I just read the most disturbing post this morning from John Burns Real Estate Consulting (read full article here, http://ow.ly/8rbSA) about a newly trending problem with builders shying away from VA loans primarily due to VA appraisers and the new stance and rules & regs they have recently implemented.
This “stance” while under the guise of “protecting the VA and the Veteran” is really hurting the Veteran, the housing market and the general economy.
I recently encountered just what Jody Kahn, the author of this article, has written about. I had a veteran who had diligently served his country for over 10 years decide last year to purchase a bigger home for his growing family. He & his wife work hard to provide the American Dream to their two boys. We go on the house search and they find a beautiful short sale home in the area. The house had just come on the market and by my market analysis (side note – I’m a pretty conservative analyst when working with home buyers) this was a good opportunity. They were in a competing offer situation with this house that had only been on the market for 2 days. They won the bid and then spent 5+ months working their way through the arduous short sale process. We finally get lenders approval and are told we need to jump to and have this home closed in 30 days or less. Their lender who is one of the best lenders I have ever worked with hammers down and gets to work to make it happen. Buyers, sellers, listing broker and myself all do the same. We hit every deadline days before it was actually due.
Then comes the appraisal…. The VA appraiser completely disregarded the deadline assigned to him. After repeated attempts to contact him and request an update we encounter an extremely standoffish appraiser who curtly informs us that he doesn’t work for us. His mandate is to protect the VA and the Veteran at all costs. So he proceeds to take another 10-12 days beyond his deadline to complete his appraisal. Well, guess what. His appraisal comes in $12,000 under the contracted and lender approved price. When we question him about this he refuses to justify or explain his rationale for how he derived this value. He also refused to have a rational conversation about the value and informed us he would not reevaluate the appraisal. This caused quite a quandary for us and we had to jump through several more hoops in order to get this through the short sale process and closed. At the end of the day and not withstanding the best attempts of the VA appraiser to “protect and serve…” we were able to close on this home and now have a very satisfied veteran homeowner. He did say that if he had to do it all again and knowing what he knows now about the VA lending process, he would probably forgo this “benefit” and pay a little more in a conventional loan just for the ease of the process.
As a veteran myself I this bothers me on so many levels. First and foremost, our veterans deserve better than that. They served honorably and are repeatedly sold that a VA home loan is a real benefit. Really?
Secondly, what’s with this protectionism stance of late? Does the VA not trust the Veteran to make a sound financial decision? Sure, they can ship you off to battle to make life or death decisions or operate million dollar pieces of equipment, but please once you step away from that we’re not so sure we can trust you to work hard and pay your bills.
Thirdly, as a government entity that relies on a robust economy and who says everyday that a healthy housing market is one of the keys to digging ourselves out of the Great Recession, why are you trying so hard to continue to keep it down?
I could go on and on but I will step off my soapbox for today and just say this. Our Veterans need and deserve homes too!
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