U.S. GOVERNMENT PUBLISHING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Publishing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

25–099 2017

A REVIEW OF VA’S LOAN GUARANTY AND SPECIALLY ADAPTIVE HOUSING GRANT PROGRAMS (SAH) 

HEARING 

BEFORE THE

SUBCOMMITTEE ON ECONOMIC 

OPPORTUNITY 

OF THE

COMMITTEE ON VETERANS’ AFFAIRS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

WEDNESDAY, FEBRUARY 10, 2016 

Serial No. 114–54 

Printed for the use of the Committee on Veterans’ Affairs 

( 

Available via the World Wide Web: http://www.fdsys.gov 

Leonard.horne on VACREP0180 with DISTILLER

(II) 

COMMITTEE ON VETERANS’ AFFAIRS 

JEFF MILLER, Florida, Chairman 

DOUG LAMBORN, Colorado 

GUS M. BILIRAKIS, Florida, Vice-Chairman 

DAVID P. ROE, Tennessee 

DAN BENISHEK, Michigan 

TIM HUELSKAMP, Kansas 

MIKE COFFMAN, Colorado 

BRAD R. WENSTRUP, Ohio 

JACKIE WALORSKI, Indiana 

RALPH ABRAHAM, Louisiana 

LEE ZELDIN, New York 

RYAN COSTELLO, Pennsylvania 

AMATA RADEWAGEN, American Samoa 

MIKE BOST, Illinois 

CORRINE BROWN, Florida, Ranking 

Minority Member 

MARK TAKANO, California 

JULIA BROWNLEY, California 

DINA TITUS, Nevada 

RAUL RUIZ, California 

ANN M. KUSTER, New Hampshire 

BETO O’ROURKE, Texas 

KATHLEEN RICE, New York 

TIMOTHY J. WALZ, Minnesota 

JERRY MCNERNEY, California 

JON TOWERS, Staff Director 

DON PHILLIPS, Democratic Staff Director 

SUBCOMMITTEE ON ECONOMIC OPPORTUNITY 

BRAD WENSTRUP, Ohio, Chairman 

LEE ZELDIN, New York 

AMATA RADEWAGEN, American Samoa 

RYAN COSTELLO, Pennsylvania 

MIKE BOST, Illinois 

MARK TAKANO, California, Ranking 

Member 

DINA TITUS, Nevada 

KATHLEEN RICE, New York 

JERRY MCNERNEY, California 

Pursuant to clause 2(e)(4) of rule XI of the Rules of the House, public hearing records 

of the Committee on Veterans’ Affairs are also published in electronic form. The printed 

hearing record remains the official version. Because electronic submissions are used to 

prepare both printed and electronic versions of the hearing record, the process of converting 

between various electronic formats may introduce unintentional errors or omissions. Such occurrences are inherent in the current publication process and should diminish as the process 

is further refined. 

Leonard.horne on VACREP0180 with DISTILLER

(III) 

C O N T E N T S 

Wednesday, February 10, 2016 

Page 

A Review of VA’s Loan Guaranty and Specially Adaptive Housing Grant 

Programs (SAH) ................................................................................................... 1 

OPENING STATEMENTS 

Honorable Ryan Costello, Acting Chairman .......................................................... 1 

Honorable Mark Takano, Ranking Member .......................................................... 2 

Honorable Amata Radewagen, Member ................................................................ 12 

WITNESSES 

Ms. Heather Ansley, Associate General Counsel for Corporate and Government Relations, Paralyzed Veterans of America ............................................... 2 

Prepared Statement ......................................................................................... 20 

Mr. Ross A. Meglathery, MPA, Director, VetsFirst .............................................. 4 

Prepared Statement ......................................................................................... 23 

Mr. James H. Danis II, CMB, AMP, President, Residential Mortgage Corporation, On behalf of the Mortgage Bankers Association ....................................... 6 

Prepared Statement ......................................................................................... 26 

Ms. Sherri Meadows, 2016 Vice President, National Association of Realtors .... 7 

Prepared Statement ......................................................................................... 31 

Mr. Mike Frueh, Director, Loan Guaranty Service, Veterans Benefits Administration, U.S. Department of Veterans Affairs ................................................. 9 

Prepared Statement ......................................................................................... 34 

Leonard.horne on VACREP0180 with DISTILLER

Leonard.horne on VACREP0180 with DISTILLER

(1) 

A REVIEW OF VA’S LOAN GUARANTY AND 

SPECIALLY ADAPTIVE HOUSING GRANT 

PROGRAMS (SAH) 

Wednesday, February 10, 2016 

COMMITTEE ON VETERANS’ AFFAIRS, 

U. S. HOUSE OF REPRESENTATIVES, 

Washington, D.C. 

The Subcommittee met, pursuant to notice, at 2:07 p.m., in Room 

334, Cannon House Office Building, Hon. Ryan Costello presiding. 

Present: Representatives Costello, Radewagen, Takano, and Rice. 

OPENING STATEMENT OF RYAN COSTELLO, ACTING 

CHAIRMAN 

Mr. COSTELLO. Good afternoon, everyone, and the Subcommittee 

will come to order. Chairman Wenstrup has a scheduling conflict 

and apologizes for not being able to join us today. I am pleased that 

we were still able to reschedule this important hearing following 

the snowstorm that caused us to postpone it last month. 

The subject of today’s hearing is the Loan Guaranty Service of 

the Department of Veterans Affairs. The major mission of this service is the administration of the VA Home Loan Program. This benefit was originally authorized by the Servicemembers’ Readjustment Act of 1944 and has provided over 22 million loans to veterans since its inception. While the home loan program is a wonderful benefit that helps veterans achieve their piece of the American dream, it is also a win-win for taxpayers. Unlike most other 

VA benefits programs, the home loan program operates as a partnership between the VA and the private mortgage industry. It is 

because of this partnership and the VA’s high underwriting standards that VA-backed loans consistently have one of the lowest foreclosure and delinquency rates in the country. 

While the benefit provides a great service to veterans, there is 

always room for improvement. I am concerned there are veterans 

who are unaware of this benefit and I look forward to hearing from 

the VA about their outreach efforts. I am also concerned that the 

current cap on loan guaranty amounts excludes as many as 12,000 

veterans who live in high cost areas from using this benefit. Yesterday, the House passed a version of Mr. Zeldin’s legislation that removed this cap. I am hopeful that our colleagues in the Senate will 

consider this proposal quickly and send it to the President’s desk. 

The other issue we will examine this afternoon is the administration of VA’s Specially Adaptive Housing Program that provides 

grant funding for severely injured veterans to adapt their homes to 

Leonard.horne on VACREP0180 with DISTILLER

2 

make them more accessible for their needs. Some of our witnesses 

have raised concerns about the amount of paperwork and processing delays associated with this benefit. While I understand 

there is a need to examine each veteran’s circumstances to appropriately fund the adaptation that fits their needs, we must strive 

to improve timeliness of service for all veterans. 

Finally, I would like to commend Mr. Frueh and the staff of VA’s 

Home Loan Guaranty Service for their dedication and their willingness to work with the Members and staff of this Subcommittee. 

They truly represent the model for positive interactions with Congress, and I wish other parts of the department would take a page 

out of their play book. 

With that, it gives me great pleasure to recognize Mr. Takano for 

any opening remarks he may have. 

OPENING STATEMENT OF MARK TAKANO 

Mr. TAKANO. Thank you, Mr. Chairman. The VA’s Home Loan 

Guaranty Program leverages the non-government world of realtors, 

lenders, builders, and servicers with the veterans who want to buy 

a home. Because the government protects lenders from loss on 

these loans, and because of the safeguards built into the law barring lenders from entering into loans that are risky, more VA loans 

go to closing than any other product in the industry. Veterans are 

able to find the homes they want and get into them with a minimum of time and hassle, clearly a win-win for all involved. 

Today’s hearing is a check-in on this popular program as well as 

on the Specially Adaptive Housing Program, which helps serviceconnected disabled veterans build or adapt homes so they can live 

with greater ease after being catastrophically injured. The Specially Adaptive Housing Program has seen an increase of 65 percent since fiscal year 2013. Today we will hear how VA’s improvements in outreach have contributed to this increase, and what is 

needed in terms of funding and staffing to meet the challenges 

ahead if growth continues at that pace. 

Both programs embody successful public-private partnerships, 

and I think that makes all of us happy here. I want to thank the 

witnesses for being here today and I look forward to their testimony. Thank you, Mr. Chairman, I yield back. 

Mr. COSTELLO. Thank you, Mr. Takano. On our first and only 

panel we have Ms. Heather Ansley with Paralyzed Veterans of 

America; Mr. Ross Meglathery, with VetsFirst; Mr. James Danis 

testifying on behalf of the Mortgage Bankers Association; Ms. 

Sherri Meadows testifying on behalf of the National Association of 

Realtors; and finally, Mr. Mike Frueh, who is the Director of VA’s 

Loan Guaranty Service. Thank you all for being here. Each of you 

will be recognized for five minutes for your oral statement. Ms. 

Ansley, let’s start with you. 

STATEMENT OF HEATHER ANSLEY 

Ms. ANSLEY. Thank you, Representative Costello, Ranking Member Takano, and Members of the Subcommittee. Paralyzed Veterans of America would like to thank you for the opportunity to 

testify this afternoon regarding the Department of Veterans Affairs 

Loan Guaranty and Specially Adaptive Housing Grant Programs. 

Leonard.horne on VACREP0180 with DISTILLER

3 

Our testimony this afternoon will focus on VA’s Adaptive Housing 

Grant Programs. 

PVA’s members are veterans who are catastrophically disabled 

by a spinal cord injury or disease. Many of them have benefitted 

from VA’s Specially Adaptive Housing or SAH Grant Program. Providing a catastrophically disabled veteran with an accessible home 

is an investment that pays dividends in lower health and long term 

care costs. We hope that every effort will be made to strengthen 

VA’s Adaptive Housing Program and increase the benefits available 

for these veterans by making investments in staffing, streamlining 

and expediting grant processing for veterans with terminal illnesses, and improving outreach. 

Investments in staffing are needed to increase the number of 

SAH agents serving veterans. In many parts of the country, inadequate staffing contributes to delays in processing grants and results in poor customer service for veterans. According to PVA’s 

service officers, many veterans have a difficult time contacting 

their SAH agents as phone calls and emails are not returned in a 

timely manner. PVA believes that veterans’ inability to connect 

with their SAH agents is not only unfair to them, but also to these 

agents who are sincerely trying to serve veterans despite too many 

tasks and too few resources. Insufficient staffing also leads to retention problems as agents leave their positions due to excessive 

workload and extensive travel requirements. PVA’s service officers 

report frequent turnover, which overburdens agents who must 

carry increased workloads when other agents leave. In addition, 

some agents cover large geographic areas and travel hundreds of 

miles one way to meet the eligible veterans, which also leads to 

delays in responding to veterans and processing grants. 

One of the biggest challenges PVA encounters in the SAH Grant 

Program is the length of time it takes for grants to be processed 

and approved. This is especially true for veterans living with 

amyotrophic lateral sclerosis, or ALS. Veterans with ALS are critical users of the SAH Grant Program and the housing adaptation 

assistance it provides. VA’s SAH grant process, however, is not well 

suited to veterans with rapidly changing diseases like ALS. As a 

result, it may be difficult for a veteran with ALS to get the adaptations he or she needs when he or she needs them. 

In its recommendations to the 114th Congress, the coauthors of 

the independent budget, which include PVA, Disabled American 

Veterans, and the Veterans of Foreign Wars, recommended that VA 

expedite these grants for veterans who are terminally ill, including 

those who have ALS. This includes encouraging the use of waivers 

to prevent adaptations that are unneeded due to the veteran’s level 

of disability. 

Ultimately, the SAH Grant Program must be flexible enough to 

assist veterans who have relatively static disabilities such as spinal 

cord injuries, and those who have rapidly changing diseases such 

as ALS. 

Delays in processing grants for veterans with diseases such as 

ALS can also prevent these veterans’ families from accessing the 

mortgage protection that is available through the VA’s Veterans 

Mortgage Life Insurance, or VMLI program. The VMLI program is 

designed to provide a mortgage insurance option for veterans who 

Leonard.horne on VACREP0180 with DISTILLER

4 

otherwise would not be able to seek such coverage. Coverage begins 

when an eligible veteran receives final approval of the grant. VMLI 

must be available to these veterans earlier in the grant process. 

One incremental change would be to approve VMLI at the same 

time as the final grant instead of waiting until funding is in escrow. Another option would be to approve those that are eligible for 

VMLI coverage as soon as VA determines that they meet all applicable requirements with the exception of the final approval of the 

adaptive housing grant. 

PVA strongly supports VA’s adaptive housing programs because 

the benefits available through this program are not only life-changing, but also life-saving. 

When a veteran is determined by VA to be eligible for ancillary 

benefits including adaptive housing, VA provides the veteran with 

a decision that includes information about these benefits, and such 

a notice typically includes the requisite forms to apply. We have 

noticed, however, that the required forms are not always provided 

with the notice of eligibility and for veterans who are not represented by a veterans service organization like PVA, it may be difficult for them to navigate the sea of benefits for which they are 

eligible. 

PVA provides significant outreach related to the benefits of 

adaptive housing. Our service officers communicate with our veterans to ensure they understand the benefit and the importance of 

the program. We also seek to increase awareness by providing information on our Web site, and in our meetings, and in our membership magazine. We also work to provide information about how 

to design a wheelchair accessible for home and we support efforts 

to increase affordable accessible housing for all people with disabilities. 

We appreciate the Subcommittee’s focus on VA’s adaptive housing program. We hope additional resources will be available, and 

we thank you for the opportunity to share our thoughts today. 

[THE PREPARED STATEMENT OF HEATHER ANSLEY APPEARS IN THE

APPENDIX]

Mr. COSTELLO. Thank you. Mr. Meglathery? 

STATEMENT OF ROSS MEGLATHERY 

Mr. MEGLATHERY. Representative Costello, Ranking Member 

Takano, and other distinguished Members of the Subcommittee, 

thank you for giving VetsFirst the opportunity to testify regarding 

VA’s Loan Guaranty and Specially Adaptive Housing SAH Grant 

Programs. 

VetsFirst has represented our disabled veterans, their families, 

and their caretakers since 1946 when paralyzed World War II veterans came together to claim their rights. We advocate for the programs, services, and disability rights that help all generations of 

veterans with disabilities remain independent and fulfill their desire to reintegrate into society. Today through our parent organization, United Spinal Association, we are not only a VA-recognized 

national veterans service organization, we are a leader in advocacy 

for all people with disabilities. We are honored to have the opporLeonard.horne on VACREP0180 with DISTILLER

5 

tunity to testify about the VA’s Loan Guaranty and SAH Grant 

Programs and offer some suggestions for improvement. 

The VA’s Loan Guaranty Program is a critical benefit to veterans 

across the Nation and it is an example of what the VA is doing 

right by veterans. More than 80 percent of veterans utilize this 

program as a result of its affordability and ease of use. VA’s delinquency rate is quite low as a result of the holistic approach to ascertain the veteran’s income based on monthly expenses. On a personal note, I have taken advantage of this benefit, and it allowed 

me to purchase a home in an area with an extremely high cost of 

living. 

