Mortgages for Gulf War veterans have more than tripled since 2008, which along with a spirited outreach program and the post-crisis credit squeeze, has helped fuel a steady increase in Department of Veterans Affairs lending.
VA loan production to Gulf War veterans (from both Gulf wars) has increased from 58,000 in 2008 to 174,000 in 2013, according to a tabulation of VA data performed by Veterans United Home Loans.
The Columbia, Mo.-based VA lender, using preliminary numbers from the agency, estimates fiscal 2014 VA mortgages at $100 billion. That would be about 9% of the Mortgage Bankers Association's estimate of $1.1 trillion in home loan finance for the full year, in line with previous increases of share over the past several years.
The Veterans United data also show an exact reversal of purchase versus refinancing share in the last two years. In 2013, refinancings accounted for 62% of total VA volume, while in 2014, purchase mortgages made up 62% of VA loans.
John Bell, assistant director for loan policy and valuations at the agency, noted VA purchase share has risen 92% since 2008.
In aggregate, there was $99.5 billion in VA lending done through 438,000 mortgages in fiscal 2014. Of that, $64 billion (272,000 loans) was in purchase money. That's a 30% decrease in total loans from 2013's $141 billion, which was achieved through 630,000 mortgages.
The 2014 decrease is pretty much in sync with the general mortgage market, which declined from $1.8 trillion in 2013 to $1.1 trillion in 2014, according to MBA estimates. VA purchase loans, though, increased by 13% from 2013.
Interestingly, in 2013 there were 733 VA mortgages extended to veterans of World War II, which ended 70 years ago. That's up from 192 in 2008. These veterans, in their 90s now, may not have known that they could use VA home loan benefits more than once, according to a spokeswoman for the lender.
Bell underlined the effect of the outreach program, saying "We are investing our time and resources on education."
Bell said the agency's outreach to veterans has increased in the last several years. "We've done a ton of webinars, Google hangouts, talking to Realtors, sitting down with lenders," and other efforts, Bell said.
He pointed out that VA mortgages have remained strong in the millennial generation, often cited as being reluctant or unable to buy homes. Currently, about 25% of VA volume is going to the age 26-35 group, and a similar number to those 36-45.
Bell also pointed to the post-crisis credit squeeze as a positive for VA lending. "As private capital left the market, lenders, Realtors and veterans were looking for options. We were able to step in," he said.
Asked if he thought VA market share would continue to grow in coming years, Bell said "it's not our job to get market share." Instead, he'd like to make sure every veteran who's eligible has the opportunity to participate.
VA numbers for 2013 show that 5,252 loans were made to borrowers over 80, nearly 1% of the total. That's up almost five times over the 1,121 made in 2009.
By race, 79% of 2013 lending went to whites, 10.7% went to blacks, 8% of loans were to Hispanics, with the balance going to Asians and Native Americans.
Nearly half (110,096) of 2013 purchase loans went to veterans in the highest income bracket, over $75,000. Average income was $82,000 and median income was $71,000.
One of the attractive features of a VA loan is that the borrower can obtain up to 100% financing. However, not all do. Some 39,000 purchase borrowers put money down on a 2013 VA loan, while 203,000 opted for no down payment. First-time purchase buyers that year numbered 98,000, while there were 141,000 previous home buyers.
All categories of vets have shown increases between 2008 and 2013, some even larger than the tripling shown by Gulf War veterans. The Gulf War cadre (both Gulf wars are included) is the category with the biggest number of service period mortgages by far, however. Bell could not say whether loans to veterans of the first Gulf War spiked as much in the years immediately after they returned to private life 20 years ago.
In addition to these service-period veterans, VA home loans go to active service members (108,778 in 2013), "restored entitlement" veterans seeking to finance a second house after the first one is paid off (256,705), reservists (10,319), and surviving spouses (2,494).
Veterans United Home Loans, founded 12 years ago, said it made $4.1 billion in mortgages in 2013. Its volume is primarily but not exclusively loans to veterans, according to the spokeswoman. The company employs about 1,500 people at offices in 20 states, the majority in its Missouri headquarters.
The firm in late 2014 made a $1 million donation to aid construction of housing for homeless veterans in the state of Missouri. It also made a donation of $100,000 for vet mental health services in 2014, and says it has donated or pledged $9.5 million to veterans' causes through its charitable arm since 2011.
Mark Fogarty, Editor at Large of National Mortgage News, brings more than 30 years of experience to his analyses of the mortgage market.