▶ 0:40:45I'm going to say NAR, folks. Just anybody? Not anybody cuz there's certain
▶ 1:05:48Good afternoon. The subcommittee will come to order and I'll figure out how to use these buttons later. I want to thank everyone for being here today to discuss affordability for our men and women who've served in ways we can improve and modernize the VA home loan program. The purpose of this VA benefit is to assist veterans and service members with living the American dream by purchasing their first home. As always, I appreciate the non-partisan approach to the subcommittee, my friendship with Mr. Pappas, ranking member Pappas.
▶ 1:06:16It's a something I really truly enjoy that we have a great working Uh in fiscal year 2025, an estimated 340 veterans, service members, and their families use the VA home loan program with 61% of VA guaranteed loans being used for the initial purchase. VA has guaranteed over 29 million loans in excess of $4 trillion since the 1940s.
▶ 1:06:39And I'll tell you what, the VA home loan guarantee program and the GI Bill are the two best programs the United States government has ever uh developed. These impressive numbers represent millions of veterans, uh their service members, and families who may not have otherwise achieved the American dream of home ownership.
▶ 1:06:57I'm also proud user of the VA home loan program myself, and I personally know the benefits and purpose of this program can bring to veterans and their This is a benefit that we must protect to ensure it unleashes economic opportunity for today's and tomorrow's veterans.
▶ 1:07:11And last year, I championed HR 1815 VA Home Loan Program Reform Act that was signed into law by President And I'm looking forward to full implementation of this partial claims program that will put the VA home loan program on par with other federal home loans in terms of options to mitigate foreclosure. And that's something that I um the timing of that, I think it should probably should have been earlier. We talked about this with the VAST deal.
▶ 1:07:37Uh this law helps fulfill a promise to those who protect us with their services and continue with their service, excuse me, and can you continue to do so today by providing a safety net to maintain home ownership. I'm very proud of our legislation and grateful to President Trump for signing into law. I know the VA is working with industry to implement this law and encourage them to work closely with industry so that good work the good work we've done with this law is not wasted in bureaucratic red tape. The enactment and implementation of this law is important, but the work's not done.
▶ 1:08:06And uh I'm currently working on a piece of legislation that would streamline the VA home loan program by requiring VA to review and update their outdated minimum property requirements and barriers to entry into the appraisal process. We must find ways to eliminate the unnecessary administrative costs of the VA home loan and better align it with other federal housing programs so that it remains the best benefit our veterans in today's volatile housing market.
▶ 1:08:29It's both a priority of mine, Chairman Bost, our Republican Conference, and President Trump to ensure that housing is affordable for all, especially our veterans. And today we'll be hearing from industry experts about how to do just that. I was happy to see the VA is taking a closer look at updating some of their minimum property requirements, but there is more work that needs to be done to streamline the home loan program and remove unnecessary bureaucracy getting the way of veteran home ownership.
▶ 1:08:53And I want today's discussion to be uh respectful, obviously, and with the end state of keeping housing affordable for our veterans, service members, and their families. And with that, I'd like yield to my very good friend, ranking member Pappas. Thank you, Mr. Chairman, for holding this session. And I agree with you that the VA home loan guarantee program is one of the most important commitments that we can make to veterans, so essential, especially at this moment where we're dealing with a housing crunch all across our country.
▶ 1:09:20We know that housing prices, along with pretty much every other expense a family faces, like energy and groceries, continue to rise. As veterans spend more money at the pump and at the grocery store, they have less to spend on rent, their mortgage, or to save for a down payment. From what I hear constantly from my constituents, and I'm sure this applies to all of my colleagues, too, affordability concerns aren't a hoax. They're a huge concern of Americans, and I'm thankful that we're holding this hearing in recognition of that.
▶ 1:09:43When we're talking about how to make a VA home loan program more affordable, we can't forget that veterans are facing the same housing and affordability crisis that impacts all Americans, a situation we can't address through minor fixes to the home loan program itself. For example, when most Americans talk about barriers to buying a home, they're talking about the down payment. We know for veterans, one of the greatest advantages of the home loan guarantee program is that no money that no no money down option. So, down payments aren't an issue for a lot of veterans.
▶ 1:10:10When it comes to closing fees, VA already limits what lenders can charge veterans. Of course, we should be open to a discussion about how limiting fees even more can save in terms of veterans' costs. However, it's important to make clear that up to 2/3 of the closing fees a pays are to register the deed, homeowners insurance, escrowing taxes, none of which this committee can influence. My point here is that focusing on issues like fees shouldn't divert our attention away from the crux of the problem.
▶ 1:10:36That's why we need a whole-of-government approach to tackle the housing crisis, lower costs for veterans and all Americans, and put home ownership back within reach for everyone. We should explore comprehensive policies that would provide real savings, tangible affordability, and accessibility to home loans for veterans. We need to focus on legislative packages like the updated Senate-passed 21st Century Road to Housing Act, which House leadership has yet to put to the floor for a vote.
▶ 1:11:00This bipartisan bill includes bills I helped introduce that would cut red tape to build more housing, strengthen assistance to middle-class homeowners for improvements and repairs, and expand access to the VA home loan program by ensuring veterans are made aware of the benefit during the loan application stage. The housing crisis requires an all-hands-on-deck approach, and we should be using every tool at our disposal to create the conditions to tear down red tape, build more housing, and lower prices. In my state of New Hampshire, we're moving in that direction.
▶ 1:11:26We have a first-in-the-nation veterans campus in Franklin, which is a partnership between the private sector, government, and the nonprofit community, funded with federal dollars and providing critical housing for our veterans. We're empowering our nonprofit and VSO partners, including Harbor Care, that have stepped up to fill a need for emergency, transitional, and permanent housing for veterans. Based on the testimony we received and will hear momentarily, perhaps there are there are ways to align VA along with other other federal agencies to put veterans on an equal footing with non-veteran home buyers.
▶ 1:11:55However, the benefits must outweigh the costs, especially if proposals will ultimately expose veterans to excessive risks. So, rather than discussing slight changes to improve accessibility, let's also focus on what this hearing should be about, affordability, and that big-picture conversation about how to bring down costs and make life better for veterans and all Americans. So, I look forward to the testimony today, and I yield back. The gentleman yields. Before I introduce the witness panel, I'd like to recognize one of my constituents who's sitting in the audience, Jane. How are you?