From the perspective of the VSO, this benefit is one of ease. We 

just determine the eligibility of the veteran, and the lender does 

the remainder of the work. It is an example of a program that supports VetsFirst’s core principle one of independence, and core principle two of timely access to VA benefits. 

VetsFirst supports all programs that are designed to enhance the 

independence of veterans with disabilities. For this reason, community integration and independence is our first core principle. The 

ability to own a home that is adapted to the unique needs of each 

individual is critical for both the emotional and physical well-being 

of the veteran. VetsFirst wholeheartedly backs SAH. We would like 

to highlight areas where we see that improvements are warranted 

and would make this program even more successful. 

Currently, both SAH and Vocational Rehabilitation and Employment Program are in the business of housing modifications for veterans. VetsFirst believes this is a less efficient way to utilize limited resources. SAH staff are experts in the arena of home modification. While VR&E staff are hardworking and diligent, they are 

not solely focused on this benefit. Additionally, as you know from 

a prior hearing, VR&E staff are currently overworked with large 

caseloads supporting vocational rehabilitation. By taking home 

modification off their portfolio, VR&E would be able to focus on 

their area of expertise. 

In the last few years, SAH has seen an increase in approved 

grants. The addition of VR&E’s caseload would add to that growing 

number. For this reason, VetsFirst would like to emphasize its desire to see that SAH is fully funded and staffed to support this upward trend, and would like to see that commensurate with any addition of the VR&E caseload. 

VetsFirst does not advocate removing VR&E from the process altogether. If a veteran is getting vocational rehabilitation in conjunction with home modifications, VetsFirst recommends a threeway dialogue amongst the veterans, SAH, and VR&E personnel. 

Currently, SAH gives the veterans the chance to choose which 

contractor to use for home modification. VR&E does not. We recommend shifting VR&E’s home modification to SAH. Giving the 

veteran the choice of contractor is important on several levels. It 

allows the veteran to have the independence they would seek and 

it allows them to quickly address any problems or complaints with 

the intent of not having to bring in a third party to settle the dispute. 

With regard to grant money that is funded, VetsFirst is concerned that the benefit is not a large enough amount. SAH has 

Leonard.horne on VACREP0180 with DISTILLER

6 

been indexed based on inflation. However, we are concerned that 

the baseline was too low. Currently, the maximum amount of a 

grant is just under $74,000. Often, with that money, the veteran 

is forced to make choices as to what to modify and what not, or pay 

the remainder out of pocket. Another point of concern is the 

amount of the grant is not based on the cost-of-living, but rather 

standard across the board. Anyone who has lived in the Washington, D.C. metro area is aware that the cost of living here, for 

instance, is a lot higher than in Boise, Idaho, for example. 

The last point I have to make about SAH based on feedback from 

my VSOs and our online help desk, Ask VetsFirst, is that the SAH 

process takes longer than desired. This should not be seen as a 

criticism of the individual SAH staff members as they work in the 

local community. It is a way to identify an opportunity to find a 

solution for rapid response. 

VetsFirst would like to express its thanks for the opportunity to 

testify today on the Loan Guaranty and SAH Programs. We appreciate your leadership on behalf of this Nation’s veterans. I would 

be happy to answer questions. 

[THE PREPARED STATEMENT OF ROSS MEGLATHERY APPEARS IN

THE APPENDIX]

Mr. COSTELLO. Thank you. We will recess and reconvene very 

shortly. 

[Recess.] 

Mr. COSTELLO. I call the hearing back to order and recognize Mr. 

Danis on behalf of the Mortgage Bankers Association. 

STATEMENT OF JAMES H. DANIS 

Mr. DANIS. Chairman Costello and Members of the Subcommittee, thank you for the opportunity to testify this afternoon 

on VA’s Home Loan Guaranty Program. 

I have been in the mortgage business for 23 years and have 

worked with the VA Home Loan Guaranty Program the entire 

time. My company, Residential Mortgage Corporation, is an independent mortgage lender located in Fayetteville, North Carolina. 

Approximately 70 percent of the loans we issue are VA loans. In 

North Carolina with our large military population centered around 

Fort Bragg, loans guaranteed by VA are an important part of our 

market. In fact, their use is steadily increasing. In the latest fiscal 

year alone, more than 14,000 VA purchase loans were originated 

in our state, up 13 percent from 2014. 

For many reasons I am a staunch advocate of the VA Home Loan 

Guaranty Program. You see, the homes my parents purchased and 

where my siblings and I were raised were bought with VA loans. 

In keeping with our family tradition of military service, I served 

my country, and my first home was financed with a VA loan. 

Much like our company, MBA has been a consistent supporter of 

the VA Home Loan Guaranty Program. Our industry is united in 

the belief that the VA remains an important and viable program 

for veterans and active duty military personnel. Providing 100 percent LTV loans is a tremendous benefit to our veterans who have 

dedicated their lives to serving our country and is crucial in miliLeonard.horne on VACREP0180 with DISTILLER

7 

tary communities. But as credit markets have tightened and loan 

underwriting has become stricter, finding low downpayment mortgages has become increasingly difficult. 

Despite most VA borrowers not having skin in the game, VA 

loans have continued to outperform their counterparts. In fact, the 

VA portfolio has been able to sustain production, and weather the 

turbulent market largely due to its historically conservative underwriting standards which includes a residual income test. VA mortgages have always been fully documented, and fully underwritten 

loans and owner occupied properties. That is why they continue to 

perform so well today. 

Additionally, the borrowers who use the VA program are as diverse as the entire U.S. population. According to VA’s 2015 Annual 

Benefits Report, African Americans comprise 10.6 percent of VA 

loans; American Indian and Alaskan Natives 8.3; Hispanics 7.8; 

and Asian and Pacific Islanders 2.6 percent. 

In our written testimony, MBA offers a number of policy recommendations for improving VA programs. Chief, among them, we 

urge the VA to issue a final qualified mortgage rule that establishes clear bright lines for VA lending, and once the rule is issued, 

we hope that they will permit an appropriate implementation period so that smaller lenders like our company have the time we 

need to test our systems and ensure we are in full compliance. 

MBA also calls on Congress to reauthorize the extended foreclosure protections afforded to active duty military by the 

Servicemembers’ Civil Relief Act, or SCRA. During the financial 

crisis, SCRA’s foreclosure moratorium for active duty military 

members was extended from three years to a year. Unfortunately, 

that important consumer protection lapsed at the end of last year. 

In our view, it should be extended immediately and ultimately 

made permanent. 

I want to conclude my testimony by commending VA and its excellent staff for the collaborative approach they take to policy making, as well as their overall emphasis on maintaining open lines of 

communication with our industry. We are grateful for our strong 

partnership, and look forward to continuing to work together on 

the issues I have outlined here today. 

Once again, I want to thank you for holding this hearing and 

shining a spotlight on the importance of this vital path to home 

ownership. We look forward to working with you to help our members of our military, past and present, achieve the American 

dream. 

[THE PREPARED STATEMENT OF JAMES H. DANIS APPEARS IN THE

APPENDIX]

Mr. COSTELLO. Thank you, Mr. Danis. Ms. Meadows testifying on 

behalf of the National Association of Realtors, welcome. 

STATEMENT OF SHERRI MEADOWS 

Ms. MEADOWS. Good afternoon. I have been a realtor in North 

Central Florida for 33 years. I serve in a volunteer position as the 

2016 Vice President of the National Association of Realtors, and 

represent its more than one million members working in all aspects 

of real estate. 

Leonard.horne on VACREP0180 with DISTILLER

8 

The National Association of Realtors is a strong supporter of 

housing opportunities for veterans. According to the U.S. Census, 

there were 19.3 million veterans in the United States in 2014 and 

2015, and one in five home buyers was a veteran or active duty 

servicemember according to our NAR survey. 

In 2015, the homeownership rate was 76 percent for veterans, 

more than 12 points above the national average. The Department 

of Veterans Affairs Home Loan Guaranty Program serves a large 

population and has been doing it well for over 70 years, including 

in the aftermath of the recent recession. VA’s strong, yet flexible 

underwriting allows veterans the ability to purchase a home of 

their own without depleting their savings. More than 82 percent of 

veterans utilize the zero downpayment option provided by the VA. 

Despite this VA delinquency, rates are very low, comparable even 

to today’s tight conventional lending. Despite all the talk about the 

skin in the game, loans with appropriate underwriting, especially 

VA’s use of the residual income test, and zero downpayment can 

successfully balance risk, and provide sustainable homeownership. 

A realtor in Atlanta once told me the story of a veteran who lost 

his job, and as a result his home, during the Great Recession. 

When he found a new job, he moved with his family to Atlanta. He 

worked to rebuild his credit and was able to use his VA guaranty 

to buy a home for his family just two years after being out of work 

and down on his luck. This would have been impossible without the 

VA. 

VA also protects their borrowers. Extensive counseling, and active negotiating helps veterans who run into financial difficulty. 

Since 2009, the VA has prevented more than half a million veterans and their survivors from losing their homes, while saving our 

taxpayers more than $16 billion in claims payments. 

NAR also supports grant programs that allow disabled veterans 

to own a home that accommodates their needs. VA provides two 

types of grants to servicemembers and veterans with service-connected disabilities to help purchase or construct an adapted home 

or modify an existing home to accommodate a disability. These 

grants provide a significant benefit that allows our disabled veterans to retain their independence. 

We support the comments by the two veterans service organizations urging that staffing and financial levels are sufficient to operate the program efficiently. 

In recent years, this Committee has made tweaks to the home 

loan program to make it even more useful for veterans. The National Association of Realtors is here today to offer several other 

changes that could further enhance the program. Number one, consider higher cost loan limits. The VA Home Loan Guaranty Program is unique. It is not simply a Federal loan program, it is an 

entitlement promised to our military members in return for their 

service to our Nation. Veterans should be able to purchase a home 

wherever they choose to live and should not be prevented from 

using their entitlement due to the low loan limits. We urge this 

Committee to increase the VA loan limits and not penalize veterans for geographic differences in the housing market. 

Number two, VA fee requirements. NAR believes that VA borrowers should be allowed to negotiate fees with sellers, just as nonLeonard.horne on VACREP0180 with DISTILLER

9 

VA buyers do, as part of the home purchase transaction. A realtor 

in Ohio recalled a client who wanted to use his VA benefit to purchase his first home. His lender tried to discourage him from using 

the VA, saying it was too time consuming and complicated. Moreover, he lost offers on the first several homes he bid on because the 

seller did not want to deal with the VA requirements. While the 

veteran was able to buy the home, he ended up using FHA and 

paying 3.5 percent downpayment to get the home he wanted. We 

urge VA to create a level playing field and provide veterans with 

the flexibility to negotiate all fees so they are not disadvantaged 

when trying to buy a home. 

Number three, incentivize a program for renovation and rehabilitation. NAR urges the U.S. Department of Veterans Affairs to 

incentivize lenders to use existing authority to offer a veterans renovation pilot program, similar to the FHA’s 203(k) Program. The 

203(k) Program provides a loan for post-renovation appraised 

value. It is a safe and viable way for veterans to purchase a home 

that is in need of renovation while still using their guaranty. 

The National Association of Realtors strongly supports the VA 

Home Loan Guaranty Program and the Specially Adaptive Housing 

Grants. It is our hope that the Subcommittee will support our recommendations for enhancing and improving the VA Home Loan 

Guaranty Program, so it may be a real benefit to those who bravely 

served our country. 

I would also like to thank the Members of this Subcommittee. 

Each of you have served your communities and our Nation’s veterans very well in areas such as protecting private property rights, 

advocates for affordable housing, the disabled, domestic violence 

victims, and those that are less fortunate than us. It has been an 

honor and I thank you for the opportunity just to be here today. 

[THE PREPARED STATEMENT OF SHERRI MEADOWS APPEARS IN THE

APPENDIX]

Mr. COSTELLO. Thank you, Ms. Meadows. Mr. Frueh, who is the 

Director of the VA’s Loan Guaranty Service, welcome. 

STATEMENT OF MIKE FRUEH 

Mr. FRUEH. Thank you, Mr. Chairman, Ranking Member 

Takano, and Members of the Subcommittee. Thank you for this opportunity to appear before you today and discuss the status and accomplishments of the Loan Guaranty Program and the Specially 

Adaptive Housing Program. 

Our program’s mission is a very simple one. We work to maximize veterans’ and servicemembers’ opportunity to obtain, retain, 

and adapt homes. However, our program does not generally make 

loans, build or sell homes, service loans, nor do we build adapted 

homes. Instead, we rely on lenders. We rely on realtors, appraisers, 

servicers, builders, and many others in the mortgage industry to 

help us deliver these benefits that our veterans have earned, many 

at great sacrifice. 

We have worked relentlessly to increase our program’s efficiency 

and effectiveness by delegating functions to our mortgage industry 

stakeholders. And I would like to take this opportunity to thank 

my colleagues at the Mortgage Bankers Association, the National 

Leonard.horne on VACREP0180 with DISTILLER

10 

Association of Realtors, and others like the National Association of 

Home Builders and the Appraisal Institute that have worked with 

us over the years to help make our program work better for our 

Nation’s veterans. 

To ensure this relationship is effective, we maintain a robust 

oversight and risk management program to secure a world class 

veteran experience, ensuring these private sector stakeholders adhere to our program goals, values, statutes, and regulations. Our 

work centers on creating success on all sides of the program. We 

work constantly to remove barriers veterans may face when using 

their benefits and ensure that veterans experience high quality 

consistent services no matter where they live. This work ranges 

from in home grant consultations with SAH eligible veterans and 

their families, to creating informational YouTube videos and the 

Google Hangout feeds, to making prudent policy changes that facilitate timely appraisal and loan closings, more efficient SAH 

grant processing, or innovative loss mitigation efforts. 

We also work to ensure our program is easy to understand and 

at the forefront of industry processes and technology so that our 

private sector stakeholders succeed in their missions to make and 

service loans, construct or renovate homes, and manage and sell 

properties. On this front, we facilitate daily electronic transmission 

of loan and property data, we established permanent liaisons to all 

of the lenders and servicers across the Nation, and we hold regular 

forums, trainings, and calls, so stakeholders have open access to 

our leadership to ask questions, and obtain realtime answers and 

timely explanations of program or industry changes. We built systems that streamlined the flow of information between the industry 

and VA and provide analytical tools that decrease the time from 

application to closing so veterans benefit directly. 

Through these strong partnerships, our focus on veterans, and 

our continuous drive to innovate and enhance operations and performance, we have built a high performing program that works for 

veterans, our stakeholders, and the American taxpayer. We have 

seen tremendous results from our efforts in removing barriers and 

enabling access. For the past few years, VA loans have equaled or 

exceeded industry benchmarks for time to close, percent of applications that actually do close, serious delinquency rate, and foreclosure inventory rate. We know our approach works because by 

creating ways to help our industry partners more effectively deliver 

these benefits, they have responded by offering veterans an interest 

rate lower than that for any other type of loan. 

Veterans prove our approach works as well. At the same time, 

we guaranteed our largest number of loans last year, while preventing the largest number of foreclosures, the VA loan program 

maintained the second highest satisfaction rating in J.D. Power’s 

Primary Mortgage Origination Satisfaction Study, significantly 

higher than the industry average. 

