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Number of VA Loans Sharply Increased Following the Mortgage Crisis

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By Debbie Gregory.

The Home Depot Foundation, the charitable arm of home improvement giant Home Depot, partially funded a study that revealed that home loans through the Department of Veterans Affairs more than tripled in the wake of the 2007-2009 subprime mortgage crisis.

This information exemplifies the critical need for credit in order for tens of thousands of veterans to buy a house, as well as the importance of the VA program, a benefit used by millions of veterans but often getting less attention than initiatives like health care coverage and education stipends.

“This is a stable, accessible form of credit that has helped a lot of families,” said Keith Wiley, a research associate at the Housing Assistance Council (HAC) and co-author of the report. The HAC is a national nonprofit organization that supports affordable housing efforts in rural areas of the United States. It was established in 1971 to increase the availability of affordable housing for rural low-income people.

Wiley’s report found nearly 9 percent of all home mortgages in America in 2014 were backed by VA, up from 2 percent a decade earlier.

Before the mortgage crisis, those loans totaled around 140,000 a year. Today, those numbers are closer to 510,000, making them the third-largest home loan type in the country.

“There has been a VA home loan in nearly every county in America,” said Moises Loza, HAC executive director, in a statement. “There are more than 100 counties where VA loans make up 20 percent of the loan population. … The military community truly relies on the VA Home Loan program to provide a home for their families.”

The mortgage crisis was triggered by a large decline in home prices after the collapse of a housing bubble, leading to mortgage delinquencies and foreclosures and the devaluation of housing-related securities.

Declines in residential investment preceded the recession and were followed by reductions in household spending and then business investment. Spending reductions were more significant in areas with a combination of high household debt and larger housing price declines.

Researchers said they did not see a significant drop in the rejection rate of loan applications as the total mortgage count rose in recent years, another sign they say indicates stability and accessibility for veterans.

Military Connection salutes and proudly serves veterans and service members in the Army, Navy, Air Force, Marines, Coast Guard, Guard and Reserve,  and their families.