Just before the end of last year, President Joe Biden signed into law a bill intended to help veterans, servicemembers, and their families gain greater access to homeownership.
The Improving Access to the VA Home Loan Benefit Act of 2022 was approved by the U.S. House of Representatives last fall, and by unanimous consent in the Senate just eight days before Biden signed the bill on Dec. 27.
According to the Mortgage Bankers Association, which endorsed and testified in support of the act, it will help ensure servicemembers, veterans, and their families “have access to more affordable, sustainable homeownership opportunities through the Department of Veterans Affairs’ (VA) Home Loan Program.”
The act requires that, no later than 90 days after it is enacted, “the Secretary of Veterans Affairs shall submit to the Committees on Veterans’ Affairs of the Senate and House of Representatives recommendations for improving the delivery times for appraisals for loans guaranteed” by the VA.
The act also requires the VA secretary to prescribe updated regulations or program requirements to “clarify when an appraisal is required, how an appraisal is to be conducted, and who is eligible to conduct an appraisal for a loan” guaranteed by VA. The act states that, in prescribing updates to regulations or program requirements, the secretary “shall consider making changes applicable to” the following:
- Waiver of requirement for certain properties, including certification requirements for appraisers; minimum property requirements; the process for selecting and reviewing comparable sales; quality control processes; the Assisted Appraisal Processing Program; and the use of waivers or other alternatives to existing appraisal processes.
- Desktop Appraisals: Taking into consideration situations in which the use of such authority would provide for cost savings for the borrower; and situations in which a traditional appraisal requirement could cause a delay substantial enough to jeopardize the ability of a borrower to complete a transaction.
The VA in July 2022 announced it would allow desktop and exterior-only appraisals for some transactions. At the time, the VA said the decision was made in response to the “high demand for appraisal services and limited availability of appraisers" in certain areas. It added that the decision would reduce delays and address a shortage of VA appraisers.
MBA President and CEO Bob Broeksmit, CMB, released a statement applauding the act.
“The enactment of this MBA-endorsed legislation will now help streamline the homebuying process for veterans and their families by requiring the VA to update its home appraisal rules and program guidelines,” Broeksmit said. “To the benefit of buyers and lenders, the VA will now be required to encourage hybrid appraisals, employ emerging technologies, and revisit policies on property inspection waivers, minimum property requirements, and comparable sales.”
He added that the “MBA will continue to work with the VA, Congress, our members, and other key stakeholders to ensure veterans and their families have access to more affordable, sustainable homeownership opportunities.”
The Appraisal Institute opposed the legislation, stating in a letter sent last May to the House Veterans’ Affairs Committee that it believes concerns about slow VA appraisal turnaround times are overblown.
The letter, sent “on behalf of nearly 16,000 members of the largest organization of professional real property appraisers,” expressed the organization’s concerns and opposition to the legislation, “which, if enacted, could degrade the VA Home Loan Program and home buying process for Veterans.”
The letter continued, “The VA appraisal process is widely regarded as the ‘gold standard’ in credit risk management, and this is illustrated by the fact the VA outperforms other federal loan guarantee programs by large margins. We believe the strong appraisal risk management components unique to the VA program directly contribute to this strong standing and Veteran benefit.”
Officials with the Department of Veterans Affairs did not immediately respond to request for comment.