The VA loan is not a good loan, it is a great loan. VA loans are 

viewed by lenders as safe and viable and viewed by veterans as an 

important financial benefit that helps them obtain a home for their 

families. Additionally, the work we have done to streamline policies 

and procedures in the SAH Program have enabled us to process a 

Leonard.horne on VACREP0180 with DISTILLER

11 

record number of grants for veterans who want to live independently in their own homes. 

We have done some amazing things over the past few years. But 

could we do better? Of course we could. We can always do better. 

And no matter how successful we have been, we are always looking 

forward to see how we can make the program successful for veterans a decade from now. To that end, we are focusing on a number of initiatives that will empower veterans with information and 

access to innovative, effective, high quality products and services. 

We have made incredible progress in our ability to manage, market, and sell foreclosed properties, and we have been able to increase our return on sale to almost 90 percent while decreasing our 

time in inventory to under 120 days. 

We created a Federal Housing Agency Task Force, where FHA, 

USDA, VA, and others meet regularly to talk about best practices 

in the mortgage industry. And we are happy to report that USDA 

thought our processes were so good that they asked us to start 

managing and marketing their REO properties. And in the past 

three months, we have already made inroads in selling their properties, and they look to save about $10 million a year by using our 

processes. 

Finally, Mr. Chairman, I would like to leave you with three 

thoughts about the impact our program has on veterans, on the 

taxpayers, and on the U.S. housing market. The record 631,000 

borrowers obtaining a VA guaranteed home loan last year enjoyed 

an interest rate that was on average more than a quarter point 

below the rate for conventional loans. In addition to the longstanding no downpayment feature of VA loans, because they require no mortgage insurance premiums, those 631,000 borrowers 

saved over $40 billion in their mortgage payments for the life of 

their loans. Even here in D.C. that is serious money. The savings 

in downpayment and mortgage insurance are a strong benefit to 

veterans who may need those funds in the future to overcome unforeseen financial obstacles. 

Since 2009, we have worked with private sector loan servicers to 

help over half a million veterans and their families retain their 

homes or avoid foreclosure, helping a record 90,000 last year alone. 

And finally, in the past three years, we have helped over 4,000 

severely disabled veterans build or adapt homes to help them live 

independently in the house of their choosing. And the 1,800 we 

helped last year represents almost a 50 percent increase from the 

record setting year before. 

Obtain, retain, and adapt. It is that simple. Mr. Chairman, I appreciate the opportunity to speak today. I would like to thank the 

Subcommittee for your support of our veterans and for the productive working relationship that we have had with your Committee 

Members and your staff. I will continue to identify opportunities to 

enhance our program and stand ready to provide any information 

or technical assistance that the Subcommittee requires on ideas the 

members believe would help deliver our benefits to our veterans. 

This concludes my testimony. 

[THE PREPARED STATEMENT OF MIKE FRUEH APPEARS IN THE APPENDIX]

Leonard.horne on VACREP0180 with DISTILLER

12 

Mrs. RADEWAGEN. [Presiding] I thank the panel for their testimony and I now recognize myself for five minutes of questions. 

Ms. Meadows, can you please expand on your suggestion for VA 

to enter into a pilot program that would authorize a veteran to borrow money to rehabilitate and renovate their homes? 

Ms. MEADOWS. Thank you, Acting Chairman. The FHA 203(k) 

program, we want VA to be a very similar program to that. The 

203(k) program is a rehabilitation and renovation loan. An FHA 

buyer can purchase a home that they plan to renovate. The costs 

of that renovation are included in the loan amount. Working with 

a specially designed plan and a trained appraiser, the value of the 

completed renovations is included in the loan and put in escrow. 

The work is done by an approved contractor and the renovation 

part of the loan is paid out as the work is completed. VA has the 

authority for a similar program, but has not promoted it with lenders. We believe some kind of incentive program for lenders, whereby they get an enhanced fee due to the extra work required, would 

make this type of program available to veterans. 

Mrs. RADEWAGEN. I have got a follow-up question. Should the 

program be approved, what could be done to ensure that our veterans who live in remote areas such as the U.S. Territories would 

be made aware of and included in the program? By the way, I 

think it is a good idea. 

Ms. MEADOWS. We have, as I said in my opening statement, 

thank you for the opportunity to answer this question. We have 1.1 

million realtors across the United States and Territories. The realtors have worked very hard to promote VA loans. I have with me 

a VA Toolkit, Home Loan Guaranty Services, that each of our realtors has the opportunity to obtain. So I believe by us continuing to 

educate our members and realtors working within the community 

and with the lenders in those areas, that we would be able to promote this product. Thank you. 

Mrs. RADEWAGEN. Mr. Frueh, in her written statement, Ms. 

Ansley raises concerns about inadequate staffing levels and high 

turnover rates for SAH agents. What can be done to reduce caseloads and improve services in this area? 

Mr. FRUEH. Well as part of our evolution in the loan guaranty 

process to enable veterans to use their benefits, we look at efficiency and effectiveness across the Board. And SAH agents, by 

their very nature, need to be located, dispersed throughout the 

country, so that they can actually get to and meet with veterans 

in their homes. In fact, we have a requirement within 30 days of 

being deemed eligible for the grant, we want to be in your house, 

speaking with your family, and looking at your living conditions, 

and talking about what you want and what ideas we might have 

for your future needs. So we do need to keep those staff dispersed, 

but we have taken a lot of time the last several years to move the 

rest of the work that we can across the Nation. So that just because there is a spike in originations in a state such as California, 

it does not mean that our office that serves California is the only 

office that is affected. We spread that work nationwide. 

We have seen a lot of efficiencies in that the last couple years 

and we are making a couple changes as we proceed through that 

process of allocating those efficiencies. And one of those changes is 

Leonard.horne on VACREP0180 with DISTILLER

13 

focusing on SAH and saying where are the most disabled veterans 

living, where we need this help? We had a 50 percent increase in 

SAH grants authorized last year, which means 1,800 over 1,200 

from the year before. That is a significant increase in work for approximately the same number of SAH agents. So we are working 

to free up the other staff that we do have in our budget across the 

Nation so that more agents can be put out to work on what we 

think is a very essential, very in person, very unique benefit that 

requires one on one development. 

Mrs. RADEWAGEN. Mr. Frueh, yesterday the House passed H.R. 

3016 as amended, which included legislation from our colleague 

Mr. Zeldin that would eliminate the home loan guaranty cap. Can 

you please share with us how the current cap is affecting veterans 

in high cost areas of the country? Additionally, how many veterans 

does the current cap affect? 

Mr. FRUEH. First let me say thank you for passing that particular piece of legislation. H.R. 3016 eliminates the cap, which to 

explain is actually a little bit convoluted because it relies on several different organizations to set a cap in virtually every single 

MSA around the country. So it depends on where you live. If a veteran decides to move to a particular area or finds a house that they 

like in a particular area, what they might find by looking up our 

caps in the particular area is that the house they want to buy is 

greater than the amount that we are willing to guarantee or we are 

able to guarantee. 

I think a misnomer is that it is a lending cap. VA does not set 

a limit on how much a veteran can purchase, we set a limit on how 

much we will guarantee. Which basically means that a lender can 

offer a loan to that veteran with no downpayment up to what that 

cap is, which is predominantly $417,000 around the country. 

We did some analysis last year and found that there were about 

15,000 veterans who wanted to buy a home in an area that was, 

where the price of the home was greater than the amount that is 

allowed. And we do not know how many veterans did not pursue 

purchasing a home with their VA benefit in an area where the cap 

was less than the amount of the home that they want because they 

never started the process. What we do know is that from the inception of the program, almost 90 percent of our loans have been made 

with zero downpayment. It is a cornerstone of the program for 72 

years. Our average loan to value, our percentage of money that 

people put in on loans that they do put money in, it’s 98 percent. 

So people put two percent down. The only other national housing 

program with a small downpayment is FHA, which is a 3.5 percent 

downpayment program. So I think that our records for the last almost 22 million loans indicate that no downpayment is important. 

And setting an artificial cap on the amount that we can guarantee 

is going to limit people that want to buy a home above that cap 

because that no downpayment is a very important part of the benefit. 

Mrs. RADEWAGEN. I now recognize Mr. Takano for five minutes 

for any questions he may have. 

Mr. TAKANO. Thank you, Madam Chair. Ms. Meadows, we recently had a field hearing on veterans homelessness in my district 

and one of the witnesses was someone who worked on the VA Loan 

Leonard.horne on VACREP0180 with DISTILLER

14 

Guaranty, or the advising and educating veterans about the benefit. And I think they also work with realtors. But he said something that I vaguely recall, and I may not have it correctly, but I 

recall him saying that often realtors may have, not a vindictive or 

a malicious bias against directing veterans toward the benefit, but 

that there may be easier ways to get the veteran into a home. And 

so often they may not mention the benefit to them, even though 

that benefit may be advantageous. And that similarly the sellers, 

you know, may not wish to go, I want to kind of understand what 

that’s about, if you know what I’m talking about. 

Ms. MEADOWS. So there is a misconception among lenders as well 

as realtors and they discourage veterans from using the VA benefit 

because of that. You mentioned homelessness, and when I was the 

2014 President of Florida Realtors, we as a leadership team traveled around the state to our 140,000 members to raise awareness 

on homelessness, to bring a face to the invisible homeless, and I 

believe we helped eliminate homelessness in many communities. Of 

the 500,000 homeless in the United States, eight percent of them 

are veterans. We have 40,000 homeless veterans. So that is an 

issue that NAR is looking at. It is one of our objectives this year, 

to try to decrease homelessness, and especially among our vets. 

I was just speaking with a few of my colleagues earlier, and in 

my office what I have learned in working with the VA loans is that 

it’s just a misperception. And I taught 20 of my agents yesterday 

that the first question that we should ask as a realtor when we 

have a buyer approach us is number one, have you served? Have 

you served in the military? Because if they have, we want to thank 

them for their service, but number two, we need to tell them about 

the VA Guaranty Funding Program. The toolkit explains a lot of 

things. And I believe that realtors, we just need to educate them 

and we can overcome this misconception of the VA process being 

difficult. 

As well as I believe if we, you know, are able to negotiate the 

closing fees in the transaction and we raise those limits, because 

those individuals want to live in areas where their family is from. 

And I wrote some numbers down earlier. You were asking earlier 

the prices around the United States. And the average price around 

the United States is $222,700. But when you move into areas like 

San Jose, California, it’s $940,000. Areas like San Francisco, it’s 

$781,600. So the higher loan limits, or removing the cap are absolutely necessary. Thank you for your question. 

Mr. TAKANO. Yes, just if I could follow-up. So you did hear about 

the legislation by Mr. Zeldin that did pass, and I am happy that 

we have addressed the loan limit issue and I am hopeful that the 

Senate will pass similar language, so we can make it law and actually make this happen. But help me understand, what is the misconception? If you could just—— 

Ms. MEADOWS. That the VA process is clunky. That appraisers 

come in with low appraisals. That there are repairs that need to 

be made to the property in protecting the vet. And when you have 

an investor come in with cash, and you have somebody with a VA 

loan, the seller tends to believe in the misconceptions of this being 

a clunky process, and they are going to take the cash deal over 

somebody having to go get VA financing because those fees that the 

Leonard.horne on VACREP0180 with DISTILLER

15 

seller has to pay in the closing, play a part in what their net proceeds will be in the transaction. 

Mr. TAKANO. So is that beyond a misconception? I mean it 

sounds like, you know, the idea that cash is king, I mean, is very 

real. So I mean, it is not that maybe the realtors are under a misconception, it is maybe that they are looking for a quicker transaction, right? And so if the veteran has some other way, so I did 

recall that I had a conversation with a realtor about the appraiser 

coming in, the cost of that appraiser. So are there elements of the 

process which sort of burden the veteran who wants to go through 

the VA program? And I want to know how we can fix it because 

I want to make sure that veterans are able to use it. If there’s advantages, I want the veterans to have that advantage. 

Ms. MEADOWS. I think being able to negotiate those fees, you 

have the termite inspection fee, the escrow closing fee, the tax service fee, the document recording fee, attorneys fees, brokerage fees, 

postage and delivery charges, these are fees that a veteran cannot 

pay. So if they were able to negotiate that into the contract, I believe that you would see a more level playing field for the veteran. 

Mr. TAKANO. Well so it is not just a misconception. There are 

some real things that we need to address, and realtors are not behaving, you know, in a rational manner. I thank you for the spirit 

and attitude that you brought to Florida. But you know, that 

caught my attention and I want to work with the industry and the 

VA in looking at how we can incentivize realtors to use the program. Thank you. 

Ms. MEADOWS. Thank you. 

Mrs. RADEWAGEN. Mr. Frueh, would you like to comment on the 

fees? 

Mr. FRUEH. Yes, actually on several things that you brought up. 

One is an overall misperception that I call my father’s VA. You 

know, the way the VA operated before is really what is living in 

a lot of realtors’ minds and others in the industry, bankers, and 

others, that say it takes a long time. And that is what we have 

been working to address very very directly the last several years, 

is to survey the landscape and say, what is taking the most time 

that we control at VA? And moving it out of the way. And closing 

time is very important. So for the last several years, we look every 

month at industry benchmarks to say how long does it take to close 

a VA loan compared to a conventional loan? Which is someone that 

puts 20 percent down, or pays mortgage insurance, someone that 

has got pristine credit versus our borrowers who may or may not 

have pristine credit. We don’t have a credit requirement. They may 

or may not put something down. We do not have a downpayment 

requirement. We try to compare ourselves to the best of the best. 

And we have been at industry standard closing times around 47 

days, 49 days for most of the year. As of December, the last time 

I saw, we were about two days slower than the average conventional loan in the industry. Which to me is two days of opportunity 

that we can get back. But for the last several years, we have been 

dead even. 

So we look at things like appraisal turn times, how quickly can 

we work our appraisal process from order to receipt. And we track 

that very diligently. And we know that at eight and a half days on 

Leonard.horne on VACREP0180 with DISTILLER

16 

average for each of our 600,000 appraisals last year, we are pretty 

much on par with industry. However, there is another five days of 

notice of value issuance, which is five days that we can control. 

And we have provided tools that this year we anticipate will drive 

down that five days to one day or less. And then, we will be at a 

four-day better than what we were today in the process. So we are 

continually looking at what we can do to take little steps out of the 

way that VA controls to make the process more efficient. 

I did note that 74 percent of loans started as a VA loan actually 

closed last year, which is the highest rate in the industry. Conventional loans was only 72 percent. So our loans, if a veteran wants 

to use their benefit, they have a greater likelihood of actually getting the home that they want and completing that transaction than 

if they use any other type of mortgage, more than anyone else that 

tries to use the mortgage. 

As for closing costs we do agree, and we take what Sherri said 

seriously. We are looking at the ability for veterans to negotiate 

what fees they pay. We are kind of balancing, we have been for 72 

years, protecting veterans from getting into a situation they don’t 

like versus protecting them from buying a house that they want. 

And that balance in some periods has shown to be more protective 

than less. And I think this is a regulatory option that we have for 

some of these fees and charges that are allowable, and we are certainly willing to work with our partners in the industry to find a 

balance that works better. 

Mrs. RADEWAGEN. I now recognize Ms. Rice for five minutes for 

any questions she may have. Thank you. 

Miss RICE. So I just want to add, New York has got to be up 

there in terms of housing prices, right? I mean, I do not know how 

they compare to California, but I cannot believe that they are not 

as high because this is a perennial complaint that I hear about 

from our veteran community. 

