Broker warns policy changes are eroding key protections for veteran borrowers
Policy reversals and tightening market conditions are exposing gaps in protection for veteran homebuyers – and Corey Casper (pictured top), a veteran and mortgage brokerage owner, is watching those gaps widen.
“I’ve been in the real estate industry since 2012, and then in 2019, in partnership with the real estate office that I work for, we opened up a mortgage brokerage,” Casper said. “We try to do as many VA products as we can that way. Honestly, they're just great products, and I enjoy doing them. They're a little more flexible than other options.”
Casper considers VA loans unmatched in their design, but said recent policy changes are undermining their safety net. The rollback of the Veterans Assistance Servicing Purchase (VASP) foreclosure program is a key example.
“That program going away... I think that that leaves a hole, given that there are other programs,” he said. “FHA is very robust in its flexibility for delinquent homebuyers, whereas VA doesn't have as many options.”
While Casper focuses on origination, not servicing, he’s still seeing ripple effects. Delinquent borrowers have already come to him, and his advice is consistent: contact your servicer early. But he’s aware that the VA’s underwriting structure can leave some borrowers more exposed than others.
“The flexibilities associated with the qualification of a VA do potentially put some borrowers in a slightly more risky position than a conventional borrower,” he said.
That’s because VA loans rely on residual income calculations, not debt-to-income ratios – an approach that can obscure financial strain. Casper addresses this up front: “I always try to do an in-person or virtual consultation during the pre-approval phase, just to let them know the repercussions associated with delinquency and the risks associated with getting a mortgage.”
Fee confusion, overlays and eligibility gaps create new barriers
Recent changes allowing VA borrowers to pay buyer broker fees have added confusion rather than clarity. Veterans often assume they’ll pay lower costs – and that’s not always the case.
“Veterans come in with the expectation of low fees or lower reduced costs,” Casper said. “And it may deter them from certain properties currently in this market that aren't offering that cooperating compensation for their buyer agent.”
Workarounds exist – such as structuring agent commissions as seller concessions – but those only work in select markets. “The majority of times that we see contracts come through with VA buyers, they tend to be seller pay compensation from the buyer agent,” he said.
Misunderstandings about credit standards are another obstacle. “There's technically no credit score requirement for a VA loan,” he said. “It's all about credit history, especially recent credit history or re-establishment of credit.” But lender overlays often introduce rigid score minimums.
“I've had several instances where customers approached us and said, ‘Oh my I need to have a 640 credit score or some arbitrary number,’ and I remind them that, no, not necessarily,” he said.
In rarer cases, eligibility itself becomes a hurdle. “I have a client right now that has a disability rating through the VA for a service-connected disability, though he's not eligible to obtain VA financing,” Casper said.
Clearing up misconceptions and advocating for reform
In a competitive market, these misconceptions can kill deals. Casper takes a proactive stance with listing agents, aiming to educate them on the strengths of VA offers.
One of his most effective tools is explaining the Tidewater Notification process – a rule that gives lenders and buyers advance notice of low appraisals.
“Tidewater is a required notification of the appraiser to the lending team, where we are presented with a heads up that the value is probably not going to be met,” he said. That heads-up allows the team to submit comparable properties and potentially preserve the sale.
But other VA appraisal standards can frustrate sellers, especially condition requirements. “Exposed wood is the thing that gets most people,” he said. “If there's any exposure to the raw wood surface underneath the paint, that has to be remedied.” Casper sets that expectation early: “Lender required repairs don't necessarily have to be paid for just by the seller.”
Asked what changes he’d make to the system, Casper flagged eligibility clarity and cost burdens as top priorities. “I really think that it's just maximizing the eligibility for the use of the program and making sure that the veterans who deserve it are able to take advantage of it,” he said.
He also called the funding fee – especially for subsequent-use borrowers – “a pretty substantial fee for that benefit.” With down payments already out of reach for many, that extra cost can be a dealbreaker.
“To be able to capture a property that suits their needs and allows them to live their life and their family, I just think it's really important to be able to have that tool,” Casper said.
