Veterans Affairs Loan Origination and Servicing

The VA Home Loan Guaranty Program was created in 1944 under the GI Bill to assist veterans in becoming homeowners. Since its creation in 1944, the VA has guaranteed more than 18 million home loans, valuing $944 billion.

In the last five years, VA has assisted over 1 million veterans in obtaining financing. The single greatest advantage of the VA home loan program is the opportunity to purchase a home without a downpayment. Many veterans, especially younger veterans, have not had the opportunity to accumulate the funds needed for the downpayment, but do have sufficient income to make their monthly payments.

VA guaranteed loans are made by private lenders, such as mortgage companies, banks and thrifts. Lenders process, underwrite and close most VA loans without any prior approval of the loan by VA. The VA guaranty means that the lender is protected against loss up to the amount of the guaranty if the borrower fails to repay the loan.

In February 2008, the VA published final rules establishing a new series of servicing regulations for the VA Home Loan Guaranty program, which will be phased in over an approximate eleven-month timeframe, as mortgage servicing industry segments "go live" on a computer-based tracking system called VALERI, or the VA Loan Electronic Reporting Interface. This series replicates existing regulations, but also includes changes related to several aspects of servicing and liquidating guaranteed home loans in default, and the submission of guaranty claims by loan holders. VA presented the phased implementation plan for the new electronic reporting requirements.