▶ 1:12:23Thanks for coming very She works for Portage County, and she does a fantastic job. Thank you so much for joining us today. I'll now introduce the witness panel. Our first witness is Mr. Patrick Zondervan, executive director of Loan Guarantee Service at the Department of Veterans Affairs. Accompanying Mr. Zondervan is Mr. Terry Rauch, assistant director for Loan Policy and Evaluation, Loan Guarantee Service at the Department of Veterans Affairs.
▶ 1:12:47I ask you two gentlemen to stand and raise your right Do you solemnly swear that the testimony you're about to prove to provide is the truth, the whole truth, and nothing but the truth? All right. You may be seated. Let the record reflect that the have answered in the affirmative. Mr. Zondervan, you're now recognized for 5 minutes to deliver your testimony on behalf of the Department of Veterans Good afternoon, Chairman Van Orden, Ranking Members Pappas, and members of the subcommittee.
▶ 1:13:18Thank you for the opportunity to present information on several topics regarding the Department of Veterans Affairs Home Loan Guarantee Program.
▶ 1:13:24Mr. Van Orden, Van Orden, is is your microphone on? It is. I'll try to speak a little louder. How's Good afternoon, Chairman Van Orden, Ranking Member Pappas, and other members of the subcommittee.
▶ 1:13:40Thank you for the opportunity to present information on several topics regarding the Department of Veterans Affairs Home Loan Guarantee Joining me is Terry Rauch, assistant director for the VA Loan Policy and My remarks will focus on a set of key issues that are both timely and significant to veteran home lending. These are also detailed in my written testimony for your reference.
▶ 1:14:00As the new executive director of VA Loan Guarantee Service, I have the distinct honor to lead the VA's home loan The VA home loan program is an earned benefit for veterans and service members to obtain, retain, and adapt a home which truly recognizes their service to the nation. As a veteran myself, I have personally leveraged the VA home loan program more than once to secure stable housing for my family. Since 1944, VA has been helping veterans achieve the American dream of homeownership.
▶ 1:14:28To date, VA has guaranteed more than 29 million home loans totaling over $4 trillion, and there are more than 3.9 million active VA-guaranteed loans. VA-guaranteed home loans can be considered as one of the most useful VA benefits available to veterans and service members, and is a premier choice in opening the door to homeownership. VA home loans provide a great opportunity for the first-time veteran home buyers to purchase a home because of the following unique features on the VA home loan program.
▶ 1:14:57100% financing with no down payment Exemptions from paying the VA funding fee for service-connected disabled veterans in receipt of disability compensation. Limits on certain costs lenders may charge a veteran for origination and administrative fees to 1%. Lower interest rates, no monthly private insurance premiums, and allowing seller concessions of up to 4% of the reasonable value of the home for items like prepaid escrow and paying off consumer debts.
▶ 1:15:23These cost-saving measures ensure that that the VA home loan is an affordable option for veterans even in tight housing markets. VA continues to see strong demand for the program. In fiscal year '25, VA guaranteed more than 500,000 home loans with more than 60% of those being new and first-time homeowner purchases. While the demand for the VA home loan program is strong, housing affordability remains a valid concern for veterans as it does for buyers in the conventional market.
▶ 1:15:51With mortgage rates around 6% on average, housing prices remain elevated in many areas where property taxes, homeowners association fees, home insurance costs, and other unexpected repairs continue to impact the overall cost of homeownership. VA continues to make to make efforts to modernize its origination system and increase automation to allow lenders to submit proposed loan information prior to closing and identify potential errors that may lead to costly corrective measures after the loan is closed.
▶ 1:16:20Earlier this month, VA launched an enhancement to the VA mobile app that now allows eligible veterans to view their certificates of eligibility from their mobile phones. Within the first week, more than 35,000 certificates of eligibility were downloaded from the mobile app. An often misunderstood component of the VA program is the VA appraisal process, which is designed to ensure the home meets safety, soundness, and livability standards for veterans. These minimum property requirements have frustrated many buyers, sellers, and real estate agents alike.
▶ 1:16:48Today, I'd like to set the record straight and dispel a few myths about the VA appraisals for the committee. The first myth is that the VA appraisals take too long. As of February 2026, VA appraisals have taken on average seven business days to complete, which is equal to other conventional and federal government programs. The second myth is that the VA appraisal of the VA appraisals are a home inspection. VA appraisals are not a home inspection. The VA home loan appraisal is an opinion of fair market value.
▶ 1:17:17VA is developing several actions to reduce and simplify the minimum property requirements for appraisals outlined in VA regulation, handbook policies, and procedures. This month, VA updated the VA Lenders Handbook Chapter 12 with the removal of several minimum property requirements to streamline the appraisal In conclusion, VA will continue to support the path to homeownership through the VA home loan program, strive to modernize our systems, streamline processes, and expand communication and education efforts to improve the VA home loan program for future
▶ 1:17:47veterans and their families. Mr. Chairman, thank you for the continued support of the VA home loan program and for this opportunity to speak today. This concludes my testimony, and I welcome any questions that you or other members of the subcommittee may have. Thank you, Mr. Zondervan. The written statement of Mr. Zondervan will be entered into the hearing record. We're now going to proceed to questioning, and please stick to the 5-minute rule. I now recognize Ranking Member Pappas for 5 minutes to question the witnesses. Well, thank you very much for that testimony.
▶ 1:18:14I appreciate the steps that you're already taking to make things more efficient and to streamline processes. I think that's incredibly important, and we always need to be thinking about how we can do things a little bit better. We hear a lot of comments from industry that the processes and standards for the VA home loan program are different from other government lending programs, especially when it comes to the appraisal process and minimum property requirements.
▶ 1:18:36So, I understand the desire for these programs to be matched up across the board, as it would be easier for industry, and it would reduce misconceptions among sellers and real estate agents that VA-backed loans are to complete or take long longer to get done, as you've addressed. I have to question the logic, though, that we should lower VA standards to meet everyone else instead of perhaps raising all standards for FHA and USDA to match VA.
