Abe Hamadeh Pushes for Modernization of VA Home Loan Program

Representative Abe Hamadeh (R-AZ) wrote to Secretary of Veterans Affairs Doug Collins, urging the modernization of the Department of Veterans Affairs' (VA) Home Loan program.

Specific areas of concern that Rep. Hamadeh emphasizes in his letter include reports of fee stacking, in which lenders pile on extra itemized charges on top of the initial lender's and administrative fees.

Under current regulations, the VA's lender and administrative fees are capped at 1% of the total home loan amount to cover labor and overhead, but veterans have said that lenders are adding extra charges for processing, underwriting, and other services, which Rep. Hamadeh calls "a cash grab, and it needs to stop."

The Arizona congressman noted that the VA still underwrites manually, slowing the process, whereas the Federal Housing Administration (FHA) uses a semi-automated system that completes the process in 2 to 7 business days. Instead, the VA requires an average of 10 due to manual underwriting.

Hamadeh pointed out that VA seller concessions are capped at 4% of the home's reasonable value, while the FHA and U.S. Department of Agriculture (USDA) use a seller-concessions cap of 6%, which limits veterans' ability to compete in a highly competitive housing market.

He further called for more appraisers, which Hamadeh said is because the VA requires 3-5 years' experience for home appraisers, making wait times for veterans longer than those for FHA and USDA, which only require 12 to 18 months' experience for their appraisers.

"As my fellow veteran and Committee member, Congressman Van Orden said in our hearing on the subject, we must find ways to eliminate the unnecessary administrative costs of the VA Home Loan program and better align it with other Federal housing programs," Hamadeh wrote in his letter. "My family is in real estate. I am very familiar with housing, and I know the unintended consequences of bureaucratic policies that have little to no protective value and ignore the realities of the marketplace."