A substantial increase in VA appraisal activity during May was announced recently by chief loan guaranty officer Robert O'Toole.
"Due to recent high interest rates, applications for VA loans in April declined over the previous month and were down 45 percent from April of 1979. However, since VA rates were reduced to 11 1/2 percent, appraisals have increased by 35 percent," he said.
In speaking recently to the mortgage and finance committee of the Montgomery County Board of Realtors, O'Toole said that there were over 25 condominium conversion project applications for Veterans Administration approval during a recent six-week period.
The VA official also said that a developer must obtain approval of a condo apartment complex from VA in order for a veteran buyer to get a guaranteed government loan on a unit. O'Toole said condos are one of the answers to affordable housing and VA financing as a mortgage option increases the number of potential buyers.
Under its special exception procedure, VA will also grant a loan to an individual veteran who purchases in a small project not covered by HOW, or any condo or PUD association. The same guidelines apply as for a single-family dwelling.
The purpose of a VA appraisal is two-fold, O'Toole said. It tells a purchaser what his house is worth and it protects the government in its guaranteed financial commitment.
Until recently, VA interest rates were as high as 14 percent. O'Toole called attention to Congressman Jack Brinkley's (D-Ga.) bill (HR 7458) that would allow a veteran who closed a loan at the high rate to refinance his mortgage at the prevailing interest.
The legislation, O'Toole said, would not permit the veteran to realize any proceeds from the transaction -- only to refinance the unpaid balance by using the same VA entitlement. The advantage to the veteran would be lower monthly mortgage payments. He would be required to pay all customary settlement fees. Congress is expected to hold hearings on the bill later this month.