▶ 1:18:59So, I'm wondering, does the VA home loan program perform better than similar programs at other agencies, and is that partially credited to the kinds of protections that are in place for veterans that are purchasing a home? Thank you for that question, sir. The protections are very important because the veteran is our first However, there are parts of of minimum property requirements that we can remove.
▶ 1:19:23And so, right now what we're doing is evaluating our policies and identifying any, you know, um property minimum property requirements that we can remove without compromising the additional features that we have to ensure that the safety, the soundness, and the um the sanitary conditions of the home remain in place. Could you give folks some examples of ways that you feel like you could modify the property requirements in a way that wouldn't hurt veterans or put them at risk? Certainly.
▶ 1:19:53Actually, I'm going to defer to my colleague, Mr. Terry. All right. Thank you for that question. Uh a lot of these are cosmetic in nature. So, we're looking at some of the things that have been problematic over the years such as uh chipped paint or peeling paint. Uh uh so, those are are are one of the ones that are that are out there.
▶ 1:20:13Um uh burglar bars, those type of things that have have been problematic that while they're NPRs in other programs as well, uh VA has made those subject to uh in the in the past. And so, those are the ones that we want to tackle. But you agree that there are certain minimum property requirements that you feel should stay in place as a means to protect veterans.
▶ 1:20:37The the whole purpose of minimum property requirements are uh safety, soundness, and sanitation. Those are the ones that we'll be wanting to keep. I appreciate that. Um last year the administration put an end to the VASP program, which we know offered veterans uh a low interest rate and refinances to avoid foreclosure. I'm just wondering if you can say whether VASP uh prevented folks from getting foreclosed on and if that lowered the foreclosure rate for veterans. Thank you for that question.
▶ 1:21:07Um so, the VASP program did end. Uh the secretary decided to end it in May of last year. Um and our focus right now remains on implementing the partial claims program, which will now provide the additional um option for veterans to you know, um Yeah. And while it was in place, can you speak to I mean, the fact that there were thousands of veterans that were assisted? I assume for those veterans um that that helped them prevent foreclosure uh and that kept the foreclosure rate lower across the board. Would you agree with that?
▶ 1:21:36I would say that the VASP program at the time did have options to help veterans who were facing foreclosure, yes. Okay. Well, it's certainly borne out in the numbers that I've seen. Um and so, talking about partial claims, I mean, we're we're approaching a year since this was, you know, designed and passed by Congress. We're really eager to see this implemented. And with VASP gone, I I'm wondering what happens to veterans who are still waiting for this to be stood up. Thank you for that question.
▶ 1:22:02So, there are other options before the the partial claims rolls out. So, there are forebearances, special um modifications of the loans. Those options have always been available absent of the VASP program. So, we work closely with our servicers and the industry partners to ensure that when veterans reach a point of default, that they are offered all of the remaining options that are available until the partial claims program comes out. We're seeing the foreclosure rate increase.
▶ 1:22:30And so, I think time is of the essence here. I know you've been briefing uh staff. I'm wondering if you can give us a clearer picture on the timetable for the rollout. Absolutely. Thank you for that question. Uh our goal is to have it available to the public in June of this Okay. And you've been through the comment period. I assume you've received significant comments from folks on the outside uh that would be, you know, working with veterans on loans. Can you uh characterize any of those comments and how long it's going to take to work through that?
▶ 1:23:00You'll still be able to hit that June timeframe? Certainly. Thank you. Um so, we actually did something new with the VA. We used what's called a drafting table. It's different from comments through the regulatory process. And we received well over 800 individual unique feedback
▶ 1:23:15time has expired. You'll bet. The gentleman yields back. The chair now recognizes Representative O'Halleran from Arizona. Thank you, Mr. Chairman. Mr. Zandbergen, thank you for being here. As a veteran myself, and I represent Arizona's 8th District, which is home to one of the fastest growing veteran populations in the country.
▶ 1:23:34The median home prices in our communities are now topping Young veterans, fresh off active duty, they're trying to start families and put down roots in the state they defended are being locked out. Not because they lack discipline or drive, but because the VA home loan program has failed to keep up with Arizona's skyrocketing cost of living and housing market. My first question is, Mr. Zandbergen, my constituents in Arizona are getting slammed with what I call fee stacking.
▶ 1:24:02You know, lenders are charging the full 1% origination fee on VA loans, then piling on extra itemized charges for processing, underwriting, and others. That 1% is supposed to be all-inclusive. It's meant to cover the lender's labor and overhead. Now, these sneaky add-on administrative fees are nothing but a cash grab, and they need to be banned. Now, what is the VA doing right now to ensure our veterans are not paying twice for the same paperwork at closing? Thank you for that question. Um so, we we look at data.
▶ 1:24:32Our systems uh evaluate data. And uh if there is any evidence of misuse uh or inappropriate fees being charged, uh we do work with the lenders to recoup those fees back. And if we receive complaints from veterans, we do a full file loan review. And if we do find that there are overcharges overcharges and charges, those are actually paid back by the lender. And they get paid back to the veteran?
▶ 1:24:59To the VA cuz Now, right now the VA caps seller concessions at just 4%, as you know. Now, while FHA and USDA allow 6%, in a red-hot market like Phoenix, that 2% difference can sometimes be the difference-maker between winning and losing a home. Now, sellers see a VA offer and realize they're getting less help with closing costs and immediately choose the FHA buyer instead. Now, our veterans are getting squeezed out of the market they fought to protect.
▶ 1:25:28Now, does the VA support raising the seller concessions cap to 6% to align with the other federal uh agencies? Thank you for that question. Um so, seller concessions, um it's kind of, you know, the higher you go on the seller concessions, it can create some issues with cost.
▶ 1:25:49Um because it's what what we have seen is that the um the lenders will or the the person selling the home, when you have higher concessions, that sometimes causes them to raise the the price on the home. And so, it it doesn't necessarily help with affordability. Um so, that is one of the things that we're looking at. We'll be glad to work with the committee to continue to look at that.
▶ 1:26:16Um we currently are at 4%, but we we do want to make sure that whatever decision we make, it will continue to protect the veteran and not cost them more down the road. Yeah, of course. But I'm about common sense. Right now, FHA USDA are 6%. It seems to make sense to me to align the VA with FHA and USDA. My family's in real estate. I'm very familiar with uh housing. And uh I know the unintended consequences of that what you're talking about, but that's not what we are seeing.