I have one question and it really is a question that every meeting 

we have with the VA, every hearing we have, the question is, and 

we just did a round table out in my district last week. How is it— 

so there’s 40,000 homeless veterans. You mentioned some of the 

ways that you try to reach out to make them aware, whether it is 

upon separation or when they are still active duty. We have got to 

be able to do this better. I mean, one of the great failures, I think, 

of our government is we let too many veterans fall through the 

cracks, whether it is for mental health care, physical health care, 

these benefits, G.I. benefits. So is there a plan that you have, more 

than just—well we are going to do these pamphlets, that—where 

are they going to get them, how are they going to, do you understand what I am saying? How do we reach more veterans? 

Mr. FRUEH. Well that is a very very important question to ask. 

And I can address some of it. And we actually have a department 

at VA called the Ending Veteran Homelessness which is focused 

100 percent on combining all of VA’s resources that can help in the 

homeless arena and reach out with the private sector and other 

public sector entities to address the needs and various entities. Because, you know, as real estate is all about location, location, location, homeless veterans are in pockets in different areas. And we 

have to reach them where we are. 

Leonard.horne on VACREP0180 with DISTILLER

17 

You know one thing that we did as an organization last month, 

VA had their point in time count. And in about 40 communities 

around the Nation, VA employees and local representatives from 

all the different constituencies went out to count the homeless and 

to meet with the homeless and to talk to them about services that 

they could avail them right then, they could find out whether these 

are homeless veterans or non-veterans, what we can do to help 

them. And those are things that we do repeatedly to find out how 

big is the problem. Because 40,000 veterans is a number that is 

out, but there is different numbers on different days in different 

communities. So we are trying to continually address it. 

In the Loan Guaranty Program, we deal with a single benefit, 

the home loan benefit. And one thing that we focused on a lot in 

the last nine years is how do we stop a veteran who is already in 

financial distress from progressing down towards foreclosure? And 

what we have seen in the last nine years is—we have put together 

a formula, working with servicers around the country, working 

with the Mortgage Bankers Association and others, we have found 

a way to avoid foreclosure more than any other major loan product 

out there. And what we have started thinking about it more as we 

are not just avoiding foreclosure, we are helping prevent homelessness by keeping a family in a home, by not allowing one more family or one more veteran or one more member of a community to not 

have a roof over their head. So to that end, we work with our Ending Veteran Homelessness group. And when we have a veteran 

that is in default and a foreclosure date is set, we communicate 

that with them to say here is a potential for homeless. We need to 

conduct outreach to this family now and see do they have opportunities for housing afterwards. Not every deed in lieu of foreclosure 

or every short sale or every foreclosure leads to homelessness, but 

we do take it very seriously and we call this at risk for homelessness. And we identify a veteran family is at risk and we communicate with that process. But for everything else that VA is doing, 

I would have to put you in touch with our EVH group, the Ending 

Veteran Homelessness group. 

Miss RICE. I think it is one of our great moral failures as a country that we have even one homeless or jobless veteran. I applaud 

all of you for doing your part to reduce that number of homeless 

veterans. Thank you. I yield back my time. 

Mrs. RADEWAGEN. Thank you all for your testimony and questions, and I thank the witnesses for taking time out of their busy 

schedules to be here. Finally, I ask unanimous consent that all 

Members—— 

Mr. TAKANO. Madam Chair, I just wanted to ask one more. Mr. 

Danis, is it? 

Mr. DANIS. Yes, sir. 

Mr. TAKANO. You looked like you wanted to say something earlier and I just wanted to give you a chance to say it. 

Mr. DANIS. I did, and thank you. As far as the misconception 

with the question that you asked earlier, I have to agree with most 

of what Ms. Meadows says. Most of my business is done in North 

Carolina, which is veteran heavy of course. But I also work in other 

states that do not have a military presence, and I have come up 

against the same issues that Ms. Meadows has talked about where 

Leonard.horne on VACREP0180 with DISTILLER

18 

as realtors or homeowners in that area are being discouraged from 

using their VA benefits. And I think it is more of a lack of education with the lenders, the veterans, and the realtors in that area 

because they do not understand the program. They think it is a difficult and cumbersome program to work through when in reality 

VA is a very easy loan program to do. With Mr. Frueh, when he 

talks about his closing times, you know, being in 40-day range, 

there have been times where I have originated a loan on a Monday 

and closed it that next Monday. So it can be a very streamlined 

process. There is no reason why veterans should be discouraged 

from using their benefits as far as a lender is concerned. The fees 

can be an issue, but that can always be worked around. Where you 

talked about where a veteran was discouraged from using his VA 

benefits, that should not come about. The program is a very easy, 

a very workable loan program to do. 

Mr. TAKANO. Well I am very happy to hear this. And you know, 

I want to find out ways in which we can make sure the industry, 

you know, overcomes this misconception. 

Mr. DANIS. I think it is just education. It is educating lenders 

and realtors about the program. And then a little bit of experience. 

We have that experience, but it is not something that is difficult 

to gain at all. 

Mr. TAKANO. Well thank you. And I appreciate the chairwoman’s 

indulgence. 

Mrs. RADEWAGEN. Finally, I ask unanimous consent that all 

Members have five legislative days in which to revise and extend 

their remarks and include any extraneous material on today’s hearing. Hearing no objection, so ordered. 

This hearing is now adjourned. 

[Whereupon, at 3:29 p.m., the Subcommittee was adjourned.] 

Leonard.horne on VACREP0180 with DISTILLER

(19) 

1Department of Veterans Affairs, Veterans Benefits Administration, FY 2014 Annual Benefits 

Report-Home Loan Guaranty Section, available at: http://benefits.va.gov/REPORTS/abr/ABR– 

LoanGuaranty-FY14–10202015.pdf. 2 Id. 

A P P E N D I X 

Prepared Statement of Heather Ansley 

Chairman Wenstrup, Ranking Member Takano, and members of the Subcommittee, Paralyzed Veterans of America (PVA), thanks you for the opportunity to 

testify for this oversight hearing regarding the Department of Veterans Affairs’ (VA) 

Loan Guaranty and Specially Adaptive Housing Grant programs. Our testimony will 

be directed to the adaptive housing grant programs which are vital to veterans who 

have acquired a disability as a result of their service to our nation. 

PVA is an organization of veterans who are catastrophically disabled by a spinal 

cord injury or disease. Access to housing, employment, and transportation are critical to ensuring that these veterans are able to fully return to their communities. 

Many of our members have benefited from VA’s Specially Adapted Housing (SAH) 

grant program as they worked to rebuild their lives after acquiring a life-altering 

disability. Veterans who are unable to obtain accessible housing are in danger of 

being forced to live in more restrictive settings, away from their friends and family 

members. 

Authorized under Chapter 21 of Title 38 of the United States Code, VA’s SAH program provides assistance to veterans and servicemembers who need to remodel an 

existing home or build or purchase a home that will accommodate their disabilityrelated needs. Accommodations may include wider doorways, ramps, roll-in showers, 

and other modifications that allow individuals with significant disabilities greater 

independence. 

VA’s SAH program is an ancillary benefit available to veterans who are permanently and totally disabled as a result of their military service. Some of those veterans who are eligible for SAH include those who have lost or lost the use of both 

legs or both arms, those who have lost or lost the use of one leg together with the 

residuals of organic disease or injury, or those who have lost or lost the use of a 

leg together with the loss or loss of use of one arm. Veterans are eligible to use the 

grant a maximum of three times up to the current grant maximum. The benefit is 

indexed for the cost of construction. For fiscal year 2016, the grant is $73,768. In 

fiscal year 2014, VA approved 1,154 SAH grants for a total amount of $61,353,253. 1

The VA’s Special Housing Adaptation (SHA) grant is available for veterans who 

have blindness in both eyes with 20/200 visual acuity or less, those who have lost 

or lost the use of both hands, those who have severe burn injuries, and those with 

certain severe respiratory injuries. Like the SAH grant, SHA eligible veterans may 

use the grant three times up to the current grant maximum. For fiscal year 2016, 

the amount available is $14,754, as indexed for the cost of construction. In fiscal 

year 2014, VA awarded 99 grants for a total amount of $960,930. 2

Providing a catastrophically disabled veteran with an accessible home is an investment that pays dividends in lower health and long-term care costs. Veterans 

with catastrophic disabilities who are able to live safely in their homes with their 

families also reap benefits beyond those that are easily quantifiable. Consequently, 

we hope that every effort will be made to strengthen VA’s adaptive housing grant 

programs and increase the benefits available for these veterans. This includes investments in staffing, streamlined and expedited grant processing for veterans with 

terminal diseases, increased benefits, and improved outreach. 

STAFFING CONCERNS AND RESPONSIVENESS 

In many parts of the country, it appears that there are too few SAH agents 

charged with too many responsibilities. PVA’s service officers overwhelming report 

that insufficient numbers of SAH agents is a problem for their veterans. Inadequate 

Leonard.horne on VACREP0180 with DISTILLER

20 

staffing contributes to delays in processing and results in poor customer service for 

veterans. Agents are not able to handle the large workload, including the influx of 

veterans living with amyotrophic lateral sclerosis (ALS). 

According to our service officers, many veterans have a difficult time contacting 

their SAH agents. Phone calls and emails to agents are often not returned in a timely manner. PVA believes that veterans’ inability to connect with their SAH agents 

is not only unfair to them but also to the agents who are trying to serve veterans 

despite too many tasks and too few resources. 

In general, we believe that most agents genuinely try to fulfill their duties to the 

veterans in their caseloads. Many are simply stretched too thin due to the demands 

on their schedules. For example, SAH agents are required to review VA appraisals, 

which is unrelated to their role in helping veterans with housing adaptations. We 

understand that VA is hoping to eliminate this process through the use of electronic 

reports. In light of the chronic staffing needs of this program, which serves veterans 

with the most significant service-connected disabilities, we hope that VA will reassign these and other similar duties so that agents will be able to fully focus on their 

SAH-related duties. 

Insufficient staffing also leads to retention problems as agents leave their positions due to the excessive workload and extensive travel requirements. PVA’s service officers reported frequent turnover which overburdens agents who must carry increased workloads when other agents leave. In addition, we understand that some 

agents cover large geographic areas and must travel hundreds of miles one way to 

meet with eligible veterans, which also leads to delays in responding to veterans 

and processing grants. 

Limited numbers of SAH agents mean that every agent must do his or her part 

to fulfill their obligations to the veterans in their caseloads. Increased accountability 

measures are needed to ensure that all agents are performing at peak capacity. 

Underperforming agents are a burden to other agents struggling to keep up with 

the demands of their positions. 

VETERANS LIVING WITH ALS 

Grant Processing and Approval 

One of the biggest challenges PVA encounters in the SAH grant program is the 

length of time it takes for grants to be processed and approved. This is especially 

true for veterans living with ALS. ALS is presumptively related to a veteran’s military service and is rated at 100 percent regardless of how advanced the veteran’s 

disease is at the time of rating. ALS veterans are also presumed medically eligible 

for SAH even if the disease has not yet resulted in loss of use of limbs or other significant impairments. 

Veterans with ALS are critical users of the SAH grant program and the housing 

adaptation assistance it provides. VA’s SAH grant process, however, is not well suited to veterans with rapidly changing diseases like ALS. As a result, it may be difficult for veterans with ALS to receive the types of accommodations they need when 

they need them. 

In its recommendations to the 114th Congress, the co-authors of The Independent 

Budget (IB), Disabled American Veterans, PVA, and the Veterans of Foreign Wars, 

recommended requiring VA to expedite SAH grants for veterans who are terminally 

ill, including those with ALS. This includes encouraging the use of waivers where 

appropriate to prevent adaptations unneeded due to a veteran’s level of disability. 

Projects that take a long time to complete are not able to meet the needs of a rapidly progressive disease like ALS. 

Ultimately, the SAH program must be flexible enough to assist veterans who have 

relatively static disabilities, such as spinal cord injuries, and those who have rapidly 

changing diseases such as ALS. For example, SAH agents should be given permission to approve all paperwork needed in order to get these projects underway instead of following standard procedures which require the agent to gather the paperwork and submit it for approval to the regional loan center (RLC). We believe that 

this will eliminate months of waiting and delays, which will allow veterans with 

ALS to have faster access to bathrooms and other crucial areas of their homes. 

Implementation of expedited procedures for veterans living with ALS may also 

help VA continue to streamline the grant process for all eligible veterans. Although 

VA recently revised its internal processing procedures, some veterans continue to 

encounter bureaucratic processes. The need for waivers of project requirements and 

delays in receiving final grant approval once agents have submitted all paperwork 

to the RLCs continues to cause concern for many veterans. 

Veterans’ Mortgage Life Insurance 

Leonard.horne on VACREP0180 with DISTILLER

21 

VA’s Veterans’ Mortgage Life Insurance (VMLI) program provides veterans who 

are eligible for an adaptive housing grant with insurance benefits that pay down 

or off their home’s mortgage in case of their death. The VMLI program is designed 

to provide a mortgage insurance option for veterans who would otherwise not be eligible for such coverage due to their catastrophic disabilities. Coverage begins when 

an eligible veteran receives final approval of his or her adaptive housing grant. Unfortunately, delays in processing grants for veterans with diseases such as ALS can 

delay final approval and prevent veterans’ families from accessing the mortgage protection available through VMLI. 

To ensure that veterans with ALS and other similar diseases are able to receive 

mortgage protections available through VMLI for their families, VMLI must be 

available to these veterans earlier in the grant process. One incremental change 

would be to approve VMLI at the same time as the final grant instead of waiting 

until the funding is in escrow. Another option would be to approve eligibility for 

VMLI coverage for these veterans as soon as VA determines that they meet all applicable requirements, with the exception of final approval of the adaptive housing 

grant. If the veteran’s adaptive housing grant does not receive final approval, then 

VMLI coverage could be terminated. 

CONTRACTORS 

Another difficulty many veterans face is locating a contractor who will agree to 

work through VA’s adaptive housing grant process. Due to the length of the process, 

many contractors are no longer willing to work with VA. In addition, VA provides 

veterans with little guidance about how to locate contractors who are willing to 

work through the process. We understand that VA is working to improve its relationship with contractors and educate veterans. We applaud these efforts. 

VA should work more closely with contractors to ensure that they are aware of 

VA requirements up front. Providing contractors with this information might prevent all the haggling over materials and equipment in the early stages of the contract. Additional thought should also be given to the level of detail involved in providing information about the project. 

For example, floors tiles must have the slippage coefficient and color identified 

and approved prior to final grant approval. While the slippage coefficient is understandable, requiring identification of the color in most cases is not. There are many 

examples of too much information being required from contractors that is not critical to ensuring completion of a quality, safe project. 

SUPPLEMENTAL GRANT FOR ADAPTATION OF A NEW HOME 

Although veterans with catastrophic disabilities are able to access VA’s adaptive 

housing grant programs three times, up to the statutory funding limit, this benefit 

may be insufficient to assist a veteran who must move due to employment, health, 

family, or other needs. For veterans who have used up their remaining eligibility 

for these programs, they may have fewer options to acquire a new accessible home. 

Many homes are not built with universal design or other features that would allow 

these veterans the opportunity to live independently and remain healthy. 

