The Department of Veterans Affairs last week announced it is streamlining the loan approval process for borrowers with a VA-appointed fiduciary and for veteran borrowers who apply for a joint loan.
Effective immediately, lenders no longer must send such loan applications to the VA for guaranty approval prior to closing, which should speed up the loan closing process.
The VA also has done away with the requirement of individual, case-by-case reviews on the loans, which had been an additional, laborious step. VA representatives told lenders the change will eliminate “delays and additional administration burdens that can be associated with the historical process.”
Going forward, the department intends to rely on post-audit oversight to maintain program integrity.
The VA did not immediately respond to requests for comment.
The agency formerly required a pre-closing review of certain loan application packages, such as those from borrowers unable to manage their financial affairs and cases in which a loan included more than one veteran using entitlement.
Loan closings could not proceed until the VA issued its approval, which resulted in a drawn-out process.
While the VA said it hopes to “improve the veteran experience” by modernizing its outdated procedures, some loans will still require pre-approval before closing. They include: joint loans to a veteran and a non-spouse, or non-veteran; loans to purchase manufactured homes not affixed to land; and loans not secured by a first lien.
The VA also expects to overhaul its procedure on appraisals following the mid-May introduction of legislation in the Senate aimed at streamlining the appraisal process for VA loans.
The legislation would remove a stipulation requiring all VA appraisals to be performed in-house. The Department of Veteran Affairs subsequently would allow desktop appraisals, and in some circumstances, waive the appraisal requirement altogether.
If passed, the legislation introduced by Sen. Dan Sullivan of Alaska and Congressman Mike Bost of Illinois, would address a long-standing gripe that VA appraisal requirements are both lengthy and costly.