▶ 1:26:45So, I would encourage you to go back to the VA and try to align that up with the FHA, okay? I will be glad to take that into
▶ 1:26:51Now, the VA has identified 436 counties across 31 states that don't have enough certified appraisers to meet demand. Now, the VA demands 3 to 5 years of experience for certification, while the FHA only requires 12 to 18 months. Now, that gap is forcing our veterans into longer wait times and much higher fees, sometimes $600 to $1,300 per appraisal versus just $400 to $700 on the FHA side.
▶ 1:27:18Is the VA willing to reduce its experience requirements to align with FHA standards and get more qualified appraisers into the pipeline? Thank you for that. Um we are absolutely willing to consider looking at our requirements and reducing those to help. And how are you doing that? So, um I'm working with my staff right now to determine the balance between what's required versus ensuring that the product that's delivered is still a quality product.
▶ 1:27:47I'm looking forward to our modernization efforts, which will help us with the quality control of appraisals, which will then also help us reduce the requirements before a VA uh before an appraiser can become part of the the panel. Yeah, but it goes back to my previous question. We just got to align up with what FHA is doing. It seems like it's common sense to me. And I know it is common sense for the for our veterans as well. Thank you. The gentleman yields. The chair now recognizes Representative Kilili Sablan from the Northern Mariana Islands.
▶ 1:28:16Thank you very much for your time today. earlier, there was a lot of focus on on how do we make things better for for our vets. And I kind of want to just start off and get your thoughts on what has the VA done to modernize the home loan program in recent years? Thank you for that question. So, part of our modernization efforts is what we call guaranteed remittance.
▶ 1:28:39Uh and it it has it has four different parts where we use APIs um to gather data and to be able to evaluate information. So, we've implemented our first part of that modernization uh 100% back in November 20 2024. Uh we are about 83% with the second API and about 34% with the third.
▶ 1:29:01So, although our priority is partial claims right now, once we have partial claims implemented, we will continue to focus on getting guaranteed remittance uh to full production as that is one of the things that our stakeholders have asked for, and it is one of my That's good to hear. Are you familiar with the Commonwealth of the Northern Mariana Islands? Somewhat. Somewhat.
▶ 1:29:23So, you know, one of the challenges that that we that we have out there and I was uh the written submitted testimony of the second panel, the the folks that are coming right behind you and they were talking about um shortage of uh housing available in general, right? and that's a challenge out here.
▶ 1:29:46Um that's not the challenge out in the Northern Mariana Islands, but I think more outreach with regards to the programs that you provide needs to be done so that, you know, the vets out uh know, right, that that that they have this opportunity and and they and the ability to avail of this program. Uh I think a has mentioned that Arizona he has a lot of veterans who are living in Arizona.
▶ 1:30:11Well, we have the second highest enlistment rate per capita across any state or territory and, you know, folks are coming back home and and this program is incredibly useful.
▶ 1:30:25And so, that's why I want to thank the chairman for uh taking the lead with me to sponsor the HOME Act, which um addresses or attempts to close in some of the gaps by um explicitly requiring that the VA does an outreach uh to places like like the CNMI.
▶ 1:30:48Ranking Member Pappas mentioned that uh you know, every the priority right now should be how do we make housing more So, and I think it's uh the president's priority as well to make home ownership affordable. What are you doing uh towards that effort? Thank you for that question. So, the VA home loan program is already a fantastic program. It's the best option for veterans out there.
▶ 1:31:12Uh I am willing to work with the committee if you have any legislative proposals that you uh would like for us to view or provide technical assistance. Uh we do want to help make it more affordable. So, any opportunities that there are, we will be glad to work with your committee and our stakeholders as well. But if you were to give a suggestion in terms of what policies are standing in the way to be able to open up that path, what would it be?
▶ 1:31:41Thank you for that question. I don't have a specific suggestion that this time um you know, our our program as I stated has a lot of benefits already. Um but if you have ideas on how we could make it better, we would welcome that and we'll work with you. All right. I yield back, Mr. Chairman. The gentlelady yields back and I recognize myself for 5 minutes.
▶ 1:32:05Who writes the requirements for the So, I I just want to I want to talk a little bit about some of the stuff that that Ranking Member Pappas was saying and also my Republican colleague. So, uh about this this appraisal thing. It's fascinating to me. How long is the residency for a family practice physician? It's 3 years.
▶ 1:32:30So, if you can do a residency to become a family practice physician in 3 years, why would you take 5 years to be an appraiser? And I'm not trying to degrade appraisers. It's, you know, it's a great vocation. But I just don't see you know, 5 years is a very long time. And it's not just the fact I I understand the times for getting an appraisal. You're right, you know, they're they're generally on par. I've never had a problem with it.
▶ 1:32:58But when you're talking about 5 years, that's 5 years of a bunch of different people doing essentially repetitive tasks. And to me, that looks like another VA jobs program. And you're paying for these other people to train them as an apprentice to look at paint chips and stuff like that. It just seems like a waste of time and money and we can't waste time and money So, who writes these requirements?
▶ 1:33:28I mean, who do Is it a bunch of people like, "Hey, let's pile on all these requirements to make take a half a decade to become an Who writes those? Thank you for that question. I I fully agree with you. Um I'm new to this program.
▶ 1:33:44I know. Uh however, there is a lot of opportunity for us to reduce that 5 year significantly. So, I'll be working on that with my staff. It is within my control to change that. It is. I'm going to I'm going to admit it. I knew the answer that question before I asked it.
▶ 1:34:02One of the greatest slogans ever for advertising was Nike when they said, "Just do it." The Trump administration has taken that and they say, "Just do things." This is something that you can do. You are empowered by your position to do this and it could it could really be Very happy about that. Now, Ranking Member Pappas, he I want you to understand that this is a bipartisan thing. You got three people talking about this.
▶ 1:34:32I'm not happy at all with the fact that it's going to be June before partial claims is done. That timeline is too long. And, you know, what Chris's concerns are absolutely valid. We don't want veterans getting booted out of their homes, right? So, I want you You can't I don't know if you can say yes right now, but I want to talk to you later about this.
