For the past six years the number of house loans guaranteed by the Veterans Administration has exceeded those backed by the Federal Housing Administration, an older program which for years has been regarded as the basic federal housing program. Last year VA-backed home loans accounted for nearly 60 percent of the total.
There were 390,000 VA-backed home loans made last year, for a total of $14 billion. The average price of houses purchased by veterans using the program was nearly $37,000. Almost all of them were conventional, stick-built dwellings.
Since the VA home loan program began in 1944, more than 9.7 million loans have been guaranteed - most of them on the no-down-payment basis that has made the VA program widely popular.
Buyer and developer interest in VA financing has mounted in the 1970s with the liberalization of veteran eligibility for VA financing. A 1974 law provided that VA could guarantee refinancing, condominium and mobile home loans.
However, most of the VA-guaranteed loans are placed on existing and new single-family houses for which financing is provided by large-volume mortgage lenders. The VA guarantees up to $17,500 of a total loan that can go far higher, depending on the lender.
The VA guarantee of that portion makes the loan more secure and desirable to a lender. The current FHA-VA interest ceiling is 9 percent. Because it is nearly 1 percent below the market average for conventional loans, the builders or sellers have to pay mortgage discount points (now 5 in most areas) to make up the difference in rates. One mortgage discount point is 1 percent of the total mortgage and is payable at time of settlement as a price for the lower loan rate.
FHA loans, which have been available to all Americans since 1934, have a maximum loan limit of $60,000 and 30-year payout terms similar to VA's. FHA pioneered in long-term amortization of home mortgages.
However, the FHA basic home loans program (Section 203b) has been used less in recent years because of what builders and developers have described as red tape delays in the processing stage and because of the increased use of private mortgage insurance to provide lender protection on a portion of conventional loans.
While numbers indicate the use of the VA home loan programs by thousands of qualified veterans, they don't tell the entire story.
The VA is making a "major effort to be helpful in trying to provide decent homes for $30,000 or under for the many young veterans of Vietnam military service," said Robert C. Coon, national director of the VA loan guarantly program.
"That's why we are trying to encourage the development of permanently sited modular (or mobile) houses that meet FHA minimum property standards and can be part of the local tax base."
That program is now relatively small in numbers - an estimated 1,000 units produced in subdivisions and a few hundred more on scattered lots. But Coon said that the growing interest in low-cost housing for young families makes the use of manufactured, two-section housing units a logical target.
"New, conventionally built houses are far more expensive - and so are most of the resale houses in metropolitan areas," he added.
As the VA's Coon put it: "The assistance to veterans and military personnel is chiefly through substituting the government's guaranty on loans in lieu of the substantial downpayment, relatively short terms and other investment safeguards applicable to conventional mortgage transactions."
As an example of what is being done now in modifying mobile homes for use as low-cost, permanently sited houses on individual lots, Coon's assistant, George Alexander, cited an ongoing development in Kileen, Tex., near Fort Hood.
"Developer Jack Morris has delivered 70 one-story houses, priced from $22,800 to $29,900, within 15 months," he said. "The houses are eligible for 30-year, VA loans - instead of the 20-year, 12 percent VA loans for mobile homes that are not permanently sited on individuals lots," Alexander said.
The VA official said that the houses, which meet local codes and HUD standards for mobile homes as well as FHA minimum property standards, have 1,200 to 1,500 square feet of space. He said the buyers are mostly young married couples with two children and an average annual income of $12,500.
"One of the dwellings was resold after seven months for $1,200 more than the seller had paid for it," he added.
Therein is one of the key differences between the so-called mobile home on wheels and the same modular dwelling on a permanent foundation - on a subdivided lot that becomes part of the tax base.
"While the mobile house on rented space in a park tends to depreciate, the house that is adapted for permanent status appreciates because it is real property," Alexander said.
In the Washington area, where Robert M. O'Toole heads the regional office, general VA home loan activity has been high in new house sales, resales of existing houses and condominium apartments. Since VA began making condo loans in 1975, 80 projects have qualified for loan approvals.But adaptations of the mobile homes into permanent dwellings have been missing here.
However, Gary Nordheimer, president of Norbeck Development Associates in Chevy Chase, said that his firm has been developing "permanents" with VA financing in Virginia Beach and Fort Lauderdale and Lakeland, Fla., that sell for just under $30,000.
"And now we seem, finally, to be in the threshold of being able to start a 360-house development on 100 acres in the Germantown area," he said.With landowner Maurice Berk as a partner in the development of that site at Rtes. 355 and 118, Nordheimer seeks to build a land-planned community of dwellings that would be priced under $40,000. He said that the project had been turned down by the county planning board on the basis of established priorities for sewer allocations but later won approval of the county council. "We hope to get a final decision from the county council in late July," he added.
"Our idea is to have a half-million-dollar community center as part of the subdivision and to adapt the double-wide modulars to have cathedral ceilings and higher-than-usual roofs," he said. "Obviously we think this is a means of providing lower priced housing in Montgomery County. We have Blair & Abernathy, of Aberdeen, Fla., doing the land planning and we are studying the double-wides of several manufacturers whose products we might use."
And the manufacturers of mobile, homes are interested in marketing more of their double-wides for permanent houses.