3 New Legislation (Pending) Increase “Cash-out” refinancing loans to conforming rate.No longer limited to $144,000Raise LTV from 90% to 100%Renewal of ARMs and HARMs until 2012
4 Veteran and Loan Profile Average Purchase Loan$199,000$6,000Median Assets92%No Down Payment$62,448 Median Income30% Active Duty70% Veteran88% Male12% FemaleMedianFICO Score 679FYTD thru June 30, 08Race:White – 73%Black – 17%Hispanic – 8% Asian/PI – 2%AI/AN – .6%68.1%National HomeownershipRate82%Veteran HomeownershipRate
5 Recent Loan Guaranty Workload Year # Loans $ AmountFY ,000 $63 BillionFY ,000 $44 BillionFY ,000 $24 BillionFY ,000 $25 BillionFY ,000 $25 BillionFY ,000 $36 BillionTotal ,446, $217 BillionFYTD thru July 2008Originations in July are up nearly 16% from previous month.Originations in July are up nearly 69% from July 2007.Since 1944, VA has guaranteed over 18.3M loans for over $959B
10 Market ShareData from Realtor.Org and Loan Gty Reports. Jun #s came out July 24. Per data Jun mortgages totaled 504,000, an increase of 4.3% from May. VA loans for Jun were approx 18,000, a 7.4% increase from the 16,782 in May.
11 Specially Adapted Housing Grants 1998-Present Program cumulative figures from 262 on Actual grant total cited as 34,610. Dollar value estimated (rather than run 42 separate TAS reports... Will do that at EOFY).FYTD figures: (thru June )1st use:422Subsequent use:304Since inception, the SAH program has made over 34,000 grants for approx. $668M
12 Defaults Pending 1997-Present FYTD 2008 data is thru EOM JulyDefault reporting changed to 61st day; used to be 105th day. Enables LGY to intervene at earlier date to help veterans avoid foreclosure.Some increase in Defaults figure is due to change in reporting criteria; some increase also due to market conditions.
13 Foreclosures7524 foreclosures FYTD 2008… flat line puts us at 9,029 foreclosuresJuly Foreclosures up approximately 17% from JuneJuly 2008 Foreclosures UP approximately 29% from July 2007FY figures for past years:12,586 9,528 8,113Flat-line projection puts EOFY figure at just over 9,000 foreclosures
15 Toll Free Number for Outreach: (877) 827-3702 The Subprime CrisisVA does not make subprime loans, and the average VA borrower does not have subprime creditVA Credit StandardsAvg. VA FICO score = 679Toll Free Number for Outreach:(877)Subprime Loan CharacteristicsVarious layers or risk;A-paper, Alt-A paper, Subprime-paperLiar Loans, No-doc loans, Teaser-rate ARMs, Balloon mortgagesSubprime Crisis for DummiesSurge in subprime originations (20% of all originations in 2006)Risky loans = high foreclosure ratesHigh foreclosure rates of the 2000-vintage loans led to lack of liquidity in secondary market; this has sparked tightening in credit availability across the industryCollateral Impact of Subprime CrisisIncrease in foreclosures = increased housing supplyConcurrently, credit has tightened as investors, fearing the quality of sub-prime loans, withdraw funds from the mortgage marketEven well qualified buyers experience difficulties in obtaining new mortgages.With supply now exceeding demand, prices have naturally declined.Current decline in home prices means that in many areas, borrowers in default now have less equity or no equity against which to borrow in order to cure the default. In many areas home equity values have declined so substantially that the option to cure the default is altogether eliminated.For many borrowers who are in default, and are not able to cure the default, there are now fewer options to sell their homes for enough to satisfy outstanding mortgage debt, in time to avoid foreclosure.The net result of this situation will be a rise in foreclosures, industry-wide.