▶ 1:34:56I want to guarantee that you're not going to foreclose on any single veterans if you have the ability to do so until this partial claims gets done. So, if that is in your power, I need to know that and then I want your word if you can do that. That's really all I have. Chris, you want to do a second round? Do you have more questions? Um I think I'm good. You guys good? Okay. Well, very well.
▶ 1:35:23Um with that, I'm going to yield back cuz my buddy's got all the questions. Uh thank you very much for coming, gentlemen. You are excused and I hope you stick around and listen to the second panel.
▶ 1:36:59Uh please be seated. We'll have you stand up in a sec. Our second panel, we're going to hear from the following witnesses. Our first witness is Mr. Owen Lee, 2026 chair-elect of the Mortgage Bankers Association. Our next witness is Mr. Kurt Thompson, executive committee member at the National Association of And our final witness is Ms. Alice Is it Elise. Elise, that's a very neat name. Uh Cohen, director of Federal Housing Advocacy at National Consumer uh Law Center.
▶ 1:37:31I'd like to welcome you very much uh to the table and I'd ask now that you would stand and raise your right hand. It's all right. You're very eager. That's great. Do you solemnly swear that the testimony you're about to provide is the truth, the whole truth, and nothing but the I do. All right. Thank you very much. Let the record reflect that the witnesses have answered in the affirmative. Mr. Lee, you are now recognized for 5 minutes to deliver your and members of this subcommittee.
▶ 1:38:00Thank you for the opportunity to testify today on behalf of the Mortgage Bankers Association. My name is Owen Lee. I serve as the MBA's 2026 chair-elect and I'm also chief executive officer of Success Mortgage Partners. I have more than 30 years of experience in residential real estate finance as an independent mortgage banker.
▶ 1:38:20I founded Success Mortgage Partners, headquartered in Plymouth, Michigan, in Our firm originates mortgages in 43 states and the District of Columbia, closing billions of dollars of loans every year. Today, SMP is a top 100 VA lender. Since 2020, we have closed between 100 and 220 million dollars of VA loans each year.
▶ 1:38:43I am proud that over the last 6 years, SMP has helped more than 3,100 veteran families secure the dream of home Many of those VA loan closings have been memorable, especially one very close to me. It involved my cousin, retired Sergeant First Class Damien Seewick.
▶ 1:39:02Sergeant Seewick is a 22-year Army veteran and recipient of the rarely received Soldier's Medal, one of the highest honors a soldier can receive for an act of valor in a non-combat During his army service, he completed multiple tours of duty on the DMZ in Korea, and then Honduras, Egypt, Iraq, and Afghanistan. He retired from the army nearly 10 years ago. As a soldier, my cousin never lived in a singular posting for more than 3 years.
▶ 1:39:31He made the achievement This made the achievement of home ownership quite difficult. Sergeant Seaweck all was also judged 70% disabled upon his discharge due to circumstances directly related to his service. So, it was with immense pride that on January 17th of 2025, I helped my cousin become a homeowner for the first time at age 58.
▶ 1:39:56The MBA is honored to have productive working relationships with the full House Veterans Affairs Committee and this subcommittee, including your highly professional staff. I want to highlight a few of MBA's recommendations to strengthen and improve the VA home loan program.
▶ 1:40:14More details can be found in my written I appreciate the full committee passing HR 1815, the VA Home Loan Program Reform Act, which last year created a practical and permanent partial claim program, aligning with existing programs across other federal housing agencies.
▶ 1:40:35This law ensures veterans are not left behind during moments of financial MBA commends the VA for their transparent and open drafting table process to implement the new partial claim authority, but would encourage the agency to improve their draft waterfall proposal in the following ways.
▶ 1:40:57A borrower should not have to agree to a monthly payment increase before receiving other home retention options that do not result in a payment It is also important for the policy to explicitly allow servicers the option to offer regular forbearance, so a veteran homeowner does not have to commit to a repayment option before their hardship has ended.
▶ 1:41:26Beyond the partial claims implementation, MBA would also encourage the VA to make certain other programmatic changes, among a list included in my written statement. To align minimum property requirements with with Fannie Mae and Freddie Mac, to reform the Earl program to improve its effectiveness and assure ensure it reflects today's mortgage market, to modernize the allowable fee schedule structure that VA mortgage servicers can
▶ 1:41:56charge to process an assumable loan, and to align the agency's fee documentation requirements with how third-party services are actually billed and documented. I would be remiss if I did not mention that MBA stands by its traditional that the use of any revenue generated by VA home loan funding fees should only be used for the benefit of the VA's home loan program itself.
▶ 1:42:26In closing, I want to thank the committee for its time and attention on ways to reduce costs and improve efficiencies with this vital program, ensuring it better serves veteran families as they pursue their slice of the American dream. And I look forward to answering any questions you may have. Thank you, Mr. Lee. The written statement of Mr. Lee will be entered into the hearing record. Mr. Thompson, you are now recognized for 5 minutes to deliver your testimony.
▶ 1:42:55Thank you, Chairman Van Orden, Ranking Member Pappas, and distinguished members of the subcommittee. My name is Kurt Thompson, and I am the broker owner of RE/MAX Liberty in Westminster, Massachusetts, where I've been helping buyers and sellers for over 29 years. I am testifying today on behalf of the more than 1.4 million members of the National Association of Realtors, and I'm also a veteran. I served for 8 years with the Army Reserve in one of the 157th Air Refueling Wing in New Hampshire's Air National Guard.
▶ 1:43:25The VA Home Loan Program helped me to achieve homeownership, which is why as a standard practice, I ask every buyer whether they have VA eligibility. I know from my own experience that the no down payment feature can be the difference between owning a home or continuing to Before I turn to where I think the program can be strengthened, I want to thank this subcommittee for its leadership in passing HR 1815.
▶ 1:43:53This legislation will help ensure our nation's veterans utilizing the VA benefit have access to professional representation when making one of the most important decisions of their lives. That said, even the strongest loan benefit can only do so much when the availability of homes is in such short supply. NAR research estimates that Americans face a shortage of almost 5 million homes.
▶ 1:44:18In my market in Massachusetts, most entry-level buyers are looking in the 300,000 to 500,000 range, and there simply are not enough homes at that price point. The ability for veterans to purchase with no down payment is VA loan program's greatest strength, and it is most meaningful when affordable homes are within reach. Strengthening the benefit and increasing supply are complementary goals, and both are essential.
