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

2. NEW LEGISLATION (Pending)

3. 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

4. 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

5. Recent Loan Guaranty Workload
Year # Loans $ Amount
FY ,000 $63 Billion
FY ,000 $44 Billion
FY ,000 $24 Billion
FY ,000 $25 Billion
FY ,000 $25 Billion
FY ,000 $36 Billion
Total ,446, $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

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

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

8. Loan Volume is Increasing…

9. Top Five States for VA Loans

10. 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.

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:
422
Subsequent use:
304
Since inception, the SAH program has made over 34,000 grants for approx. $668M

12. 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.

13. 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:
12,586 9,528 8,113
Flat-line projection puts EOFY figure at just over 9,000 foreclosures

14. Mortgage Industry Delinquencies

15. 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)
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.

16. 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 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)
(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

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 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

20. 99% of VA Loans are Automatics
1% are Priors
98.8% 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 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

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

27. 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

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 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

30. 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

31. VA Disability Income
Verification of VA Benefit Related Indebtedness – VA form
dedicated fax # in Atlanta:
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

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

33. Contact Information
Atlanta RLC
General Fax
Winston-Salem Eligibility Center option 1-1-2
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

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