CFPB Releases Report on First-Time Home Buying Servicemembersere VA loans.
By Jeff Sorg, OnlineEd Blog
(March 1, 2019)
(WASHINGTON, D.C.) Consumer Financial Protection Bureau – Today the Consumer Financial Protection Bureau (CFPB) released a report focusing on mortgages made to first-time homebuyers who are serving in the armed forces or who are veterans. The Bureau’s report is the first time researchers have been able to provide a description and analysis of servicemembers’ mortgage choices and mortgage performance, both during and after the housing crisis of the last decade.
When buying a house, servicemembers — defined here to include both those on active duty and veterans — have the option of taking out a home loan that is partially guaranteed by the U.S. Department of Veterans Affairs (VA). VA-guaranteed home loans differ from other mortgages in several ways including allowing a purchase with no down payment and without mortgage insurance. Servicemembers may also choose other mortgage products, including conventional loans or loans by a different government agency.
Today’s report spans the years leading up to and after the housing crisis. Among the key findings:
- The share of first-time homebuying servicemembers using VA mortgages increased from 30 percent before 2007 to 63 percent in 2009. Among non-servicemember first-time homebuyers there was a parallel increase in the use of FHA and USDA mortgages. However, whereas non-servicemembers’ reliance on FHA/USDA mortgages declined after 2009, servicemembers’ reliance on VA loans continued to increase. In 2016, 78 percent of servicemember loans were VA loans.
- The greater share of VA loans among servicemembers was part of a larger shift among consumers (both servicemembers and non-servicemembers) away from conventional to government-guaranteed mortgages between 2006 and 2009. Conventional mortgages—that is, non-government-guaranteed mortgages—were about 60 percent of loans among first-time homebuying servicemembers in 2006 and 2007, but this share declined to 13 percent by 2016. By comparison, the conventional loan share among non-servicemembers fell from almost 90 percent before 2008 to 41 percent in 2009, then increased back to 60 percent in 2016. The combined share of FHA and USDA mortgages to these borrowers increased and then decreased accordingly.
- The median loan amount for first-time homebuying servicemembers with a VA loan increased in nominal dollars from $156,000 in 2006 to $212,000 in 2016, closely tracking the median value of conventional home loans taken out by non-servicemembers. By contrast, the median loan amounts in nominal dollars for servicemembers who used conventional or FHA/USDA mortgages during this period were lower in value compared to VA loans and increased at a slower pace, growing from $130,000 in 2006 to $150,000 in 2016.
The Quarterly Consumer Credit Trends report, “Mortgages to First-time Homebuying Servicemembers,” is available at: https://content.
OnlineEd blog postings are the opinion of the author and not intended as legal or other professional advice. Be sure to consult the appropriate party when professional advice is needed.
For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers visit www.OnlineEd.com.
All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.
OnlineEd® is a registered Trademark
Jeff Sorg is a co-founder of OnlineEd®, an online real estate, mortgage broker, and vocational school founded in 1997, where he also serves as Chief Executive Officer, and School Director. Sorg holds vocational and post-secondary school instructor licenses in several states and has authored numerous real estate continuing education and pre-licensing courses and has been awarded the International Distance Education Certification Center’s CDEi Designation for distance education. Memberships include ARELLO (Association of Real Estate License Law Officials), the National Association of REALTORS®, Oregon Association of REALTORS®, and Portland Metro Association of REALTORS®. Awards and service include REALTOR® Emeritus in the National Association, Life Member award in Portland Metro Association and Chairperson of the Oregon Real Estate Forms Committee.
OnlineEd® provides real estate, mortgage broker, insurance, and contractor pre-license, post-license, continuing education, career enhancement, and professional development and designation courses over the Internet.