▶ 1:44:43This is why NAR strongly urges Congress to pass the 21st Century Road to Housing Act, HR 6644, and the More Homes on the Market Act, HR 1340, which will unlock existing inventory by modernizing the capital gain exemption. Turning to the program itself, I want to spend most of my time on appraisals because that's where I see the issues most clearly in my day-to-day work.
▶ 1:45:09The biggest competitive challenge I see with VA buyers is closing costs leading to appraisal risk. Many of my veteran buyers have limited cash on hand, and closing costs largely cannot be rolled into the VA loan. This means that I often need to negotiate seller concessions. In a hot market like mine, sellers have a certain expectation of the amount of proceeds they will receive and from the sale of their property. So, to get the seller the number they need and secure the concession my clients need, the offer has to go above the asking price.
▶ 1:45:40As a result, the appraiser appraisal has to come in at that higher number. If it does not, the seller has to either take less or walk away. And when they have another offer on the table without that complication, that is where veterans lose homes. Another issue I see is that property conditions that are generally acceptable for conventional loans are required to be flagged by VA appraisers.
▶ 1:46:02These additional requirements can add time and costs or even kill purchases, giving sellers yet another reason to favor conventional or cash offers. NAR recommends Congress direct VA to align its minimum property requirements with GSE standards, modernizing appraisal timelines, and expand the appraisal pool. Beyond appraisals, there's another issue that represents real untapped potential, which is loan assumptions.
▶ 1:46:28VA loans are assumable, which in today's high interest rate environment sounds like an incredible feature. A buyer can take on a seller's 2.5 or 3% mortgage instead of borrowing at today's rate, which would have significant impact on the monthly payment. However, I cannot think of a single transaction in my career where an assumption has actually closed. The process can take up to 90 days or more, and most buyers cannot bridge the equity gap in cash.
▶ 1:46:54The assumption The assumption benefit exists on paper, but in practice, it rarely pencils out. NAR recommends VA reevaluate the cap on lender compensation, and that Congress explore financing solutions to close the equity gap. Congress should also address veterans losing their entitlement when a non-veteran assumes their loan. The VA Home Loan Guarantee Program has been one of the most important benefits our nation offers, and I am proud to have benefited from it personally.
▶ 1:47:24When it works well, it is a powerful path to achieving the American dream of homeownership and the kind of wealth building that can last generations. This program deserves to be the best it can be, and NAR stands ready to work with this committee and VA to make that happen. I thank you for your time, and I welcome your questions. Thank you, Mr. Thompson. The written statement of Mr. Thompson will be entered into the hearing record. Ms. Cohen, you are now recognized for 5 minutes to deliver your testimony.
▶ 1:47:53Thank you, Chairman Van Orden, Ranking Member Pappas, and members of the Thank you for the opportunity to testify on behalf of the low-income clients of the National Consumer Law Center regarding the VA Home Loan Guarantee I am Alice Cohen, Director of Federal Housing Advocacy at NCLC, and the daughter of a proud Air Force veteran. We support the goal of promoting affordability for veteran homeowners, and we recognize the key role of the VA Home Loan Program.
▶ 1:48:23Today, I will address the key tool VA has to make veteran homeownership more improving its hardship options. And I will discuss several issues relating to VA lending policies, all of which would have limited effect on today's affordability crisis, in great part because those challenges are The most important step the VA can take to promote affordability for veterans is to help them retain their homes when feasible, and avoid devastating home loss when they face financial hardships,
▶ 1:48:54including those related to their These home retention programs keep kids in school, stabilize neighborhoods, prevent home equity loss, and allow veterans to to an unforgiving rental However, the mortgage relief options available for veteran borrowers remain less favorable than the options available to other borrowers with federally backed mortgages, and a higher share of veteran borrowers are moving to active foreclosure.
▶ 1:49:22The situation for delinquent VA borrowers should improve due to passage of the VA Home Loan Program Reform Act, and we thank members of this committee for your leadership on that legislation. However, the newly authorized claim program has not yet begun, and VA's draft handbook proposals do not fulfill the promise of the legislation, especially with respect to Primarily, because the agency's proposal requires a homeowner to accept up
▶ 1:49:52to a 15% increase in their monthly payment before accessing the partial claim. Of the roughly 90,000 VA borrowers who are seriously delinquent on their loan today, we estimate that over 30,000 will face a payment increase under this approach, which on average would raise their monthly payment by $150 per month.
▶ 1:50:15VA includes other options that create more affordable payments, but these are not offered until later in the draft We sincerely appreciate the fact that VA placed its proposed waterfall on the drafting table for comment.
▶ 1:50:30We are hopeful that VA will make changes as a result of the consistent feedback it has received to change the order of its waterfall to prioritize The VA's proposal, while understandably seeking to be sensitive to the need to limit term extensions and total amounts due, is out of step with Fannie Mae, Freddie Mac, and FHA, which only consider payment increases as a last resort if at all.
▶ 1:50:55To promote affordability truly, VA should ensure that veteran borrowers have options that promote affordability first, which will save money for the VA fund, veteran borrowers, and mortgage In addition, we urge the VA to adopt measures to hold off foreclosures until the partial claim program becomes widely We have suggested full pay forbearance, which would allow servicers to accept monthly payments again
▶ 1:51:26for veterans who can resume payments. This would meet the goal that the chairman just expressed about stopping foreclosures until the new program is up and running. Aside from adjustments to its home retention program, the other steps VA could take will only help affordability around the edges at best, or would seek to address issues not within VA's The problems of housing supply and overall market affordability are problems for all home buyers and mortgage borrowers.
▶ 1:51:56The VA's appraisal and minimum property standards ensure the soundness of the homes veterans purchase and catch faulty Any change should be first examined for fair lending compliance and any needed additional system accountability. Any steps the agency takes on underwriting should avoid changes that could undermine loan performance or unnecessarily narrow program access.
▶ 1:52:24VA's unique underwriting guidelines with a focus on the borrower's residual income have led to an impressive track record. Any reductions in closing costs will be limited, if useful, and cannot have a significant impact on market-wide affordability issues. VA should also explore a small dollar mortgage loan pilot in coordination with FHA. Thank you for the opportunity to testify.
