VA Home Loan Guarantee Program Faces Appraisal Problems

The National Association of Realtors (NAR) and other industry leaders testified before Congress this week to discuss the Veterans Affairs (VA) Home Loan Guarantee Program.

“America’s veterans have been well-served for years by VA’s appraisal system, and professionals in the business should be proud of their good work,” said Michelle Bradley, a general real property appraiser from Pennsylvania and Immediate Past Chair of NAR’s Real Property Valuation Committee. “Unfortunately, that system is under tremendous pressure today.”

The main complaint raised is that regulation has gotten in the way of maintaining the VA Home Loan Guarantee Program. NAR’s 2016 Veterans and Active Military Home Buyers and Sellers Profile found that 18 percent of all recent homebuyers were veterans, and over half of those veterans used a VA loan to finance their home purchase.

However, a number of roadblocks get in the way of appraisers giving veterans fair prices, such as compensation.

“What we’ve found is that, among appraisers, there’s a real reluctance to work with the VA,” Bradley said. “Generally, appraisers are dissatisfied with the level of compensation they’re receiving for their work. It’s also harder than ever for trainees to enter the field, not just within the VA system but across the industry, which only adds to the perception of an appraiser shortage. This overall regulatory burden is a significant issue, and we have to turn things around.”

Still, Bradley praised a system called “Reconsideration of Value,” which has VA appraisers notify the lender’s point of contact if the sale price of a home is higher than the appraisal. However, this process is often overlooked by the buyer or agent. Bradley recommends improving understanding of between appraisers, real estate agents, and buyers.

“What we have today isn’t perfect, but it’s an important part of ensuring veterans and active-service members are protected when using a VA home loan,” Bradley said. “NAR looks forward to working with the VA and Members of Congress to improve this system in the years to come.”

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