VA Home Loans 2008 Marion Rabalais Loan Production Officer VA RLC Atlanta, GA MBAC Convention October 2008

NEW LEGISLATION (Pending)

New Legislation (Pending) Increase “Cash-out” refinancing loans to conforming rate. No longer limited to $144,000 Raise LTV from 90% to 100% Renewal of ARMs and HARMs until 2012

Veteran and Loan Profile Average Purchase Loan $199,000 $6,000 Median Assets 92% No Down Payment $62,448 Median Income 30% Active Duty 70% Veteran 88% Male 12% Female Median FICO Score 679 FYTD thru June 30, 08 Race: White – 73% Black – 17% Hispanic – 8% Asian/PI – 2% AI/AN – .6% 68.1% National Homeownership Rate 82% Veteran Homeownership Rate

Recent Loan Guaranty Workload Year # Loans $ Amount FY 2003 490,000 $63 Billion FY 2004 336,000 $44 Billion FY 2005 165,000 $24 Billion FY 2006 143,000 $25 Billion FY 2007 133,000 $25 Billion FY 2008 179,000 $36 Billion Total 1,446,000 $217 Billion FYTD thru July 2008 Originations 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

Carolina Loan Volume FY 2008 17,570 Loans $3,050,779,900 Average Loan $173,635 Commissions earned $183,046,800

Purchase vs. Refinance Loans FYTD THRU EOM JULY: Purchase = 77% of volume; Refi = 23%

Loan Volume is Increasing…

Top Five States for VA Loans

Market Share Data 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.

Specially Adapted Housing Grants 1998-Present Program cumulative figures from 262 on 08-04-08... 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 30 2008) 1st use: 422 Subsequent use: 304 Since inception, the SAH program has made over 34,000 grants for approx. $668M

Defaults Pending 1997-Present FYTD 2008 data is thru EOM July Default 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.

Foreclosures 7524 foreclosures FYTD 2008… flat line puts us at 9,029 foreclosures July Foreclosures up approximately 17% from June July 2008 Foreclosures UP approximately 29% from July 2007 FY figures for past years: 2005 2006 2007 12,586 9,528 8,113 Flat-line projection puts EOFY figure at just over 9,000 foreclosures

Mortgage Industry Delinquencies

Toll Free Number for Outreach: (877) 827-3702 The Subprime Crisis VA does not make subprime loans, and the average VA borrower does not have subprime credit VA Credit Standards Avg. VA FICO score = 679 Toll Free Number for Outreach: (877) 827-3702 Subprime Loan Characteristics Various layers or risk; A-paper, Alt-A paper, Subprime-paper Liar Loans, No-doc loans, Teaser-rate ARMs, Balloon mortgages Subprime Crisis for Dummies Surge in subprime originations (20% of all originations in 2006) Risky loans = high foreclosure rates High foreclosure rates of the 2000-vintage loans led to lack of liquidity in secondary market; this has sparked tightening in credit availability across the industry Collateral Impact of Subprime Crisis Increase in foreclosures = increased housing supply Concurrently, credit has tightened as investors, fearing the quality of sub-prime loans, withdraw funds from the mortgage market Even 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.

This has created a unique opportunity for VA Opportunities With the implosion of the subprime market, VA is one, if not the only, remaining no-down payment option in the market Recent policy & legislation in response to the housing market crisis have benefited VA (HR 3221) This has created a unique opportunity for VA Public Law 110-289 aka THE Housing Bill was passed July 30th

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 ranges SAH-related provisions Increased PH and AH grants to $60,000 and $12,000 Annual adjustments to SAH grants based on construction cost increases TRA grants for active duty servicemembers SAH benefits for permanent and total service-connected disabilities resulting from severe burns New Effective Loan Limits... Vary based on geographic locale of the property Are based on median area home price for SF homes Allow for higher loan amounts in more expensive areas of the country Limits 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 ranges In 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

HR 3221 Maximum Loan Limit by County NC, GA, & TN

Where we are Today.. Find Home Go to Lender Determines eligibility electronically using WebLGY/Obtain COE Find Home Go to Lender Uses AUS to get decision in minutes Orders Appraisal thru TAS (7 workday timeliness) Self Explanatory Lender Closes Loan Obtains Loan Guaranty Electronically 14-21 Days

99% of VA Loans are Automatics 1% are Priors 98.8% are LAPP

VETERANS INFORMATION WEBSITES http://vip.vba.va.gov 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 Eligibility The Appraisal System Enter Loan information PIN is last 4 digits of 10 digit VA ID number Home office can review all branch offices Branch can only view that branch www.homeloans.va.gov

Eligibility Pending Timeliness FYTD (through August 25, 2008) over 241,000 requests for a Certificate of Eligibility have been received by the Eligibility Center Of these 85,000 were electronic applications WebLGY allows you to obtain the certificate more quickly and is e-mailed to you when completed. No lost certificates! Currently the Eligibility Center is processing electronic applications three (3) days faster than mailed applications

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 obligations Adding to sales price then amending contract is not allowed The VA funding fee can be paid by anyone!

Adjustable Rate Mortgages Authority through September 30, 2008 Annual adjustments limited to 1% Interest rate increase capped at 5% Must be underwritten at 1% above initial rate Veterans Benefits Act of 2004 Traditional ARM, similar to HUD’s

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.

Occupancy and the Veteran See Chapter 3, section 5 of Lender’s Handbook Generally, must occupy within 60 days Exceptions – IRRRLs Active Duty service person’s spouse Specific future event and specific future date will make occupancy possible IRRRL must certify previously occupied If 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 spouse Occupancy generally required within 60 days Exceptions and other details, Lender’s Handbook, Chapter 3, Section 5 Spouse is of opposite sexes legally SC common-law marriage

Occupancy by Spouse Veteran’s spouse may occupy if veteran is on active duty or if veteran cannot occupy within a reasonable time due to distant employment No family member, other than the spouse, may satisfy the occupancy requirement

VA Disability Income Verification of VA Benefit Related Indebtedness – VA form 26-8937 dedicated fax # in Atlanta: 404-929-5558 If Veteran has a VA benefit-related indebtedness If exempt from the Funding Fee Disability Compensation Amount Receipt of non service-connected pension (requires prior approval) Incompetent? (requires prior approval) Misnamed (CAIVRS checks for federal debt), we use it: Verifies VA income Confirms when loan must come in for Prior approval such as incompetent vet or vet in receipt of non-service connected pension Confirms 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

VA Resale Program Effective July 24, 2008, the sale of VA owned homes has been contracted to: Countrywide(Bank of America)

Contact Information www.homeloans.va.gov Atlanta RLC 888- 768-2132 General Fax 404-929-5401 Email: atlloanprod@vba.va.gov Winston-Salem Eligibility Center 888-244-6711 option 1-1-2 nceligib.vbawin@va.gov VIP@vba.va.gov for portal assistance This 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 number The Lender’s Handbook – Definitive source for information on VA loans

Questions? A handout with telephone numbers, fax numbers, e-mail addresses, and web site addresses is available.