▶ 1:52:47We urge VA to stand up the partial claim and new waterfall in a way that protects the fund, limits servicer burden, and stabilizes homeownership. The gentlewoman's time has expired. The chair now recognizes Ranking Member Pappas for 5 minutes. Thanks. Excuse me. Ma'am, your written statement will be entered into the record. The chair now really actually recognizes Ranking Member Pappas. Thanks. Well, thanks very much, Mr. Chairman. I appreciate everyone's testimony here today. Mr.
▶ 1:53:15Lee, in your testimony that was submitted to us, you said veterans today, just as in the early 1980s, face one of the most challenging housing affordability environments in decades, marked by elevated interest rates, limited inventory, and rising home prices. I'm just wondering for all the witnesses here, you've you've touched on this, but can you stress what the major headwinds are facing buyers right now? Mr. Lee, you can start. Yeah, I think that the um uh largest headwind facing buyers is supply. It's the supply of inventory of homes for sale.
▶ 1:53:45Um so, the supply of inventories of homes for sale is up um in relation to where it's been since COVID, but it has never recovered um in terms of there not being enough houses for sale. Obviously, we have a supply problem. The amount of homes that we used to build in this company or country uh up to the Great Recession has never recovered from after the Great Recession.
▶ 1:54:10So, anything that can be done in order to bring a greater supply of homes onto the market, building new uh and or anything that could be done to get people to put more homes on the market, uh like the piece of legislation to modernize and uh step up the capital gains um uh tax deduction for the sale of your primary residence uh would help the situation quite a bit. I see our Realtors nodding. Anything else you want to add in terms of headwinds? Absolutely.
▶ 1:54:40It's definitely inventory supply in shortage. We estimate there's about 5 million homes shortage. So, that translates to roughly, if we could increase production by 400,000 units, it would take us easily 12 to 13 years to catch up to demand. Um so, that is a big deal, and there are provisions on the table. HR 1340 is one of those uh those bills that consist, as is HR Thank you. Ms. Cohen. Agree about supply. It's obviously a big issue.
▶ 1:55:09Prices are also quite high and having institutional investors involved in the market is also making um a home out of reach for a lot of people, but it would be a mistake to only look at home buyers and not look at staying in the home. So, I would just add that once we get people into homes, we need to make sure they can afford to stay in their homes. Thank you. Well, thanks, Ms. Cohen. I was going to note in your written testimony you you referred to that, saying the most affordable home is the one where they currently reside.
▶ 1:55:37Uh and um uh actually, Mr. Lee, you said that. And and Ms. Cohen, you said uh the most important step that VA can take is to promote affordability for veterans uh and help them avoid unnecessary devastating home loss when they face financial hardships. Um so, I wanted to just ask about the end of the VASP program, and I appreciate the chairman's comments about how we can stave off uh foreclosure for veterans that are anticipating this partial claims program coming online.
▶ 1:56:03Um did did the end of VASP negatively impact um veterans in the VA home loan program, and has it had any impact on the floor foreclosure rate overall? Ms. Cohen, I don't know if that's something you want to take. We work with attorneys around the country who represent veterans and other borrowers with federally backed mortgages. And after the VASP program was canceled, there were many homeowners who were facing hardship who needed a solution that was just out of reach because the new program wasn't yet online.
▶ 1:56:34And so, it has definitely pushed more people to the brink of foreclosure and home loss that we haven't had a program in this gap period.
▶ 1:56:41Yeah. Mr. Lee, any observations there? No, we just wanted to uh reiterate our thanks to everybody on this committee on both sides of the aisle for the help in getting the Partial Claims Act passed. We would commend the VA for their drafting table approach um because that would promote a better solution um faster, even though we would like to see it as soon as possible, and I can promise you that our members and our servicing members are readying themselves to implement it as fast and professionally as possible as soon as we get it.
▶ 1:57:11Yeah. Mr. Thompson, thanks so much for your service through the New Hampshire Air National Guard. I should have led with that at the top. We appreciate uh what the guard does for for all Granite Staters. And um you talked about the the disparity that can exist with veteran buyers um and some of the challenges that they have with seller concessions, and you know, having to um offer above asking price. Um how do we work to level that playing Absolutely. So, one of the things that came up was increasing the concession from 4 to 6%.
▶ 1:57:41That would make a huge difference in my opinion. One of the areas where we can streamline or make things more affordable for our veterans is when we're able to work with the seller to provide a concession towards those closing costs to minimize the amount of cash coming in. In terms of the minimum property requirements, that is a challenge as well. Many times, veterans buyers take themselves out of contention even before they get to the point of offer, knowing that the property may not be in a condition that's going to pass those requirements.
▶ 1:58:09And as good stewards of our our veteran buyers, we don't want to walk them into landmines when resources may be limited. So, it's very important that we streamline those issues as well.
▶ 1:58:20Thank you. My time's up, so I yield The gentleman yields back. The chair now uh Representative Amodei from the great state of Arizona. Thank you, Chairman. You're welcome. Mr. Lee, from the lender side of the table, where's the single biggest source of delay or added cost in the VA loan process compared to conventional or FHA loans?
▶ 1:58:41Well, uh the MBA would like to see uh a modernization of the uh both the uh appraisal standards and how appraisers are approved for the process. The MBA does believe that um 5 years is too long. Uh we would love to see something much closer to the way the rest of the market operates.
▶ 1:59:02A lot of states have adopted a 2-year period that we think would be sufficient and that would speed along that process. you know, as we've talked about a modernization of the minimum property standards to bring it closer to where Fannie Mae and Freddie Mac are with the GSEs would definitely streamline the program.
▶ 1:59:26And now the VA still relies on manual underwriting underwriting while FHA has moved to a semi-automated system that can approve a loan in 2 to 7 days compared to the VA's roughly 10. Now, from an industry standpoint, what would automated underwriting do for VA loan competitiveness and for the veterans waiting on approvals?
▶ 1:59:46Automated underwriting does speed along the loan process, especially for the loans that you know, fit more right away into the box of underwriting where the underwriting simple income is simple. So, that would be helpful. we don't think it's at the absolute major choke point of getting a VA loan approved as fast as possible.
