A bill that requires the Department of Veterans Affairs to update its appraisal rules passed the Senate on Tuesday.
In recent weeks there had been murmurs among lobbyists that the legislation, the Improving Access to the VA Home Loan Benefit Act of 2022, would be pushed through during the lame-duck session. It was passed unanimously and now heads to President Biden's desk to be signed into law.
Under the legislation, which was introduced in mid-May by Sen. Dan Sullivan R-Alaska, and Rep. Mike Bost, R-Illinois, the VA will be required to update regulations, requirements and guidance related to appraisals. The agency will also have to codify the use of desktop appraisals.
The VA did not immediately respond to a request for commentary.
Appraisals for VA loans have been a sore subject in the mortgage industry, with many claiming that the process is both costly and timely, which has made VA borrowers less competitive in the housing market.
The legislation will require the agency to address both points of criticism by providing further guidance for desktop appraisals. The agency will have to take into account situations where desktop appraisals provide cost savings for borrowers and where a traditional appraisal requirement could cause time delays and jeopardize the completion of a transaction.
By codifying desktop appraisals, the VA will join Fannie Mae and Freddie Mac in making desktop appraisals a permanent fixture.
The bill on its face is incredibly broad, and it is that way for a reason, industry stakeholders say.
"If you make it prescriptive, it probably would have triggered more opposition," said a lobbyist who spoke on the condition of anonymity. "This is not as much of a mandate as many stakeholders might have wanted it to be, but I put this in the category of 'do the doable and win the winnable.' "
Trade groups including the Mortgage Bankers Association and the Community Home Lenders of America issued statements applauding the Senate for passing the legislation.
Bob Broeksmit, the MBA's chief executive, said in a statement that the bill will help the "nation's servicemembers, veterans, and their families have access to more affordable, sustainable homeownership opportunities."
"To the benefit of buyers and lenders, the VA will now be required to encourage hybrid appraisals, employ emerging technologies, and revisit policies on property inspection waivers, minimum property requirements, and comparable sales," Broeksmit said.
Scott Olson, executive director of the CHLA, said "it's critical that VA loans for veterans are done in a manner that is competitive with other mortgage loans."