The IB for the 114th Congress recommends establishing a supplementary housing 

grant to cover the costs of housing adaptions for veterans who have already exhausted their eligibility. This grant would be available to allow veterans with catastrophic disabilities to build or adapt another home to ensure safety and independence. Without proper living accommodations, veterans who could otherwise live in 

their homes may be forced to reside in expensive, restrictive settings. 

Providing a supplemental grant is an investment in veterans who have acquired 

catastrophic disabilities as the result of their military service. It ensures that veterans will not be forced to choose between the need to relocate and having a home 

that accommodates their needs. Until the nation’s housing stock provides a greater 

supply of homes universally designed to accommodate individuals with varying 

abilities, the lack of affordable, accessible housing will remain an issue. 

Alternatively, Congress could choose to increase the amount of funding available 

through the current adaptive housing grant programs to provide veterans with more 

funding throughout their lifetimes. Public Law 110–289 increased the maximum allowable grant amounts available through VA’s adaptive housing grant programs and 

also provided for indexing the grants based on the cost of construction. Due to indexing, the SAH grant amount has risen from $60,000 to $73,768 as of October 1, 

2015. 

Despite these increases, which have been crucial to the program, the total amount 

of funding remains inadequate. It can be difficult for veterans with catastrophic disabilities to have the kitchen or additional bathrooms adapted. Consequently, additional funding for the grant would not only allow veterans to better adapt their 

Leonard.horne on VACREP0180 with DISTILLER

22 

homes to fully meet their needs but would also increase the probability that veterans would have funds remaining to allow them to adapt another home in the future. It would also make it easier for veterans to get the help they need without 

being forced to cobble together assistance from other programs such as the Home 

Improvements and Structural Alterations grant program. 

IMPROVED OUTREACH TO ELIGIBLE VETERANS 

Access to housing adaptation assistance is fairly limited outside of VA. Discovering the benefits available through VA for housing adaption may not only be life 

changing, but also lifesaving. When a veteran is determined by VA to be eligible 

for ancillary benefits, such as the adaptive housing grant programs, VA provides the 

veteran with a decision that includes information about those benefits. Such a notice 

typically includes the requisite forms to apply for the benefits. 

We have noticed, however, that the required forms are not always provided with 

the notice of eligibility. For veterans who are not represented by a veterans service 

organization, it may be difficult for them to locate these forms and subsequently 

navigate the sea of benefits for which they may be eligible. This may be especially 

true for veterans and their families who are overwhelmed by their circumstances 

and unable to fully appreciate the ancillary benefits available to them, including 

how to obtain them. 

Without additional staff support for the adaptive housing grant programs, PVA 

is concerned that efforts to increase outreach would only lead to increased wait 

times for veterans who are seeking to use them. Aside from increased staffing to 

perform new outreach efforts, VA should seek to implement partnerships with nonprofit organizations that assist veterans with catastrophic disabilities. It is important to ensure that partners are aware of VA’s adaptive housing grant programs 

and how to direct veterans to VA for assistance. Additional outreach will also be 

critical to assisting veterans who have ALS to ensure that they understand the importance of beginning the adaptation process before it is needed so that they will 

be able to remain as independent as possible, for as long as possible. 

Everyone has a role to play in increasing awareness of VA’s adaptive housing 

grant programs. For its part, PVA’s service officers communicate with the veterans 

they assist to ensure that they understand the benefit and its importance. Some 

service officers even provide agents with veterans’ contact information as soon as 

eligibility is established to ensure that the agent is prepared to move forward as 

soon as he or she is assigned the case. 

In addition, PVA seeks to increase awareness by providing information about 

adaptive housing benefits on our website and by including articles on the grant program and housing adaptation in our membership magazine. PVA also assists veterans with disabilities by providing information about how to design a wheelchair 

accessible home. Furthermore, PVA supports broader efforts to increase affordable, 

accessible housing for all people with disabilities. 

Recent efforts include supporting increased assistance for veterans who need help 

with housing adaptations beyond that available through VA. Specifically, we support the Veterans Homebuyer Accessibility Act of 2015 (H.R. 3975). This legislation, 

sponsored by Representatives James Langevin (D–RI), Paul Cook (R–CA), and Dina 

Titus (D–NV), would provide a veteran first-time homeowner or a current veteran 

homeowner with a refundable tax credit of up to $8,000 for adaptive housing improvements. The credit may also be assigned to another individual making the improvements. We support these and other efforts to expand the help available to our 

members. 

We appreciate the Subcommittee’s focus on VA’s adaptive housing programs. 

Many of PVA’s members have greatly benefited from the SAH program. We hope 

that additional resources will be provided to this program and that it will continue 

to serve as a cornerstone in the efforts of veterans with catastrophic disabilities to 

remain independent. 

PVA thanks you for this opportunity to express our views. We would be happy 

to answer any questions that you may have. 

Information Required by Rule XI 2(g)(4) of the House of Representatives 

Pursuant to Rule XI 2(g)(4) of the House of Representatives, the following information is provided regarding federal grants and contracts. 

Fiscal Year 2016 

Department of Veterans Affairs, Office of National Veterans Sports Programs & 

Special Events - Grant to support rehabilitation sports activities - $200,000. 

Leonard.horne on VACREP0180 with DISTILLER

23 

Fiscal Year 2015 

Department of Veterans Affairs, Office of National Veterans Sports Programs & 

Special Events - Grant to support rehabilitation sports activities - $425,000. 

Fiscal Year 2014 

No federal grants or contracts received. 

Disclosure of Foreign Payments 

Paralyzed Veterans of America is largely supported by donations from the general 

public. However, in some very rare cases we receive direct donations from foreign 

nationals. In addition, we receive funding from corporations and foundations which 

in some cases are U.S. subsidiaries of non-U.S. companies. 

Heather L. Ansley, Esq., MSW 

Heather L. Ansley is the Associate General Counsel for Corporate and Government Relations at Paralyzed Veterans of America. 

Ms. Ansley began her tenure with the organization in January 2015. Her responsibilities include corporate legal matters, government relations, and disability advocacy. She also works to promote collaboration between disability organizations and 

veterans service organizations by serving as a co-chair of the Consortium for Citizens with Disabilities (CCD) Veterans and Military Families Task Force. Additionally, she serves as an officer on CCD’s Board of Directors. 

Prior to her arrival at Paralyzed Veterans of America, she served as Vice President of VetsFirst, a program of United Spinal Association. She has also served as 

the Director of Policy and Advocacy for the Lutheran Services in America Disability 

Network. 

Before arriving in Washington, D.C., she served as a Research Attorney for The 

Honorable Steve Leben with the Kansas Court of Appeals. Prior to attending law 

school, she worked in the office of former U.S. Representative Kenny Hulshof (R– 

MO) where she assisted constituents with problems involving federal agencies. She 

also served as the congressional and intergovernmental affairs specialist at the Federal Emergency Management Agency’s Region VII office in Kansas City, Missouri. 

Ms. Ansley is a Phi Beta Kappa graduate of the University of Missouri-Columbia 

with a Bachelor of Arts in Political Science. Ms. Ansley also holds a Master of Social 

Work from the University of Missouri-Columbia and a Juris Doctorate from the 

Washburn University School of Law in Kansas. 

She is licensed to practice law in the State of Kansas and before the United States 

District Court of Kansas. 

f 

Prepared Statement of Ross A. Meglathery, MPA 

At VetsFirst, our priorities are based on three core principles for improving the lives of veterans with disabilities. 

Core Principle-1: Community Integration and Independence 

VetsFirst supports policies that help veterans with disabilities reintegrate into 

their communities and achieve independence. Disabled veterans must have access 

to employment and educational opportunities that allow them to live meaningful 

and productive lives. 

Core Principle-2: Timely Access to Quality VA Health Care and Benefits 

Access to VA health care, compensation and pension benefits are the lifeline for 

many veterans with significant disabilities. Veterans who are unable to access these 

needed services and benefits due to delays or shortages of personnel will lack the 

foundation that will allow them to take advantage of opportunities in their communities. 

Core Principle-3: Rights of Veterans with Disabilities 

VetsFirst believes that discrimination against disabled veterans that produces 

barriers to housing, employment, transportation, health care, and other programs 

and services must be eliminated. 

Introduction 

Chairman Wenstrup, Ranking Member Takano, and other distinguished members 

of the subcommittee, thank you for giving VetsFirst the opportunity to testify reLeonard.horne on VACREP0180 with DISTILLER

24 

garding VA’s Loan Guaranty and Specially Adaptive Housing (SAH) Grant Programs. 

VetsFirst has represented our disabled veterans, their families and their caretakers since 1946 when paralyzed World War II veterans came together to claim 

their rights. We advocate for the programs, services and disability rights that help 

all generations of veterans with disabilities remain independent and fulfill their desire to reintegrate into society. Today, through our parent organization United Spinal Association, we are not only a VA-recognized national veterans service organization, but we are a leader in advocacy for all people with disabilities. 

VetsFirst is honored to have the opportunity to both underscore its support of the 

VA’s Loan Guaranty and Specially Adaptive Housing Grant Programs while at the 

same time offer some suggestions for improvement. 

Specially Adaptive Housing Grant Program 

VetsFirst supports all programs that are designed to enhance the independence 

of veterans with disabilities. For this reason Community Integration and Independence is the first of VetsFirst’s three Core Principles. The ability to own a home that 

is adapted to the unique needs of each individual is critical for both the emotional 

and physical well-being of the veteran. With that said, VetsFirst wholeheartedly 

backs the Specially Adaptive Housing Program. VetsFirst would like to highlight 

areas where we see that improvements are warranted and would succeed in making 

this program even more successful. 

Currently, both SAH and Vocational Rehabilitation & Employment Program 

(VR&E) are in the business of housing modifications for veterans. VetsFirst believes 

that this is a less efficient way to utilize limited resources. Whereas the SAH staff 

are experts in the arena of home modification, VR&E personnel are not. While 

VR&E staff are hardworking and diligent, they are not solely focused on this one 

benefit alone. Additionally as you know from a prior hearing, the VR&E staff are 

currently overworked with large caseloads supporting vocational rehabilitation. By 

taking home modification off their portfolio, VR&E would be able to focus on their 

areas of expertise. 

In the last few years SAH has seen an increase in approved grants. The additions 

of VR&E’s caseload would add to that growing number. For this reason VetsFirst 

would like to emphasize its desire to see that SAH is fully funded to support this 

upward trend and would like to see that commensurate with any addition of the 

VR&E caseload. But, by removing the stovepipe of two parallel programs, VetsFirst 

believes that in the longer term the taxpayers will see cost savings. 

That said, although VetsFirst does recommend shifting all home modification to 

SAH, it does not advocate removing VR&E from the process altogether. If a veteran 

is getting vocational rehabilitation in conjunction with home modification, VetsFirst 

recommends three-way dialogue amongst the veteran, SAH and VR&E. 

Currently, SAH gives the veteran the chance to choose which contractor to use 

for home modification. VR&E does not afford this opportunity. While it is unclear 

whether or not this lack of choice is based on statute or regulation, it serves as another reason why VetsFirst recommends shifting VR&E’s home modification to SAH. 

Giving the veteran the choice of contractor is important on several levels. First off, 

it allows the veteran to have the independence that they would likely seek. Additionally, it allows them to quickly address any problems or complaints with the intent of not having to bring in a third party to address any disputes. 

With regard to grant money funded, VetsFirst is concerned that the benefit is not 

a large enough amount. SAH has been indexed based on inflation, however, we are 

concerned that the baseline was too low. Currently the maximum amount of a grant 

is $73,768. While in some geographical areas that number is reflective of the costs, 

in areas with a high cost of living that is not enough money and the veteran is 

forced to make tough choices as to what and what not to modify; or pay the remainder out of pocket. This brings up another point of concern which is the amount of 

the grant is not based on the local cost of living, but rather a standard, across the 

board amount. However, as anyone in the National Capitol Region is aware, the cost 

of living in Washington, D.C. for instance, is not the same as it is in Boise, Idaho. 

The last point I have to make about SAH based on feedback from my lead veterans service officer and veterans using our online helpdesk, Ask VetsFirst, is that 

the SAH grant process seems to take longer than desired. This should not be seen 

as a criticism of the individual SAH staff member as they work in and are from 

the local community in which their services are used. Rather, it is stated as a way 

to identify an opportunity to find a solution for more rapid response. VetsFirst cannot state if the slowdown is a result of grant request action that must first take 

place at Cleveland or if it occurs upon receipt by the local staff appraiser who works 

with the veteran. 

Leonard.horne on VACREP0180 with DISTILLER

25 

VA’s Loan Guaranty Program 

Following the return of 16 million veterans, the VA experienced tremendous 

growth. Congress passed the GI Bill along with education and housing benefits. The 

home loan guaranty program began with the original Servicemen’s Readjustment 

Act that was passed by the United States Congress in order to extend a wide variety 

of benefits to eligible veterans. 

The main purpose of the VA home loan program is to help veterans finance the 

purchase of homes with favorable loan terms and at a rate of interest which is usually lower than the rate charged on other types of mortgage loans. 

The VA’s Loan Guaranty program is a critical benefit to veterans across the nation. During a period where VA has had much criticism leveled at it as an organization, the Loan Guaranty program is an example of the VA doing right by veterans. 

More than 80% of veterans utilize this program as a result of its affordability and 

ease of use. Although this nation has in recent years seen a housing crash, VA’s 

delinquency rate is quite low as a result of its holistic approach to ascertaining the 

veteran’s income based on monthly expenses. 

On a personal note, I have taken advantage of this benefit and it allowed me to 

purchase a home in an area with an extremely high cost of living. 

From the perspective of a veteran service organization the process by which we 

assist a veteran receive this benefit is one of ease. We help the veteran identify the 

requirements of eligibility and if/once eligibility is determined, they can contact a 

lender that will assist them through the process. 

The VA Loan Guaranty is another example of a program that supports VetsFirst’s 

Core Principle 1 of Independence. Based on its ease of use and efficient processing, 

it further supports VetsFirst’s Core Principle 2 of Timely Access to VA Benefits. 

VetsFirst would like to express its thanks for the opportunity to testify concerning 

its views on VA’s Loan Guaranty and Specially Adaptive Housing Grant Programs. 

We appreciate your leadership on behalf of our nation’s veterans who are living with 

disabilities. I will be happy to answer any questions. 

Information Required by Clause 2(g) of Rule XI of the House of Representatives 

Written testimony submitted by Ross Meglathery, Director of VetsFirst; VetsFirst, 

a program of United Spinal Association; 1660 L Street, NW, Suite 504; Washington, 

D.C. 20036. (202) 556–2076, ext. 7103. 

This testimony is being submitted on behalf of VetsFirst, a program of United Spinal Association. 

In fiscal year 2012, United Spinal Association served as a subcontractor to Easter 

Seals for an amount not to exceed $5000 through funding Easter Seals received 

from the U.S. Department of Transportation. This is the only federal contract or 

grant, other than the routine use of office space and associated resources in VA Regional Offices for Veterans Service Officers that United Spinal Association has received in the current or previous two fiscal years. 

