John Bell, Deputy Director of Loan Guaranty Services at the VA has made numerous improvements for Veterans pursuing the American dream of homeownership. The system may not be perfect but the VA is working diligently to better the process for everyone involved.
Buzz: John, thank you for taking the time to join us today. I understand that you are currently the Deputy Director of Loan Guaranty Service at the VA and in 2012 you began making some major changes to the benefits process for Veterans. Can you tell us a bit about that?
John: Rewind to 2011-2012, our entire process of how we provided the benefits was manually intensive. At that time, the loan process was reviewed manually with a checklist and issued a deficiency letter to a lender if the VA staff found they did not meet our guidelines. A huge problem was our inability to analyze the information gleaned from those reviews and understand trends in different regions. We also struggled with tracking the participation of lenders and appraisers in the program. For example, it was very difficult to understand how a particular lender performed or was managed in two different areas of the country. We completely changed the way we managed the environment from being reactive to making targeted decisions on the type of reviews we needed to conduct. LGY (Loan Guaranty Services) built a tool that generated 200 data points on every file reviewed which allowed us to create a Lender Scorecard. To date, we have reviewed over 100,000 files in this environment.
Buzz: How about appraisers participating in the program? Have there been any significant changes?
John: It was difficult to understand the performance and service the appraiser’s provided to Veterans. Specifically, how much time did it take to provide a value and what quality did it represent. Beginning in 2012, every appraisal is ran through an automated appraisal engine that creates feedback which shows the integrity of the appraisal (determining adherence to our guidelines), and whether the value is in line considering the comparables available. This feedback equips a Staff Appraisal Reviewer with the tools and resources they need to determine the quality of the product submitted.
In 2012, it took VA about 14 business days to issue a Certificate of Eligibility. VA made enhancements to our systems to entice Veterans and lenders to utilize the automated process. We now process 95% of all eligibility requests electronically, by issuing over 65% of them without human intervention. This has reduced the time to issue a Certificate of Eligibility to under 48 hours. Because we improved those processes and systems we receive fewer calls which has reduced a 65% blocked call rate (where before lenders weren’t able to reach a person) to now answering calls in less than 15 seconds.
Buzz: During your time in the industry, how have you seen things change for Veterans in the real estate market?
John: I believe we have created a competitive product for Veterans to be able to use their benefits. We take our mission seriously and that is to give Veterans, Servicemembers, and surviving spouses the ability to obtain, retain, and adopt a home. Are we finished? The answer is a resounding “no”. I left the private sector because I believed we could provide a more efficient way to access the benefits and we are on track to do that very thing. Improving the environment for all stakeholders is fundamental in combatting the challenges and the false perceptions the program has faced over time. We need for them to know that we are trying to create a transparent program, that lenders, appraisers, and real estate agents respect and value in order for them to in turn provide the opportunity for Veterans to take advantage. The valuation industry is evolving and we need to be just as agile, without sacrificing the quality the VA appraiser panel provides to the process.
Through our relationship with stakeholders, agencies, the lending community as a whole, like the mortgage bankers association, the Appraisal Institute, Valuation Expo and other organizations – we spread the message and listen to the issues Veterans face. You have to understand what the environment is and what the people are telling you before you make any improvements.
Buzz: How has the appraiser fee panel grown since the changes made in 2012?
John: VA as a whole, including our appraisal fee panel, went through a difficult period in 2014-15 due to a lack of timeliness. We had an aging panel and we didn’t do ourselves any favors by not actively expanding. We needed to be aggressive in recruitments, provide resources and tools for our panel to remain successful and above all, we needed to improve communication and set the right expectation. We have spent so much time in that effort.
Buzz: Being so hands-on in the industry and Veteran relief programs, do you see many Veterans coming home without housing arrangements or jobs? How can appraisers and lenders help?
John: Certainly, there are opportunities for all of us to help. As we have had numerous discussions with the Appraisal Institute and Appraisers themselves. It is apparent that we need to figure out a way to bridge that gap. We have discussed what steps would a Veteran take to become an appraiser when they come home? What opportunities are out there for them? How can we help? My hope is that we continue to work with the industry to find easier paths for Veterans to become appraisers.
Buzz: Has the program grown in recent time?
John: Volume has grown over 450% since 2008. At the same time, the number of employees at VA is relatively unchanged. In order to meet the demand, we had to accomplish a few major tasks.
- How could we better engage with stakeholders and determine how to resolve issues?
- How could we automate processes to improve timeliness and accuracy?
- How could we attract appraisers into a fee panel that was shrinking by the minute?
- What were the expectations from all of our stakeholders, most importantly Veterans?
This program is all about making sure Veterans can utilize the benefits, but it is just as important for them to be able to stay in the home. We owe it to them to ensure they move into a home that is, at a minimum, safe, sound and sanitary. Which we provide with our minimum property requirements, as we didn’t want Veterans moving into a property that was a cloud over their head. VA has always been there to help Veterans when they face financial problems. We have maintained the lowest foreclosure inventory rate in the industry for the last 40 quarters (under 1%), as well as one of the lowest seriously delinquent rates. These are key indicators that Veterans are succeeding once they have moved into a home.
Buzz: John, thank you for taking the time to talk with us, is there anything you would like to say that we may have missed?
John: I say all the time if you come across a Veteran who is not utilizing their benefits or thinking of not using them, ask “why”. The program saves Veterans money. Every day we come to work, and we do it to make the VA the most competitive lending program available in order for Veterans to utilize the benefits they have earned.
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