VA loan numbers last year surpassed even strong 2013 performance

By Victor Whitman, ScotsmanGuide.com
Pushed up by heavy refinancing on low interest rates, Veterans Affairs (VA)-backed loan volumes and counts rose dramatically last year, according to numbers released this week by the agency.
VA loans were up 44 percent by count and 54 percent by volume in fiscal 2015 (ending Sept. 30) compared to fiscal 2014.
The program’s totals also beat the figures for the 2013 fiscal year. Most other major loan programs saw volumes and loan counts rise steeply from a poor 2014, but fall below the 2013 levels.
The VA program ended the fiscal year at 631,142 loans with a balance of $153.5 billion, compared to 438,398 loans with a balance of $99.6 billion in fiscal 2014.
The agency backs home loans for qualifying veterans and surviving spouses, and the VA loan is popular with first-time homeowners who can obtain a loan without putting any money down.
VA Spokesman Terry Jemison said refinances surged with the low rates. Interest-rate reduction refinances — a special streamlined refinance of an existing VA loan — accounted for 31 percent of the loan volume. The overall refinancing share accounted for 49 percent of the total volume.
“Purchase loan volume also remains strong, and VA continues to grow its share of the overall purchase market,” Jemison said.
Jemison also said the VA has made progress on outreach and processing times. Roughly two-thirds of borrowers are now issued certificates of eligibility instantaneously through the agency’s electronic system, Jemison said. For those who aren’t processed through the system, the VA also has cut the average time to issue certificates to two days.
California-based originator Tony Adkins, who specializes in VA refinances for Alliance Home Loans, said he’s received many more calls in the past year to refinance with the lower rates. He said the VA also hasn’t been losing as many eligible borrowers to the Federal Housing Administration (FHA) loan program.
“In my opinion, Realtors used to push veterans toward an FHA type of loan product, and a lot of veterans were not utilizing the VA benefit,” Adkins said.
Penny Psencik, a senior loan officer with Crosspoint Financial in Newport Beach, California, said he’s also seen the uptick in VA refinances, and especially in cash-out refinances as home values have risen in the state. He also said the VA’s numbers are growing because there are now more eligible veterans from the wars in Iraq and Afghanistan.
“The VA has done a better job of getting the word out,” Psencik said. “I also think as you have got veterans who have grown up in the computer age, [and] they are easily more able to find lenders.”

Cumulative totals also rise

Loan counts and volumes also surged with the Federal Housing Administration (FHA) program this year. The U.S. Department of Agriculture (USDA) saw modest declines in loan volumes and counts in each of the past two years.
As for the cumulative total for the VA, FHA and USDA programs in fiscal 2015, counts rose to 1.9 million loans and volume increased to $385.2 billion, up 38  percent by count and 52 percent by volume, compared to the prior fiscal year. In fiscal 2014, there were 1.4 million loans with a balance of $254 billion.
“What this increase is being driven by is that traditional buyers are coming back to the housing market, and they are attracted by the low interest rates and the specter of potentially rising interest rates down the road,” said Daren Blomquist, vice president at RealtyTrac. Blomquist said that government loan programs tend to have looser guidelines and a low downpayment option, making them the first choice of the so-called boomerang buyers, who lost their homes in the downturn.
“We also have a lot of buyers who were in the penalty box for a foreclosure or short sale who are coming back to the market as well,” Blomquist said.

Questions? Contact Victor Whitman at (425) 984-6017 or victorw@scotsmanguide.com.