Biography of Ross Meglathery 

Ross Meglathery is the Director of VetsFirst, a program of the United Spinal Association. Ross has devoted his life to serving the nation and its military/veteran 

community. Prior to his tenure at VetsFirst, Ross spent over 15 years in the military, Homeland/National Security and private sectors. As a high school student he 

interned for Representative Ted Weiss in his New York City district office. As a college student he attended Officer Candidates School where upon graduation, he was 

commissioned a second lieutenant of Marines. Highlights of his active duty career 

include a deployment to Western Sahara, Africa as a United Nations Military Observer serving as one of 15 US military personnel in a multi-nation contingent. In 

2004–05 Ross deployed with the 24th Marine Expeditionary Unit (Special Operations Capable) where he received the Combat Action Ribbon, and the Purple Heart 

Medal for wounds received by mortar fire. He deployed once again to Iraq as part 

of the 2007 Surge in Al Anbar where he performed the duties of a Joint Terminal 

Attack Controller (JTAC) and led a specialized team in support of US, and Iraqi 

Army units. For his service, he was awarded the Navy and Marine Corps Commendation Medal with Valor Device. In 2010, Ross was selected as a Congressional 

Marine Fellow where he worked for Representative Mike Coffman. In this capacity, 

he worked on Defense, Homeland Security, Veterans, Small Business and Rare 

Earth Metals issues. 

As a reservist, Ross has commanded an artillery battery and currently serves as 

a lieutenant colonel at MAGTF Staff Training Program Division, Marine Corps Base 

Quantico. 

Leonard.horne on VACREP0180 with DISTILLER

26 

1The Mortgage Bankers Association (MBA) is the national association representing the real 

estate finance industry, an industry that employs more than 280,000 people in virtually every 

community in the country. Headquartered in Washington, D.C., the association works to ensure 

the continued strength of the nation’s residential and commercial real estate markets; to expand 

homeownership and extend access to affordable housing to all Americans. MBA promotes fair 

and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 2,200 companies includes all elements of real estate finance: mortgage companies, 

mortgage brokers, commercial banks, thrifts, REITs, Wall Street conduits, life insurance companies and others in the mortgage lending field. For additional information, visit MBA’s Web site: 

www.mba.org. 

As a civilian, Ross has worked as a Program Analyst at the Office of Special Programs at the Department of Homeland Security for Intelligence, Surveillance and 

Reconnaissance matters. Additionally, he has experience with unmanned aerial system policy, test & evaluation, modeling & simulation, intelligence production as a 

subject matter expert in both the public and private sectors. 

Ross is a graduate of Harvard University where he earned a Master in Public Administration. In addition, he holds a Master of Science in the Management of Information Technology degree from the University of Virginia and a Bachelor of Arts 

in History from Trinity College, Hartford. 

In his spare time, Ross is the president of the board of directors for Deeper Missions a 501 C 3 organization devoted to clean energy and safe water in Africa. 

As Director of VetsFirst, Ross’s efforts support legislation that is designed to address the issues where veterans and disability community issues intersect. Ross 

seeks to bring attention to veteran issues such as PTS, TBI, MST, suicide, unemployment, VA accountability, dependent concerns and find ways to mitigate these 

problems. Additionally, he serves the Resource Center through VetsFirst’s programs 

to answer veterans’ question regarding educational, health, and disability benefits 

that they deserve based on their service. 

f 

Prepared Statement of James H. Danis II, CMB, AMP 

Chairman Wenstrup, Ranking Member Takano, thank you for the opportunity to 

testify on behalf of the Mortgage Bankers Association (MBA) 1 on the status of the 

U.S. Department of Veterans Affairs (VA) Loan Guaranty Program and Specially 

Adaptive Housing Grant Programs. I am James H. Danis II, and President of Residential Mortgage in Fayetteville, North Carolina, a Certified Mortgage Banker, and 

MBA member. 

I have been in the mortgage business for 23 years and have worked with the VA 

Home Loan Guaranty Program since 1993. Approximately 70 percent of the loans 

my company makes are VA loans. In North Carolina, loans guaranteed by VA are 

an important part of our market and their use is increasing. During fiscal year (FY) 

2015, 14,353 VA purchase loans were originated in our state, up 12.9 percent from 

FY 2014. On a personal note, I am a beneficiary of the VA Home Loan Guaranty 

Program. The homes my parents purchased to raise me and my siblings were 

bought with VA loans. In keeping with our family tradition, I served my country 

and my first home was financed with a VA loan. For many reasons, I am a strong 

advocate of this guaranty program. 

In 1944, Congress established the VA Home Loan Guaranty Program, under 

which an eligible veteran could obtain a low-interest, up to 100 percent loan-tovalue (LTV) mortgage loan to buy a house. The program was one of the major innovations and an important part of the original Servicemen’s Readjustment Act of 

1944, commonly known as the ‘‘GI Bill.’’ Since its inception, the objective of the program has been to assist eligible veterans and active duty service members in becoming homeowners. The VA program is designed to benefit men and women because 

of their service to the United States, and is not intended to fulfill general economic 

or social objectives. 

MBA has always been a staunch supporter of the VA Loan Guaranty Program 

and we believe it remains an important and viable program for veterans and active 

duty military personnel. As credit markets have tightened and loan underwriting 

has become stricter, finding zero-downpayment mortgages has become increasingly 

difficult. Providing 100 percent LTV loans is a tremendous benefit to our veterans 

who have dedicated their lives to serving our country and is crucial in military communities. 

I. Background 

Leonard.horne on VACREP0180 with DISTILLER

27 

Based on VA and MBA data, VA guaranteed 629,087 loans totaling $154.1 billion 

in calendar year (CY) 2015, to purchase or construct a home, or refinance an existing home loan. This number is up from CY 2014, when VA guaranteed 483,229 

mortgages totaling $111.7 billion. Though VA lending is still a relatively small percentage of the overall housing market, constituting 10 percent of the overall originations for CY 2015, VA home loans have gained market share, increasing from 9 percent in CY 2014 and 7 percent in CY 2013. More remarkably, according to 2014 

Census and the National Association of Realtors (NAR) data, as of January 7, 2016, 

homeownership among the veteran population is 76 percent, compared to 62.5 percent for the general population. The borrowers who use the VA program for their 

homeownership financing are as varied as the U.S. population. According to VA’s 

2015 Annual Benefits report, African Americans comprised 10.6 percent of VA loans, 

American Indian and Alaskan Natives comprised 8.3 percent, Hispanics comprised 

7.8 percent, and Asian and Pacific Islanders comprised 2.6 percent. 

VA guaranteed loans are underwritten by private lenders to eligible veterans for 

the purchase of owner-occupied homes. These loans are comprised of both fixed- and 

adjustable-rate mortgages and can be used for purchase or refinance. Lenders will 

generally loan up to four times a veteran’s available entitlement without a downpayment provided the veteran is income and credit qualified and the property appraises 

for the asking price. If the loan is approved, and the veteran is eligible, VA will 

guaranty a portion of the loan to the lender. Although the VA does not have a maximum loan amount, there are effective ‘‘loan limits’’ for high-cost counties. The basic 

or primary VA guaranty is $36,000, however, for loans that exceed $144,000, a guaranty of up to 25 percent of the loan amount is possible, and for loans that exceed 

$417,000, a guaranty of the lesser of 25 percent of the VA county loan limit or 25 

percent of the loan amount is available. This guaranty allows a veteran to obtain 

favorable financing terms while protecting the lender against losses up to the 

amount guaranteed. 

II. VA Loan Performance 

Despite most of these borrowers not having ‘‘skin in the game,’’ VA loans have 

continued to outperform their counterparts (see chart below, based on MBA data). 

This demonstrates that the VA portfolio has been able to sustain successful production and weather the turbulent market, largely due to its historically conservative 

underwriting standards, which include a residual income test. VA mortgages have 

always been fully documented and fully underwritten loans on owner-occupied properties. 

Seriously Delinquent 3rd Quarter 

2015, % Foreclosure Starts, % 

........................................................................................ 3rd Quarter 2015 

VA ........................................................................................ 2.85 0.38 

FHA ...................................................................................... 5.39 0.61 

Conventional ........................................................................ 3.23 0.34 

U.S. Total ............................................................................ 3.57 0.38 

Source: Mortgage Bankers Association 

Although VA requires no downpayment and has no monthly mortgage insurance, 

VA requires a mandatory funding fee that can be financed into the loan. This fee 

must be paid at closing unless a borrower receives service-connected disability payments each month that serve as an exemption from the fee. The fee ranges from 

2.15 to 3.3 percent of the loan amount on purchases and 0.5 to 3.3 percent of the 

loan amount on refinances. The fee varies depending on the type of loan, the borrowers’ type of military service (regular, Reserves, or National Guard), whether the 

borrower is a first-time or subsequent loan user, and whether the borrower makes 

a downpayment. First-time users’ fees are less than subsequent users. For borrowers refinancing to lower the rate, the fee is 0.5 percent. This fee is a critical part 

of the VA Loan Guaranty Program and allows the program to maintain funding for 

future generations of military families. 

III. Recommendations 

MBA appreciates VA’s continued support of veterans through its policies and 

guidelines. MBA supports VA’s primary objective of increasing access to credit for 

deserving veterans and their families through flexible underwriting criteria that 

gives lenders the ability to qualify more veterans for homeownership. This objective 

Leonard.horne on VACREP0180 with DISTILLER

28 

is reflected in VA’s willingness to help veterans and lenders to achieve sustained 

homeownership with the inclusion of a waiting period after a foreclosure or bankruptcy, 100 percent financing options, and no minimum credit score requirements. 

Additionally, it is critical to acknowledge VA’s responsiveness to lenders’ concerns 

throughout the loan process in efforts to avoid significant delays and ensure that 

loans are processed in a timely manner. To this end, MBA recognizes VA’s efforts 

to work effectively with lenders on a one-on-one basis, valuing the need to establish 

strong relationships with participating lenders. These efforts help keep the program 

relevant and encourage continued lender participation. 

Although the VA program has had an excellent track record of providing benefits 

to veterans and active duty military personnel, MBA has recommendations to further improve this important program. To this end, MBA supports the creation of a 

lender advisory panel to better align VA’s standard policies with other industry programs to ensure VA programming remains current, competitive, and adaptive to the 

changing needs of its borrowers. 

1. Originating VA Loans 

MBA offers the following origination recommendations to keep the loan program 

effective and relevant in the marketplace today. Enhancing this important program 

will encourage more lenders to participate in the VA program and ensure direct benefits for military families. 

a. VA Guidelines: 

MBA recommends that VA issue a final QM rule that establishes clear, bright 

lines in response to questions lenders have raised following the release of the interim final rule on May 9, 2014. When this final rule is issued, MBA urges VA to 

allow for an appropriate implementation period so that lenders can change processes 

and procedures and to obtain any necessary clarifications from the VA. When guidance is promulgated and effective immediately, many lenders are not afforded the 

sufficient time necessary to test their systems to ensure that they are in compliance 

with VA guidelines. 

MBA commends VA for making a number of clarifications in its recently released 

Circular 26–16–03, specifically clarifying that the ‘‘allowable fees’’ included in the 

Interest Rate Reduction Refinance Loan (IRRRL) recoupment calculation are not intended to include prepaid items such as real estate taxes and homeowners insurance. In the interim final rule, for an IRRRL to be accorded QM safe harbor status, 

all allowable fees and charges financed as part of the loan or paid at closing had 

to be recouped within 36 months through regular mortgage payments, which caused 

certain IRRRL originations to fall outside of QM safe harbor status in one month, 

and inside it in the next, based on proximity to tax season. 

This Circular, however, also changed VA policy by clarifying that for an IRRRL 

to be QM safe harbor, the loan being refinanced must have been originated at least 

six months before the new loan’s closing and at least six payments have been made 

on the original loan. In VA’s interim final rule, a lender needed to only wait six 

months from closing. The inclusion of a six month payment requirement adds an 

additional 45–60 day period after closing. This policy change will have implications 

on the way in which lenders are processing IRRRLs and will result in lender confusion without further clarification or a delayed effective date for this policy change. 

MBA urges VA to repeat these clarifications in its final QM rule. Providing clarity 

to IRRRL guidelines through a source as authoritative as a final rulemaking will 

create a sense of certainty for lenders and a consistent application of the rules 

throughout the industry. Without such authoritative guidance, some lenders may 

still be hesitant to take on the risks associated with loans that are not formally 

deemed safe harbor loans. 

b. Certificate of Eligibility Process: 

Once an active duty service member or veteran establishes their eligibility for a 

VA guaranteed loan, eligibility to obtain VA home loan benefits must be confirmed 

by obtaining a Certificate of Eligibility (COE). A COE is an official document, issued 

upon proof of military service, to verify to the lender a borrower is eligible for a VAbacked loan. Without a COE, lenders are unable to complete the processing of a VA 

guaranteed loan. The COE can be obtained by the prospective VA borrower themselves, online, by mail, or by visiting a nearby Regional Loan Center, or the document may be obtained by a VA approved lender through VA’s Automated Certificate 

of Eligibility (ACE) system. The ACE system was designed to automatically generate a COE, which is intended to make it easier for the veteran and lender to obtain eligibility verification. Though ACE automatic certifications have been significantly improved for veteran borrowers over the past year, some lenders still struggle 

Leonard.horne on VACREP0180 with DISTILLER

29 

with the additional verification needed for COEs generated and housed in the ACE 

system. In order to protect lender guarantees, lenders must be able to verify the 

original date a COE was issued due to individual lender requirements. Additionally, 

there is no mechanism for lenders to verify whether a COE has already been used 

by another lender. Though ACE has created a centralized database to hold all veteran COEs, without the ability to obtain additional verification information on these 

issuances, lenders will still be unable to accept these certifications, which ultimately 

will delay the VA loan process for a deserving veteran who is eligible for a loan. 

MBA appreciates the strides VA has made in significantly improving the COE 

process for veterans. In order to make this system even more user-friendly, MBA 

encourages VA to continue to improve the COE process and create a business to government communication system that assigns a case number to each COE request. 

By streamlining the processing system, similar to other loan program systems, lenders will have easier access to COE information. 

c. Appraisals: 

Accurate and timely appraisals are critical to a successful origination process. 

MBA recommends VA work with the industry to refine its appraisal process. Currently, VA operates a ‘‘closed’’ panel of appraisers who must be approved by VA to 

be a part of the panel. VA approved appraisers must be licensed, and have at least 

five years of experience. To maintain the independence of the appraisal process, VA 

completely controls the valuation process by setting fees, turn times, and assigning 

appraisers to assignments on a rotating and randomized basis. VA may also remove 

an appraiser from the panel based on failure to follow VA guidelines. 

Although this process works well for many, some have voiced concerns regarding 

appraiser availability and the length of appraisal processing times. Due to the limited number of VA-approved appraisers, some lenders are concerned about sufficient 

appraiser availability to cover the demand for VA appraisals. Additionally, some 

lenders have reported the overall VA appraisal process can result in extended processing times that have the potential to delay the VA loan process. 

With these concerns in mind, MBA welcomes the opportunity to work with VA 

on improving the appraisal process within the bounds of VA’s statutory framework. 

