The Department of Veterans Affairs (“VA”) recently issued an advance notice of proposed rulemaking for minimum property requirements (“MPRs”) applicable to VA-guaranteed and direct loans. The VA is seeking comments in advance of implementing regulatory amendments to MPRs as required under the Improving Access to the VA Home Loan Benefit Act of 2022 (the “Act”).
Statutory requirements for MPRs are found in federal regulations under 38 C.F.R. § 36.4351, 36.4527(c)(4) and listed in the VA Lender’s Handbook in Chapter 12 – Minimum Property Requirements. The requirements are intended to ensure that a property financed through a VA-guaranteed or direct loan is safe and free of any defects or maintenance issues that could have a significant effect on the property’s value.
In seeking public comments, the VA is seeking “to better understand areas for improvements in MPRs, including whether VA should consider adopting an approach that aligns with other industry-wide property standards in existence.”
The advance notice of proposed rulemaking poses specific questions for which it is seeking a response, including among others:
- Advantages and disadvantages of the VA MPRs in comparison to other similar requirements found in other Federal housing programs and conventional financing options.
- What current policies specific to VA MPRs could be streamlined, modified, or eliminated to improve the VA home loan program.
- Should VA MPRs be replaced by the Fannie Mae/Freddie Mac property condition ratings.
- Are the current MPRs impacting certain groups of veterans that are underserved in the housing industry and how those issues could be addressed.
- How would changes to the MPRs impact lender participation in VA home loan programs; and what would encourage more lender participation.
- Are waivers of certain MPRs necessary for the VA home loan buying process.
Comments must be submitted through www.regulations.gov and are due by February 9, 2024.
