Nearing its 70th anniversary, the VA Loan Guaranty program recently passed the 20 million loan mark. The historic government-backed loan went to the widow of an Iraq War veteran, who used the no-down-payment program to purchase a home in Virginia.
"Without this program and all of the benefits we have received from the VA, we would not be here," Elizabeth Carpenter said during a ceremony in front of her new home. Her husband, Capt. Matthew Carpenter, died of cancer in December 2010.
Congress created the VA loan program in 1944 as part of the massive GI Bill. The government basically insures a portion of each loan, and that security help spur the country's post-war housing boom. Today, VA loans are more popular than ever.
Program Is Booming
Loan volume has soared 305 percent over the last five years, including a 51 percent increase from FY12 to FY11, according to data from the Department of Veterans Affairs. The VA provided a financial guaranty on more than 540,000 mortgages in FY12, which ended on Sept. 30.
Veterans have flocked to this program as conventional lenders have tightened their requirements since 2008. Last year VA loan volume hit an 18-year high.
The agency's milestone mortgage underscores the significant role this program still plays for those who serve our country.
"The 20 millionth VA home loan is a major milestone and is a testament to VA's commitment to support and enhance the lives of veterans, servicemembers, their families and survivors," Allison A. Hickey, VA's undersecretary for benefits, said in a news release. "As a result of their service and sacrifice, as a group, they prove to be disciplined, reliable, and honorable -- traits that are ideal for this kind of national investment."
Fighting off Foreclosure
This program has also fared remarkably well in the face of foreclosure. About 90 percent of veterans who purchase a home with a VA loan do so without a down payment. Yet, the program has had the lowest foreclosure and delinquency rates of any loan type for more than the past dozen quarters, according to the Mortgage Bankers Association (MBA).
"The VA portfolio has been able to weather today's turbulent market largely due to its conservative underwriting standards," James H. Danis II of the MBA told a U.S. House subcommittee in 2010. "VA mortgages have always been fully documented and fully underwritten loans on owner-occupied properties. The VA program has been a tremendous success and the numbers pretty much speak for themselves."
Chris Birk is director of communications for the VA Mortgage Center, which specializes in VA loans for veterans and active duty service members.