MBA encourages VA to re-evaluate its appraisal process and we look forward to 

working with VA staff on developing enhancements that will improve appraiser efficiency while maintaining the independence and integrity of the current process. 

d. Technology Support: 

Given increasing developments in technological capabilities and a fast-changing 

market, VA requires additional support for technology developments in order to increase program competitiveness and support increased efficiencies within its loan 

processes. MBA supports the allocation of increased funding and resources for VA 

to work with its participating lenders to improve its technology interface, including 

its appraisal software and lender portal, to meet the needs of both lenders and VA 

and increase technological integration with the industry. This will also enable VA 

to improve current systems and databases to make processes more user-friendly for 

both lenders and veterans. Additionally, MBA requests resources to support VA efforts to educate veterans on its homeownership program by better understanding 

the decision-making process of veterans when financing a home and to monitor and 

measure individual VA appraiser performance to help streamline the appraisal process. These initiatives are critical to the further improvement and expansion of the 

VA loan program. 

2. Servicing VA Loans 

MBA appreciates VA’s continued support of veterans through its servicing guidance and believes that VA’s efforts towards efficient communication benefits the program by providing transparency within key processes. MBA recognizes many useful 

communication tools VA uses to help lenders access contact information for specific 

groups such as Regional Loan Centers and the Construction and Valuation Section 

(C&V) to make the loan process more efficient. Additionally, the functionality of the 

VALERI Helpdesk serves as a great resource for loan-level answers. MBA also values VA’s open guidelines that give servicers the opportunity to do what is in the 

best interest of the veteran borrower. Though guidelines state a required end result, 

no specific actions are required to achieve it. This flexibility allows servicers to work 

with a borrower to make decisions that best benefit their particular circumstances. 

This program flexibility benefits lenders, borrowers, and the VA in adjusting to a 

borrower’s specific needs. 

Though there are many positive VA servicing guidelines, there are some changes 

VA could make to allow its servicing partners to better serve veteran borrowers and 

Leonard.horne on VACREP0180 with DISTILLER

30 

address the challenges unique to servicing VA loans. MBA offers the following servicing recommendations to simplify and create more cost-effective processes that will 

further improve the program. 

a. Reauthorization of the Extended Foreclosure Protections in the Servicemember 

Civil Relief Act (SCRA). 

MBA calls on Congress to reauthorize the extended foreclosure protections afforded to active-duty military provided by the SCRA. During the financial crisis, 

Congress extended the SCRA’s foreclosure moratorium for active-duty military from 

three months to one year. This extension has been continuously renewed until Congress failed to extend this provision at the end of 2015. MBA urges the House to 

reauthorize SCRA as the Senate did late last year and to ultimately enact a permanent extension of this important protection for active duty military. 

b. Assumptions: 

With many in the industry anticipating a rise in interest rates over the next few 

years, a growing opportunity for veterans seeking homeownership will be the assumption of an existing VA loan that was previously originated at lower than market rate. Today, many VA loans are assumable at the discretion of the servicer of 

the original loan. However, VA rules cap the maximum amount a lender is allowed 

to charge to process an assumption at either $250 or $300, plus the credit report, 

depending on whether the lender has automatic authority to underwrite the file on 

behalf of VA. This fee cap was set many years ago, and has not been increased or 

indexed for inflation. In practice, the actual cost of processing a loan assumption 

for a new borrower is several times this amount. Additionally, many servicing platforms are not properly equipped to process the required elements of an assumption, 

such as a creditworthiness review of the assuming party. 

In order to make processing VA assumptions viable for servicers, MBA encourages 

VA to ensure that those processing VA assumptions are able to cover their processing expenses. This can be achieved by increasing the maximum assumption fee 

servicers are allowed to charge. MBA offers to assist VA with this initiative to offer 

veterans the opportunity to utilize assumptions to further expand homeownership 

opportunities at below market rates. The availability of assumptions will also increase home values for veterans looking to sell their homes by making below market 

rate loans available to any buyer, ultimately expanding access to credit for all American consumers. 

c. Improve the Issuance Process for Disability Benefits: 

MBA commends VA on its ability to work with VA’s loan technicians to push for 

disability benefits to get veterans to workout options. In fact, MBA urges VA to reduce turnaround times so servicers can help more veteran borrowers. In some instances veteran borrowers are unable to make their payments because their disability benefits have not been processed. As a result, these veterans may be flagged 

as being in danger of losing their home. The delay in processing disability benefits 

not only hurts veterans by putting them in danger of losing their homes, despite 

their ability to make their loan payments if benefits were paid on time, delays also 

have the potential to raise VA costs because in cases of defaulted loans, VA will 

have to pay the cost of the guaranty. 

MBA recommends that VA establish a formalized process to issue disability benefits owed to deserving veterans. Through this process, VA would be able to coordinate the payment of disability benefits in tandem with housing loan payment due 

dates. A formalized process will grant veterans the benefits they are owed, keep deserving veterans in their homes, and decrease VA costs by improving VA program 

coordination. 

d. Train Regional Loan Center team members for specific states: 

While centralizing the Regional Loan Center staff has organizational and communication benefits, the process has resulted in the loss of some expertise in state specific rules or requirements. MBA encourages VA to retain the benefits of centralization by training some Regional Loan Center staff to cover specific state laws and 

requirements. 

e. Expand Loss Mitigation Options: 

There is a balance in loss mitigation between doing everything possible to keep 

a borrower in their home while protecting the taxpayer investment in the program. 

While VA loss mitigation options do afford some flexibility to servicers, the available 

program options could and should be expanded to allow servicers more leeway to 

meet the needs of the borrower. To this end, MBA suggests working with Ginnie 

Leonard.horne on VACREP0180 with DISTILLER

31 

Mae to develop programs that would facilitate pooling of longer term-extension 

modifications and other similar programmatic solutions that may help increase the 

tools a servicer can deploy in loss mitigation. 

3. Specially Adaptive Housing Grant Programs 

VA provides two types of grants to service members and veterans with permanent 

and total service-connected disabilities to help purchase or construct an adapted 

home or to modify an existing home to accommodate a disability. These programs 

are the Specially Adapted Housing (SAH) grant and the Special Housing Adaptation 

(SHA) grant. Specifically, the SAH grant program helps veterans with certain service-connected disabilities to live independently in a barrier-free environment by providing funds to construct a specially adapted home on land to be acquired, build a 

home on land already owned if it is suitable for specially adapted housing, remodel 

an existing home if it can be made suitable for specially adapted housing, or to 

apply against the unpaid principal mortgage balance of an adapted home already 

acquired without the assistance of a VA grant. These grants are critical to allowing 

disabled veterans to live independently after they return home from their dedicated 

service. According to VA data, in FY 2014, VA approved more than 1,154 SAH 

grants totaling over $61 million in home modifications for disabled service members. 

MBA urges Congress and the VA to ensure that this program is fully funded and 

fully staffed to provide disabled veterans with access to the valuable resources and 

benefits afforded by SAH grants. These benefits can be used for, but are not limited 

to, the building of wider doorways and hallways to accommodate wheelchairs, ramps 

or platform lifts, and wheelchair accessible bathrooms. Adding these housing features can be time consuming and expensive, but these grant programs are designed 

to reduce burdens and costs for deserving veterans. The robust continuation of this 

grant program is critical to the care and rehabilitation of our wounded veterans and 

a necessary benefit that will help our veterans regain their independence. 

IV. Conclusion 

MBA welcomes the opportunity to work with the VA and Congress to enhance the 

already-existing benefits of the VA Loan Guaranty Program. MBA and its members 

are willing and eager to work with this subcommittee and the VA staff in an effort 

to develop and implement our recommendations in order to increase the 

attractiveness of the VA program and, ultimately, the number of available homeownership opportunities for the many deserving eligible veterans and their families. 

We thank this subcommittee for giving MBA the opportunity to voice our appreciation for and dedication to the VA Home Loan Guaranty Program. This program 

is invaluable to the brave men and women who have sacrificed for our country. 

MBA is confident the enhancements suggested today will help make the program 

even more beneficial to veterans and their families. We look forward to working 

with you and the administration to help sustain the VA Home Loan Guaranty Program for many generations of veterans to come. 

f 

Prepared Statement of Sherri Meadows 

INTRODUCTION 

Chairman Wenstrup, Ranking Member Takano, and members of the Subcommittee, My name is Sherri Meadows. I have been a REALTOR® for 33 years, 

and am the broker/owner of three Keller Williams offices in Florida. In 2014 I was 

elected President of the Florida Association of REALTORS®, and today I serve as 

the 2016 Vice President of the NATIONAL ASSOCIATION OF REALTORS®. I am 

here representing more than one million REALTORS® working in all aspects of real 

estate. 

The NATIONAL ASSOCIATION OF REALTORS® is a strong supporter of housing opportunities for veterans. REALTORS® commend the Subcommittee for its attention to issues impacting American veterans. According to the US Census, there 

were 19.3 million military veterans in the United States in 2014. The Department 

of Veterans Affairs (VA) Home Loan Guaranty program serves a large population 

and is doing it well. The homeownership rate for veterans was 76 percent in 2014 

- well above the national average of 64 percent. 

The VA Home Loan Guaranty Program 

In 2014, the GI bill turned 70 years old, and with it, the VA Home Loan Guaranty 

program did as well. The very first loan was made that same year right here in 

Leonard.horne on VACREP0180 with DISTILLER

32 

1 National Delinquency Survey, Mortgage Bankers Association, Q315. 

Washington, DC. This entitlement program encourages private lenders to offer favorable home loan terms to qualified veterans. Today, the VA has guaranteed nearly 

22 million loans to American veterans, with a total loan volume of over $1.7 trillion. 

The number of veterans eligible to buy a home is increasing. Active military and 

veterans comprised 21 percent of all home buyers in 2015, according to NAR’s 2015 

Profile of Home Buyers and Sellers report released in November 2015. 

The VA home loan guaranty program is a vital homeownership tool that provides 

veterans with a centralized, affordable, and accessible method of purchasing homes 

as a benefit for their service to our nation. 

VA’s strong yet flexible underwriting allows veterans the ability to purchase a 

home of their own without depleting their savings. More than 82 percent of veterans 

utilize the zero-downpayment option provided by VA. Yet, despite this, VA’s delinquency rate is very low. In fact, VA’s foreclosure inventory rate (the percentage of 

loans in foreclosure) has bested that of even prime mortgage loans for 25 of the last 

30 quarters, according to the Mortgage Bankers Association’s National Delinquency 

Survey data. According to the 2015 3rd quarter MBA data, VA’s seriously delinquent rate was 1.46 percent, and the foreclosure rate was even lower at 1.39 percent. That number is very comparable to conventional lending products, which had 

a foreclosure rate of 1.10 percent, and a delinquency rate of 0.97 percent. This is 

the experience even when conventional lending rules are widely believed to be very 

tight with high downpayment requirements. 1

How does VA have such a successful program with zero down? VA requires participating lenders to ensure that the loan payments are appropriate for the veteran’s 

present and anticipated income and expenses and solidly underwrite the loans using 

debt-to-income ratios and credit history. But, in contrast to conventional lending 

and even FHA, VA also uses a residual income test. Residual income calculates how 

much income a borrower will have left for other monthly expenses after home payments. This calculation considers the borrower’s complete financial picture, and ensures money is available for emergencies or other contingencies. 

VA also requires the use of manual underwriting for those veterans who marginally qualify. For these borrowers, lenders must look at non-traditional factors and 

give veterans the benefit of the doubt when making a decision. 

This program shows that accurate and proper underwriting is the key to successful low-downpayment lending programs. Despite all the talk about ‘‘skin in the 

game’’, loans with appropriate underwriting and zero down can successfully balance 

risk and provide for sustainable homeownership. 

In addition, the VA home loan program offers protections for veteran borrowers 

when unexpected financial difficulties occur by offering a variety of supplemental 

loan servicing programs to help military families avoid foreclosure. VA offers financial counseling and can serve as an intermediary between the veterans and the private lender holding the loan. VA will try and negotiate repayment terms for veteran 

borrowers in financial difficulty. Under some specific conditions, VA may also purchase the loan and allow the borrower to make payments directly to the VA at a 

reduced interest rate. 

These interventions not only help the veteran retain their home, but save the VA 

money by avoiding the payment of a guaranty claim. Since 2009, more than half 

a million veterans, active-duty members, and survivors kept their homes, at a savings to the Government of over $16.3 billion. 

Specially Adapted Housing Programs 

In addition to our strong support for the underlying VA loan program, NAR 

strongly supports grant programs that allow disabled veterans to own a home that 

accommodates their needs. VA provides two types of grants to service members and 

veterans with service-connected disabilities to help purchase or construct an adapted home, or modify an existing home to accommodate a disability. These grants are 

critical to allowing disabled veterans to live independently, and a critical part of our 

commitment to the benefits provided in return for their service. In FY 15, VA approved more than 1,800 grants totaling $96M in home modifications for seriously 

injured service members. 

NAR urges Congress and the VA to ensure that this program is fully funded and 

fully staffed, so that veterans with disabilities can access this valuable resource. 

Making a home suitable for an individual’s disability is expensive and time consuming. The Specially Adapted Housing programs are designed to reduce these costs 

for our veterans. Our wounded warriors need assurances that their needs will be 

met through this program, and that applications will be received, reviewed and apLeonard.horne on VACREP0180 with DISTILLER

33 

2http://www.realtor.org/videos/veterans-home-loans-70-years-and-counting 

3https://www.youtube.com/watch?v=O90LCcea—Uo&list=PLA93A5833057D78B7 

proved without unnecessary delay, so they can move forward with their lives and 

regain their independence. 

REALTOR® OUTREACH TO VETERANS AND ACTIVE DUTY SERVICE MEMBERS

Many REALTORS® are veterans themselves, and NAR is proud to support our 

military members and has created special pins that recognize the service of REALTORS® in each of the military branches. Our members wear these proudly to display their veteran status. 

The National Association of REALTORS® has also created an educational program for our members to learn how to best service our military families. The Military Relocation Professional Certificate program focuses on educating real estate 

professionals about working with current and former military service members to 

find the housing solutions that best suit their needs and take full advantage of military benefits and support. To date 6,868 REALTORS® have earned the certification. 

NAR also has an ongoing partnership with the Department of Veterans Affairs. 

Each May, REALTORS® from across the nation attend a briefing at the Department 

regarding the home loan program and discuss ways to make it work to the greatest 

benefit to veterans. NAR has produced a short video, ‘‘VA Home Loans - 70 Years 

and Counting 2’’ to educate REALTORS® on the program, and has worked to disseminate a video produced by the VA entitled, ‘‘VA Home Loan Program: Why 

Should REALTORS® Work with VA? 3’’ 

Changes to the VA Home Loan Guaranty Program 

This Committee was successful in 2008 and 2012 in making a number of changes 

to the VA home loan guaranty, making this program even more useful for veterans. 

The National Association of REALTORS® offers several other changes that could 

further enhance the program. 

Consider High Cost Loan Limits: The VA Home Loan guarantee program is 

unique. It is not simply a federal loan program - it is an entitlement promised to 

our military members in return for their service to our nation. 

A significant number of veterans live in urban areas. States with the largest veteran population are California, Texas, and my home state of Florida. These three 

states account for about 24 percent of the total veteran population. Both California 

and Florida include areas where the median prices of homes are well above the national average. The current loan limits simply cannot provide all veterans with the 

full range of access. Higher limits, which provided loans up to 125 percent of local 

area median price, expired in 2014. NAR urges the Subcommittee to take action to 

give veterans the freedom to purchase a home where they choose to live. Veterans 

in high costs areas should not be penalized for geographic differences in the housing 

market. 