16 This has created a unique opportunity for VA OpportunitiesWith the implosion of the subprime market, VA is one, if not the only, remaining no-down payment option in the marketRecent policy & legislation in response to the housing market crisis have benefited VA(HR 3221)This has created a unique opportunity for VAPublic Law aka THE Housing Bill was passed July 30th
17 Opportunities New Loan Amounts SAH-related provisions Limits range from floor of $417,000 (basic, standard areas) up to max of $729,750 (high cost areas)https://entp.hud.gov/idapp/html/hicostlook.cfm (change limit type to Fannie/Freddie)Exception: States of AK, HI, Guam & Virgin Islands still have higher loan limit rangesSAH-related provisionsIncreased PH and AH grants to $60,000 and $12,000Annual adjustments to SAH grants based on construction cost increasesTRA grants for active duty servicemembersSAH benefits for permanent and total service-connected disabilities resulting from severe burnsNew Effective Loan Limits...Vary based on geographic locale of the propertyAre based on median area home price for SF homesAllow for higher loan amounts in more expensive areas of the countryLimits range from floor of $417,000 (basic, standard areas) up to max of $729,750 (high cost areas)Exception: AK, HI, Guam & Virgin Islands still have higher loan limit rangesIn Alaska, Guam, Hawaii, and the U.S. Virgin Islands, the maximum guaranty amount is 25 percent of the greater of: (a) $625,500 or (b) 125 percent of the area median price for a single-family residence, up to $1,094,625.LGY still guarantees up to 25% of established limit for loans >$144,000
18 HR 3221 Maximum Loan Limit by County NC, GA, & TN
19 Where we are Today.. Find Home Go to Lender Determines eligibility electronically using WebLGY/Obtain COEFind HomeGo to LenderUses AUS to get decision in minutesOrders Appraisal thru TAS (7 workday timeliness)Self ExplanatoryLender Closes LoanObtains Loan Guaranty Electronically14-21 Days
20 99% of VA Loans are Automatics 1% are Priors98.8% are LAPP
21 VETERANS INFORMATION WEBSITES If you want to acquire more information and print VA forms, you can log onto one of these websites.Veterans Information Portal – this is here Lenders Access:Certificate of EligibilityThe Appraisal SystemEnter Loan informationPIN is last 4 digits of 10 digit VA ID numberHome office can review all branch officesBranch can only view that branch
25 Eligibility Pending Timeliness FYTD (through August 25, 2008) over 241,000 requests for a Certificate of Eligibility have been received by the Eligibility CenterOf these 85,000 were electronic applicationsWebLGY allows you to obtain the certificate more quickly and is ed to you when completed. No lost certificates!Currently the Eligibility Center is processing electronic applications three (3) days faster than mailed applications
26 Seller Concessions Limited to 4% of the appraised value Does not include normal costs such as: appraisal, credit report, title exam or title searches.May include VA funding fee, extra points or buy downs, prepaid items, buyer’s escrow accounts, payoff of buyer’s obligationsAdding to sales price then amending contract is not allowedThe VA funding fee can be paid by anyone!
27 Adjustable Rate Mortgages Authority through September 30, 2008Annual adjustments limited to 1%Interest rate increase capped at 5%Must be underwritten at 1% above initial rateVeterans Benefits Act of 2004Traditional ARM, similar to HUD’s
28 Did You Know ?There are now more contractors than military personnel in Iraq????That’s right….per the Government Business Magazine,there are 180,000 contractors& 156,247 military personnel in Iraq.
29 Occupancy and the Veteran See Chapter 3, section 5 of Lender’s HandbookGenerally, must occupy within 60 daysExceptions –IRRRLsActive Duty service person’s spouseSpecific future event and specific futuredate will make occupancy possibleIRRRL must certify previously occupiedIf by virtue of active duty military service, unable to occupy the property, the occupancy requirement is met if the house is occupied by the service person’s legal spouseOccupancy generally required within 60 daysExceptions and other details, Lender’s Handbook, Chapter 3, Section 5Spouse is of opposite sexes legallySC common-law marriage
30 Occupancy by SpouseVeteran’s spouse may occupy if veteran is on active duty or if veteran cannot occupy within a reasonable time due to distant employmentNo family member, other than the spouse, may satisfy the occupancy requirement
31 VA Disability IncomeVerification of VA Benefit Related Indebtedness – VA formdedicated fax # in Atlanta:If Veteran has a VA benefit-related indebtednessIf exempt from the Funding FeeDisability Compensation AmountReceipt of non service-connected pension (requires prior approval)Incompetent? (requires prior approval)Misnamed (CAIVRS checks for federal debt), we use it:Verifies VA incomeConfirms when loan must come in for Prior approval such as incompetent vet or vet in receipt of non-service connected pensionConfirms if vet exempt from FF because of disability (usually 10% min. rating)VB Act of 2004 in 12/04 made possible exemption for pre-discharge ratings
32 VA Resale Program Effective July 24, 2008, the sale of VA owned homes has been contracted to:Countrywide(Bank of America)
33 Contact InformationAtlanta RLCGeneral FaxWinston-Salem Eligibility Center option 1-1-2for portal assistanceThis is a little play on words;Contact & Information – information on how to contact us, but also, you can obtain information through these sites and at this phone numberThe Lender’s Handbook – Definitive source for information on VA loans
34 Questions?A handout with telephone numbers, fax numbers, addresses, and web site addresses is available.