H.R. 7735: The Improving Access to the VA Home Loan Act of 2022 was unanimously voted to pass by the US Senate and signed into law on December 27, 2022, by President Biden. But what does this new law mean for Veterans and active-duty servicemembers?
The Veterans Administration has guaranteed more than 25 million home loans since 1944. Although that’s an impressive number, it doesn’t change the fact that the VA Home Loan process sometimes runs with less than maximum efficiency. And one area that has needed some tweaking is the VA’s out-of-date and clunky appraisal requirements.
Home appraisals are an essential part of the VA Loan process. They allow lenders to assess the current market value of properties in question based on input from VA-approved appraisers. The appraiser reviews the property that’s being purchased and compares it to recent sales in the area. They might also look at tax records, Multiple Listing Service (MLS) data, among other sources. The appraiser aims to determine the property’s current market value and report that estimated value to the lender.
For the most part, VA appraisals don’t usually take longer than those for conventional loans. About ten days in an ideal world. The VA offers affordable mortgage loans with lower interest rates without requiring down payments or mortgage insurance. But keep in mind that the VA Loan program has established extensive Minimum Property Requirements (MPRs) that protect the interests of all parties involved. Each property must meet these requirements before a VA Home Loan can close.
To get the process rolling quickly, many lenders will order appraisals from the VA once they get a purchase contract. But note that it is the Veterans Administration that assigns an approved appraiser. Also, in a hot market, with high-demand appraisal services, there could be a shortage of appraisers, extending the appraisal timeline and ultimately delaying the closing and keeping buyers and their families out of their new homes for a while.
How will H.R. 7735 improve the VA appraisal process?
H.R. 7735: The Improving Access to the VA Home Loan Act of 2022 is designed to eliminate unfair disadvantages by streamlining the homebuying process through modern, digital appraisals that will get homebuyers and their families into their new homes more quickly and efficiently.
The bill is not a blemish against the VA Home Loan because the program typically performs without significant glitches, but it’s not without some outmoded ways. For example, as we mentioned earlier, VA Home Loans require an in-person appraisal performed by a VA-approved appraiser. But there are times when appraisal demands outnumber VA-approved appraisers. So, introducing digital or desktop home appraisals, which allows appraisers to assess market values without leaving their desks, makes sense. In addition, this would enable VA Loan appraisers to rely on digital data alone and not a physical examination of the property as they do now.
Along with reducing the processing timeline, H.R. 7735 could also cut costs for Veterans because desktop appraisals are quicker and less expensive than in-person visits. The Improving Access to the VA Home Loan Act of 2022 would direct the VA to update its appraisal regulations. And it would be required to consider when an appraisal is unnecessary and when to use a desktop appraisal. Conventional mortgages have already been using desktop appraisals, so there’s no reason VA Home Loans should be left behind. And any change that reduces appraisal times and costs is a win for Veterans and active-duty homebuyers who, after all, served their country honorably to earn VA Home Loan entitlements as direct routes to homeownership.
