VA Loan Chief Says Program Going Strong

Although the government's mortgage program for military veterans continues to be hampered by a $417,000 loan limit, it is still going like gangbusters, according to the head of the Department of Veterans Affairs' loan guaranty service. In May alone, the volume of loans backed by the VA was up more than 50% over that of a year earlier, Judith Caden told the Mortgage Bankers Association's Government Housing and Loan Production Conference in Washington. Ms. Caden also said that California, a state where practically no VA-guaranteed mortgages were written in fiscal year 2007, is now among the agency's 10 most active states. But despite the resurgence in activity, the agency is unable to help veterans who are looking to the VA as a way out of their subprime loans. Because of what Ms. Caden called "a glitch" in the law, VA borrowers who want to refinance must have a 10% equity stake in their properties and cannot borrow more than $144,000. Calling both requirements impractical at a time when many subprime borrowers in high-cost areas are "upside down" in their current loans, Ms. Caden said her agency favors their elimination. "We'd like to see the limit raised and the percentage go away," she said.