▶ 2:00:12Right, but if it can speed it up by maybe eight to three days compared to FHA, that would make a big difference.
▶ 2:00:19It would make a difference and it would it would reduce the stigma that's sometimes on a VA loan for the fact that it might be harder or take longer to get to the closing table.
▶ 2:00:29I'm all about just making it simple. You know, if FHA is doing something, I don't see how a VA is taking a a longer time. They're both federal programs. Now, Mr. Thompson, I hear from veterans in Phoenix, Peoria, Surprise, Glendale that there is a real stigma against VA loans in competitive housing markets. Listing agents falsely claim that VA loans take longer to close or have a higher denial When the data shows it's just the opposite. VA loans actually have the lowest denial rate of any loan type.
▶ 2:00:57Now, from your experience in the field, how pervasive is the stigma and what can be done to educate the real estate I think that it's a timeline issue. So, many times when you're looking at a transaction, the appraisal comes in at a certain point after home inspections, purchase and sales. So, when that's coming in, there is a potential for a property to have a risk exposure on those elements within the minimum property requirements.
▶ 2:01:22Which require either a seller to take action and repair them, the consumer to take action and repair them, or the transaction could become terminal. So, there is an added risk over say a conventional or a cash purchase. And unfortunately, in the market that can cause some challenges. Now, I can tell you I had a client just a year and a half ago, they accepted the VA loan over a higher cash offer.
▶ 2:01:46So, there are still sellers out there that value the good work of our servicemen and women and will do the right thing, but we can't rely on that. We need to try to streamline those programs to minimize friction for our veterans. Yeah, that's great. There's so many brave patriotic Americans that are willing to support our service members as well.
▶ 2:02:03Absolutely. I want to thank you all and I yield back, Mr. Chairman. The gentleman yields and I recognize myself for 5 minutes. Mr. Lee, you said something really interesting and I thought it was kind of right now, when we look at this the VA is intending on making service members who are having issues making their mortgage the partial claim mandatory out of the gate. Is that correct?
▶ 2:02:33do not believe that's correct, but we would like to see some changes in the waterfall. Yeah, we need we need to I mean, we have a copy of all that stuff, but we need to me and Chris got to sit down and look at this collectively and our staffs to make sure we agree with it because with Chevron that finding, if it does not comport to our intent, then that rule will not stand.
▶ 2:02:59So, as opposed to having to undo something, I would prefer to make sure that we nail it right. So, let's if it's cool with you, let's talk about that later to get I mean, to really get down to brass tacks on this so we don't have to undo something that the administration does. Ma'am, Ms. Cohn, I want you to know that we weren't like blowing you off. We're discussing the points that you were bringing up to make sure that we can have a really good discussion at the time. So, I appreciate you doing that stuff.
▶ 2:03:26There are some things that we do need to address about VASP and the reason that it went away is that the previous administration what would have been a $18 billion check without congressional authorization. And my concern is and I stated this earlier, the two best programs that the United States government has ever developed are the Veterans Home Loan Guaranty Program and the GI Bill.
▶ 2:03:51And so, for someone to administratively decide that they can magically create an $18 billion problem set without talking to us about it directly contravened the will of Congress. And we don't want to see any veteran removed from their home ever. I don't want to see that happen.
▶ 2:04:10We have to make sure that we we maintain the integrity of the program so every single person in the future that wants to buy a home or is currently on active duty has the availability to use this program. That is the intent. That is why we did the partial claim thing to align it with other federal lending programs. And I know that because we wrote it. So, there is one other thing
▶ 2:04:36Mr. Chairman, may I respond? Yeah, sure. Go ahead. First of all, my father went to college on the GI Bill and he bought the house I grew up Right, I know [snorts] right. You know what I'm talking about.
▶ 2:04:46with you about that. Second, I think the question right now is what can we do now before the partial claim is stood up so that people don't lose their homes between now and then. And you raised that issue yourself. We're suggesting something called full pay forbearance. People who can resume their payments, who will be able to qualify for the new be further behind because they didn't have their payments accepted. And so, we're suggesting that as a stopgap measure.
▶ 2:05:15It will stop them from falling further behind and prevent avoidable
▶ 2:05:20explain Thank you for that. Can you explain the having to accept a 15% increase in their mortgage? So, the way the proposal works from VA and it's my understanding that they've heard similar feedback and they're looking at it closely is that the the top options before you get to the payment that would stay the same or the partial claim is that if you can tolerate a 30-year mortgage with a 15 up to 15% payment increase, then you don't
▶ 2:05:51get to the next option and then you stay at that higher payment. And I I believe the goal of that was to not extend people's terms or total amounts due, but what it gives people is an unaffordable payment that will lead to foreclosure. Okay. So, that's that's exactly why we need to really get get into the weeds. a hearing like this isn't really the setting for that.
▶ 2:06:14That's sitting down and looking at these things in detail and preempting any issues that we may have ahead of time. Well, with that, I don't have any more questions. I want to thank you very much for coming today and I appreciate your work. I know that your your heart is exactly where ours is.
▶ 2:06:37That's making sure that every single man and woman that serves our nation in uniform has the ability to live the American dream and that is home ownership. Oh, I You know what? My time is expired. Do you mind if I just ask one more question? How much money are you into building a home before you even break ground?
▶ 2:07:01I'm not qualified to ask that cuz it answers that cuz it varies by location and the red tape of getting it through the local municipality. There's a lot of things we can work on that together to streamline. Look forward to doing that.
▶ 2:07:13Nailed it, Mr. Thompson.
▶ 2:07:16It's somewhere around $100,000.
▶ 2:07:18Yeah, we've we have been in a lot of meetings where I've heard between 70 and or higher depending upon where you are So, you're you're you're buying a $200,000 home for $300,000 because there's a whole bunch of people that got six bosses and want you to fill out 400 pieces of paperwork, right? Yes, sir. That's what we need to change. That's where your affordability comes in. Getting rid of these damn bureaucrats and paperwork and just do things. All right. So, listen, God bless you guys. Thank you so much for coming. I appreciate it.
▶ 2:07:49Thank you, Mr. Chairman. I ask unanimous consent that all members may have five legislative days to revise and extend their remarks, including extraneous material. Without objection.