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There has been a dramatic increase in the number of Department
of Veterans Affairs home loans to members of the National Guard
and reserves in recent years, according to a top VA official.
The number of loans would increase even more if all Guardsmen
and reservists knew that being on active duty dramatically
reduces the time it takes for them to become eligible for the
loans, Keith Pedigo, director of the VA Loan Guaranty Service,
said during a recent interview. |
Keith Pedigo, director of
the VA Loan Guaranty Service, said during a recent interview that
the VA tries to get the word out to all Guardsmen and reservists,
but it's difficult to reach all of them because they're spread out
across the country.
"I would guess that many of them are not aware of the
requirements for a home loan," Petigo said. "However, I would expect
that those who are interested in buying a home would go to the
trouble to find out exactly what it takes to use the home-loan
benefit."
Normally, Guardsmen and reservists have to serve six
years before becoming eligible for a VA home loan, Pedigo noted.
But, he said, that requirement changes dramatically when they're
called to active duty during wartime.
"They're then subject to the same eligibility
requirements as a regular active- duty service member," he said.
"During wartime, you only have to serve for 90 days to become
eligible for a VA home loan."
Those who are discharged with a service-connected
disability with less than 90 days are also eligible, Pedigo noted.
During peacetime, the eligibility requirement is 181
days of continuous active duty with an honorable discharge.
Eligibility is also granted to those who are discharged with a
service-connected disability with less than 181 days service.
Pedigo noted the VA is making "more and more" loan
guarantees for Guardsmen and reservists, and officials expect that
number to continue to climb.
"We try to promote this benefit to the reserves and
National Guard through various means," he said. Currently, about 3.5
percent of VA-backed loans are made to those who qualified based on
National Guard or reserve service, he said.
There are some differences in the basic eligibility
requirements between home loans for active-duty and
reserve-component troops, Pedigo noted.
He said the best way for Guardsmen and reservists to
find out if they qualify for a home loan is to submit an application
for a certificate of eligibility to one of the two VA Eligibility
Centers. The center in Winston-Salem, N.C., handles states east of
the Mississippi River. The Los Angeles center handles states west of
the Mississippi.
"They should submit the application along with a copy
of their service record," Pedigo said. The certificate of
eligibility proves eligibility for the home- loan benefit.
Another difference between the reserve-component and
active-duty benefit is in the amount of fees paid -- reservists pay
a slightly higher fee, he noted.
The fee consists of a certain percentage of the loan
amount: 2.75 percent for National Guard and reserve members, 2
percent for others. These percentages can be lowered with down
payments of 5 or 10 percent.
The fee doesn't have to come out of the service
member's pocket, Pedigo added. It can be included in the loan
amount.
"So if you don't have the cash, that's not a problem,"
he said.
There are also minor changes to the program during
wartime. For instance, reserve-component troops are eligible to
benefit from the Soldiers and Sailors Civil Relief Act, which
affords certain financial benefits.
Under the act, active-duty service members can get a
reduction in the interest rate on their consumer credit obligations,
including mortgages, Pedigo said.
Activated Guardsmen and reservists "can get a stay on
an impending foreclosure and have an opportunity to wait until
they're discharged in order to get back on their feet financially,"
he said.
Pedigo said financial institutions are more sympathetic
to Guardsmen and reservists during wartime. "We have a very active
outreach program with the mortgage-lending community, as well as the
real estate profession," he said, noting that about 5,000 mortgage
bankers and other financial institutions participate in the VA
home-loan program.
VA encourages financial institutions across the country
to participate in the home-loan program. "Real estate sales
professionals are often the first point of contact with veterans or
(service members) who are interested in buying a home," Pedigo
noted. "We want to make sure that the lenders are aware of the
numerous aspects of our program. Then they can promote this to the
service member or veteran with accurate information."
Petigo was named director of the VA Loan Guaranty
Service in 1987. He said he believes the VA home-loan program has
two responsibilities. "One is to make sure that veterans and
active-duty service members have the opportunity to use their
home-loan benefit," he said. "But also, we consider it to be a
serious responsibility for us to make sure that they have an
opportunity to stay in that home if they encounter temporary
financial difficulty."
VA has large staffs at nine Regional Loan Centers
around the country that are actively involved in assisting veterans
who have fallen behind on their loan payments, he noted.
"We make an effort to intercede on their behalf with
the lending institution to set up repayment plans," Pedigo said.
"When there's no way to avoid foreclosure, we continue to work with
the veteran and active-duty service member to try to find the least
costly way of terminating that loan transaction.
"So once the loan is made to the veteran, we don't
consider that our responsibility is ended," he said. "We consider
that we have to try to help that veteran stay in the home and assist
them in any way we can."
Pedigo said most people aren't aware that VA will come
to their rescue when they get into financial trouble. "Everybody who
gets a home loan has an expectation that they'll be able to continue
making the payments," he said.
"So the thought probably never occurs to them that the
VA might be there to help them if they encounter financial
difficulty," he continued. "I think many are surprised when they do
fall behind in their payments and get a call from one of the VA loan
service counselors offering assistance."
This year marks the 60th anniversary of the VA
home-loan program, which was created in 1944 Serviceman's
Readjustment Act. VA has made 17.7 million loans to veterans.
"We've made mortgage money available to the amount of
$138 billion during that 60-year period," Pedigo said. "The vast
majority of those loans have been made without a down payment. The
centerpiece of the VA program in 1944 as well as today is the
no-down-payment aspect."
He said the VA is unique in that regard in the mortgage
industry. "Veterans need to be aware that they don't need the cash
on hand that non-veterans might need to buy a home," he added. |
