| On November 28, 2008, it was declared that the US | | | | have helped about 74,000 veterans, active-duty |
| economy was officially in a recession. By definition, a | | | | members and survivors keep their homes. That's a |
| recession is when the gross domestic product (GDP) | | | | savings of $1.5 billion to the U.S. Government. |
| gets smaller for at least two quarters in a row. | | | | Improved VA loan benefits and VA outreach aren't all |
| Data from expert economists shows that the U.S. | | | | that contribute to the success of veterans' mortgages |
| economy has actually been in a recession since | | | | in this economic slump. Since VA home loans are |
| December 2007. Does the recession have any effect | | | | originated and funded by VA-approved private lenders, |
| on VA loans? Is the VA Home Loan Guaranty | | | | it's up to each lender to establish its requirements for |
| Program recession-proof? Conventional loans have | | | | making a loan. So not only are veterans' loans backed |
| seen a decrease in numbers during the recession. But, | | | | by the Federal Government, they're also checked |
| there are more VA loans being made now than ever. | | | | twice by lenders to assure the low risk of each loan. |
| Why? | | | | Lenders comply with VA income and credit standards |
| Several factors help keep VA loans strong even in a | | | | when considering a VA home loan application; |
| recession: recent improvements in veterans' benefits, | | | | however, lenders may establish more conservative |
| the VA outreach program, and the abilities of private | | | | lending policies, making VA loans one of the safest |
| mortgage lenders to implement the VA benefits in an | | | | mortgages on the market. |
| economic slump. | | | | And, a VA home loan is the only option left for |
| In October 2008 the Veterans' Benefits Improvement | | | | zero-down, 100% refinancing. In the current economic |
| Act of 2008 was passed into law. The new law made | | | | recession, these benefits can be very attractive. |
| the guidelines under which VA-eligible borrowers can | | | | Now, with billions of dollars pouring into the financial |
| obtain a home refinance loan more attractive than | | | | system as a result of the Wall Street bailout, many |
| ever. First, the maximum guaranty for cash-out | | | | banks are ready to lend. Due to the year-long |
| refinance loans was made the same as that for | | | | recession, there has been a big decline in the number |
| purchase loans. Also, just like purchase loans, | | | | people seeking loans. Borrowers are wary to take on |
| VA-eligible borrowers can now refinance up to 100% | | | | more debt. Many think that changes made to loan |
| of the appraised property value. And, the ceiling has | | | | qualifying standards make it next to impossible to even |
| been raised for VA's refinance loans; unique county | | | | get a loan. |
| loan limits have been established for 2009 that | | | | For VA-eligible borrowers, the story is quite different. |
| maximize the VA guaranty for loans over $417,000. | | | | Because VA loans are guaranteed by the Federal |
| Finally, the VA's authority to guaranty ARMs and | | | | Government, a VA-approved lender considers VA |
| Hybrid ARMs has been extended to September 30, | | | | home loans less risky than conventional loans even in |
| 2012. | | | | the worst of times. So, VA lenders might promote |
| The Federal Government's guaranty is protected by | | | | veterans' loans over others. |
| VA counselors who help veterans keep their homes | | | | There are many factors that can drag the economy |
| even in the toughest economic times. VA outreach | | | | down, and the VA Home Loan Guaranty Program can |
| focuses on two targets: people with VA loans and | | | | be resistant to many of them. VA-eligible borrowers |
| people without VA loans. VA counselors can advise | | | | experiencing financial distress due to their current |
| people with VA-guaranteed loans to avoid foreclosure. | | | | high-rate mortgages may qualify for VA refinance |
| And, they can advise VA-eligible borrowers with other | | | | loans with safer more doable VA terms. |
| types of loans about the benefits of refinancing to | | | | Nobody's arguing that the recession resulted in a |
| safer and more affordable loan terms associated with | | | | decline in conventional home loans. But, because of |
| VA loans. | | | | their recession-proof qualities, VA home loans are on |
| VA outreach also has special financing programs, | | | | the rise. The VA Home Loan Guaranty Program |
| repayment plans, forbearance and loan modifications | | | | makes it conceivable for VA-eligible borrowers to fare |
| that can help a veteran in real financial trouble. | | | | very well in tough economic times. |
| Research shows that since 2000, VA counselors | | | | |