMB, AMP, President of Residential Mortgage Corp., Fayetteville, N.C., told the House VA subcommittee on Economic Opportunity that VA should issue a final Qualified Mortgage rule that establishes clear, bright lines for VA lending.

“And once the final rule is issued, we hope they will permit an appropriate implementation period so that smaller lenders like our company have the time we need to test our systems and ensure we are in full compliance,” Danis said.

Danis also urged Congress to reauthorize the extended foreclosure protections afforded to active-duty military by the Servicemembers Civil Relief Act.

During the financial crisis, SCRA’s foreclosure moratorium for active-duty military was extended from three months to a year,” Danis said. “Unfortunately, that important consumer protection lapsed at the end of last year. In our view, it should be extended immediately and ultimately made permanent.”

Danis told subcommittee members that he has worked with the VA Home Loan Guaranty Program during his entire 23-year career. “The homes my parents purchased, and where my siblings and I were raised, were bought with VA loans,” he said. “In keeping with our family tradition of military service, I served my country and my first home was financed with a VA loan.”

Danis said nearly 70 percent of loans RMC issues are VA loans. “In North Carolina, with our large military population centered around Fort Bragg, loans guaranteed by VA are an important part of our market,” he said. “Our industry is united in the belief that VA remains an important and viable program for veterans and active duty military personnel.”

In the past fiscal year, more than 14,000 VA purchase loans originated in North Carolina, up 13 percent from 2014. “Providing 100 percent LTV loans is a tremendous benefit to our veterans who have dedicated their lives to serving our country, and is crucial in military communities,” he said. “But as credit markets have tightened and loan underwriting has become stricter, finding low down payment mortgages has become increasingly difficult.”

Danis noted despite most VA borrowers not having “skin in the game,” VA loans have continued to outperform their counterparts. “The VA portfolio has been able to sustain production and weather the turbulent market, largely due to its historically conservative underwriting standards, which includes a residual income test,” he said. “VA mortgages have always been fully documented and fully underwritten loans on owner-occupied properties. That’s why they continue to perform so well today.”