VA Fee Requirements: To ensure the veterans do not have to pay excessive fees 

in the home purchase transaction, VA rules limit the amount veterans can be 

charged for closing costs and even fees like termite and other inspections. While 

NAR fully supports VA’s efforts to limit fees paid by veterans, our members report 

that veterans using the VA Home Loan Guaranty program have found themselves 

at a disadvantage when purchasing a home because of these rules. NAR believes 

that VA borrowers should be allowed to negotiate fees with sellers, just as non-VA 

borrows do, as a part of home purchase transactions. 

In some purchase transactions, special certifications and inspections stemming 

from VA policy guidance are required by lenders. Today, these certifications and inspections involve fees that must be paid by the seller, as VA limits the fees veterans 

can pay in a home purchase transaction. If the seller refuses, the veteran is denied 

the opportunity to purchase the home of his or her choice. 

Some sellers have refused to even accept offers from VA borrowers, due to the inability of VA buyers to pay certain customary buyer-paid fees. This issue is exacerbated by the current low inventory of homes. When there is a multiple bid situation 

on a home, veteran buyers are often at a disadvantage, because buyers do not want 

to have to abide by VA’s rules. NAR believes that VA borrowers should be allowed 

to negotiate fees with sellers as a normal part of home purchase transactions. 

On November 7, 2014, the Department of Veterans Affairs issued new guidance 

that allows veterans to negotiate the payment of wood destroying insect inspection 

fees in select southern and western states. NAR and VA continue to work together 

to find ways to improve the loan process for Veterans. NAR has urged VA to allow 

Leonard.horne on VACREP0180 with DISTILLER

34 

buyers to negotiate the payment of certain fees, such as pest inspections. While pest 

inspection fee payments will not be allowed in all states, this policy change is a step 

in the right direction. 

REALTORS® urge VA to create a level playing field, and provide veterans with 

the flexibility to negotiate all fees, so they aren’t disadvantaged when trying to buy 

a home. 

Incentivize a Program for Renovation/Rehabilitation: NAR urges the US 

Department of Veterans Affairs (VA) to incentivize lenders to use existing authority 

to offer a Veterans Renovation Pilot Program similar to the Federal Housing Administration’s (FHA) 203(k) Program. The pilot could be run through VA’s Loan Guaranty Program, which allows a veteran to purchase, repair, alter, renovate, and improve a home under USC Title 38, section 3710. Like FHA’s 203(k) Program, this 

pilot would promote homeownership and be an important tool for community and 

neighborhood revitalization and stabilization. The program would also be effective 

in areas with a large stock of older homes in need of renovation, just as the FHA 

program has been for years. Under the Veterans Renovation Pilot Program, veterans would use their guaranty to purchase single family homes in need of renovation and repair. Condominium units would also be eligible. The borrower gets just 

one mortgage loan, at a long-term fixed rate, to finance both the acquisition and the 

rehabilitation of the property. To provide funds for the rehabilitation, the mortgage 

amount is based on the projected value of the property with the work completed, 

taking into account the cost of the work. Renovations should be completed only by 

licensed and bonded contractors. This program has been very successful for FHA 

borrowers, and should be offered to veterans as well. 

Conclusion 

I thank the Subcommittee for this opportunity to share the views of NAR regarding veterans housing. The NATIONAL ASSOCIATION OF REALTORS® strongly 

supports housing opportunities for our nation’s veterans and active duty military 

professionals. It is our hope that the Subcommittee will support our recommendations for enhancing and improving the VA home loan guaranty program, so it may 

be a real benefit to those who have so bravely served our country. 

f 

Prepared Statement of Mike Frueh 

Good afternoon Chairman Wenstrup, Ranking Member Takano, and other Members of the Subcommittee. Thank you for the opportunity to appear before you today 

to discuss the status and accomplishments of the Department of Veterans Affairs 

(VA) Home Loan Guaranty Program, to include the Specially Adapted Housing Program. 

Overview 

The mission of VA’s Home Loan Program is to maximize opportunities for Veterans and Servicemembers to obtain, retain, and adapt homes by providing a viable 

and fiscally responsible benefit in recognition of their service to the Nation. We empower Veterans with information and access to innovative, quality products and 

services by engaging our industry partners and helping them deliver high-quality 

benefits to Veterans in an efficient and effective manner. Through these strong partnerships, our focus on Veterans, and our continuous drive to innovatively enhance 

operations and performance, we have built a high-performing program that has provided nearly 22 million loans totaling over $1.7 trillion over the last 70-plus years. 

Program Data and Accomplishments 

Recent efforts increasing Veteran access to and stakeholder knowledge of the program have contributed to a number of beneficial outcomes for Veterans. Interest 

rates for VA loans remain lower than those of conventional and Federal Housing 

Administration (FHA) loans, and VA captured approximately ten percent of the 

mortgage market in FY 2015, guaranteeing a record of more than 631,000 loans. VA 

has provided more loan guaranties over the past six fiscal years (2.9 million) than 

it did in the ten years prior (2.5 million). 

Despite the worst housing-market crash since the Great Depression, VA has 

worked with private-sector loan servicers to help over 500,000 Veterans and their 

families retain their homes or avoid foreclosure since 2009. This equates to the 

United States taxpayer avoiding over $16.3 billion in foreclosure claim payments. 

Last year alone, VA saved a record 90,000 Veterans from foreclosure, which equates 

to a savings of $2.8 billion in avoided claim payments. Further, VA’s foreclosure inLeonard.horne on VACREP0180 with DISTILLER

35 

ventory rate (the percentage of loans in foreclosure) has been better than conventional prime mortgage loans for 25 of the last 30 quarters according to the Mortgage 

Bankers Association’s National Delinquency Survey data. 

VA has seen significant increases in Veterans using the Specially Adapted Housing (SAH) program in recent years as well. The SAH program is designed to ensure 

eligible seriously disabled Veterans have the ability to improve independent living 

through the purchase and/or construction of an adapted home, or the modification 

of an existing home to meet their needs. In FY 2015, we approved more than 1,800 

grants, totaling $96 million, which represents an increase of approximately 44 percent over FY 2014 and an increase of approximately 65 percent over FY 2013. Additionally, FY 2015’s approvals include a best-ever 13 grants for Veterans living outside of the U.S. Recent statutory expansions in the SAH program, coupled with military drawdowns and VA’s success in reducing disability compensation claims processing time, have contributed to the overall increase in SAH-eligible Veterans. VA’s 

success in helping these Veterans reach grant-approval is largely due to the streamlined policies and procedures that VA implemented in February 2014. 

VA has also sought to increase awareness and usage of the Native American Direct Loan (NADL) Program by reinvigorating outreach efforts to Native American 

Veterans and Tribal governments. The NADL Program allows VA to provide direct 

loan financing to Veterans seeking to live on Federal Trust lands. In order for VA 

to provide financing, a memorandum of understanding (MOU) must first be signed 

between the Tribal government and VA. During FY 2015, VA held 44 outreach 

events with over 80 tribes, and recorded nearly 1,100 individual phone or email 

communications with various Tribal governments. This work translated into eight 

new MOUs and 18 new loans in FY 2015, bringing the program-to-date totals to 93 

MOUs and 989 loans originated. 

Process and Technological Enhancements 

VA has worked to provide world-class customer service to a recent influx of Veteran borrowers by enhancing and implementing new technology and nationalizing 

or streamlining key work products and processes. One such nationalized process is 

the Home Loan Program’s certificate of eligibility (COE) workload. The COE verifies 

to the lender that a Veteran is eligible for a VA-guaranteed loan. While the percent 

of COEs issued electronically and in a matter of seconds rose to a record 67 percent 

in FY 2015, some COEs cannot be processed automatically by the system and require manual intervention. In order to increase VA’s efficiency in processing those 

requests, VA began distributing those COE requests across staff at VA’s nine regional Home Loan Program offices. In May 2015, VA’s inventory of pending home 

loan COEs was over 15,000, with an average processing time of 26 business days. 

By August 2015, that inventory declined to fewer than 4,000, with an average processing time of two business days. Currently, there are approximately 2,000 pending 

COEs, with an average processing time of two business days. 

VA also recently implemented two initiatives that provide key program and industry benchmarking data necessary for enhanced monitoring of loan, lender, and appraiser performance. As part of the first phase of an initiative to develop and implement a risk-based loan review environment, VA’s Full File Loan Review (FFLR) initiative is enhancing our electronic collection of over 300 data points from loan closing documents and our ability to standardize and analyze that data. 

Additionally, in order to ensure quality and timeliness of appraisals, VA implemented the Automated Valuation Model/Appraisal Management System (AVM/ 

AMS), which aggregates appraisal data on VA loans as well as other loan types in 

the marketplace. The AVM/AMS tool uses an automated, rules-based approach to 

identify areas of risk, and provides VA with an appraisal risk score and comprehensive and detailed data for each appraisal in one report. This tool provides VA and 

its lending partners with significant time savings in appraisal reviews and issuance 

of the notice of value, an important benefit given the program’s recent upward trend 

in loan volume. 

Outreach and Program Education 

In recent years, VA has focused outreach and education efforts on homebuyer literacy, general program and benefit information, the NADL Program, and foreclosure 

avoidance. In order to deliver information directly and further the interests of Veteran beneficiaries, VA participates in many interagency workgroups and private-sector collaborations and attends numerous mortgage industry events each year. VA 

also develops and delivers numerous informational products such as brochures, posters, and personal online testimonial videos from Veterans who have taken advantage of the assistance VA provides in avoiding foreclosure and in adapting a home 

through the SAH grant program. In response to a rapidly changing mortgage indusLeonard.horne on VACREP0180 with DISTILLER

36 

try and the need for lenders to obtain real-time answers to pressing questions about 

program policy changes, VA has developed a number of live, interactive training 

broadcasts that we later make available to those unable to attend the live broadcasts. 

VA takes a more individualized approach to outreach under the SAH Program. 

Due to the complex and individual nature of each grant, it is imperative for VA’s 

SAH agents to consistently, frequently, and personally communicate with Veterans 

throughout the entire process. Each individual Veteran’s disability and housing situation is unique, and as such requires personalized case management from VA’s SAH 

Agents. While the standard outreach methods, such as letters, are used in notifying 

the Veteran of his/her eligibility, the SAH staff adds personalized outreach from 

that point forward. Initial program interviews with Veterans are conducted in-person within 30 business days of eligibility determination, and personal agent-to-Veteran contact occurs at least every 30 business days throughout the SAH process. A 

typical SAH case involves numerous communications and in-person meetings to best 

understand and communicate the Veteran’s unique needs and to help the Veteran 

navigate the home adaptation process through to completion. VA also conducts yearly outreach to all Veterans who are known to be eligible for the SAH program. 

Inter-Agency Collaboration 

VA and the Department of Agriculture (USDA) have forged a new partnership to 

create efficiency in managing foreclosed property assets. Since 2003, and as a result 

of an OMB A–76 study, VA’s business model has been one in which a private-sector 

contractor is hired to perform all functions required to manage, market, and sell the 

properties VA acquires from lenders as a result of foreclosure. After numerous discussions between USDA and VA, the two agencies found that this privatized business model would dramatically increase the efficiency with which USDA disposed 

of its acquired properties and drastically lower costs incurred for each property sold. 

In fall 2015, VA and USDA established a pilot program under which VA leverages 

its private-sector contract to manage, market, and sell USDA’s foreclosed property 

inventory. Since sales under the program have only recently begun, significant performance data is not yet available; however, the joint value proposition analysis prepared in advance of the inter-agency agreement projects that the program will generate annual taxpayer savings of over $9 million. VA looks forward to continuing 

work with USDA to realize this projected success. 

Upcoming Activities and Enhancements 

In the coming year, VA will be working hard to provide Veterans with continued 

exceptional service. In 2016, VA will continue its focus on nationalizing and standardizing processes to ensure the program is operating in an efficient and effective 

manner. One such focus is an initiative to reduce hold-times and increase first-call 

resolution rates for calls coming in to the Home Loan Program. By moving to one 

telephone number for all Home Loan Program offices, standardizing automated call 

scripts, and nationalizing the incoming call queue, VA expects Veteran and lender 

hold times will be reduced and callers will be able to obtain the information or response desired on their first call attempt. 

Additionally, VA will enhance Veterans’ experience with the SAH grant process 

by producing a revised Handbook for Design, which Veterans, contractors, and compliance inspectors will use as a helpful resource throughout the grant and construction process. VA will release a new online training module for SAH agents so that 

they can continue to provide accurate program information and high levels of customer service to SAH grantees. The program will also continue its focus on identifying new ways to handle challenging and problematic SAH cases, such as those involving severe structural defects resulting from poor workmanship or contractor 

negligence. 

VA will develop a risk-based review process for appraisals and appraisers, and for 

its post-closing loan review program. Risk-based reviews, facilitated by the AVM/ 

AMS and FFLR technology, and developed using statistical methods, will allow VA 

to identify risk indicators in its loan and appraisal data and target high-risk cases 

for review. From an oversight perspective, VA will enhance its ability to monitor key 

program stakeholders and provide them with more detailed performance feedback. 

Further, VA’s new SAH Assistive Technology (SAHAT) grant program will be 

poised to award its first grants in April 2016, providing funding to individuals and 

entities for the purpose of developing assistive technologies related to housing. We 

look forward to receiving a number of qualifying proposals/applications from interested parties in early 2016, and we are eager to see how the new and innovative 

technologies could enhance Veterans’ abilities to live independently in barrier-free 

environments. 

Leonard.horne on VACREP0180 with DISTILLER

37 

Finally, VA will re-compete the private fee-for-service contract that provides the 

VA Loan Electronic Reporting Interface (VALERI) in FY 2016. VALERI is a software-as-a-service solution, deployed in 2008, that allows VA to monitor status on 

every VA-guaranteed loan, level and distribute work overnight, service and process 

foreclosure claims electronically, and monitor private-sector loan servicers’ performance and compliance with VA policy and regulations. Although this technology has 

enabled VA to realize significant success in helping Veterans and their families retain their homes or avoid foreclosure, it requires a refresh. VA will be working diligently to identify different contractual and technological solutions to ensure VA’s 

loan servicing technology is modernized and Veterans continue to receive the best 

service possible. 

Legislative Matters 

VA looks forward to continued discussions with the Subcommittee on how Veterans can be served by collaborative administration of VA’s SAH and Vocational Rehabilitation and Employment programs. As the Subcommittee identified last year, 

legislation would be required to effectuate the coordinated administration. VA testified to a specific section of draft bill H.R. 2344 before this Subcommittee, which proposed that housing modifications required under a vocational rehabilitation program 

may be provided under the SAH Program. VA supported the purpose of the bill, but 

outlined in written testimony some concerns with the bill as drafted. VA appreciates 

the Subcommittee’s interest in helping identify ways in which we can work together 

to serve Veterans through streamlined benefit programs, and we stand ready to provide any additional technical assistance requested of us in the coming year. 

Conclusion 

Mr. Chairman, the coming months at VA will be busy and challenging, but I know 

we will continue to provide our Nation’s Veterans with efficient, effective, and meaningful programs centered on meeting their homeownership, home retention, and 

home adaptation needs. Thank you for your continued support of our programs 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. 

Æ 

Leonard.horne on VACREP0180 with DISTILLER