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It’s no secret that foreclosure rates are up in recent years. However, amid all the turmoil associated with job loss, the economy and other factors, the VA loan program has emerged as a relatively stable force in the otherwise volatile mortgage loan market. The following foreclosure statistics published by the Mortgage Bankers’ Association for the fourth quarter of 2009 illustrate the remarkable difference between the loan types:

All Mortgages: 4.58% in foreclosure

Prime Mortgages: 3.31% in foreclosure

Subprime Mortgages: 15.58% in foreclosure

FHA Mortgages: 3.57% in foreclosure

VA Mortgages: 2.46% in foreclosure

These impressive figures come after a banner year for VA loans, which saw an 80 percent increase in loan volume during 2009. Nearly $70 billion dollars in loan funds were guaranteed by the Department of Veterans Affairs last year.

The majority of the VA program’s success in keeping its foreclosure rate down can be directly attributed to the Department of Veterans Affairs itself. The VA works tirelessly to ensure that relatively few veterans and their families lose their homes, and the effort includes a variety of helpful programs aimed at offering assistance.

Veterans who are concerned about not being able to make payments are permitted to put their loan into forbearance, which provides the service member with time to cover their missed payments without the looming threat of foreclosure. If there is a lifestyle change or a job change that does not allow veterans to catch up and make their regular payments, loan modification is also available. With a loan modification, veterans are provided with a new payment schedule with the delinquent amount of the loan factored into the new payment. Veterans are also able to catch up on missed payments by including delinquent funds into their regular monthly payment.

If repayment of their loan is an impossibility and an agreement cannot be reached, veterans with a VA loan are usually allowed additional time to sell their house to another individual or a family member without the worrying about imminent foreclosure.

The VA staffs eight centers across the country with loan counseling experts who are ready to help veterans, active duty service members and their families keep their homes whenever possible. Even if veterans and active duty service members do not currently have a VA loan but are concerned about another mortgage, the VA loan experts may be able to help.

Concerned homeowners can call a special hotline at (877-827-3702) to get in touch with a loan counselor at the closest VA loan servicing center and begin the process of returning their mortgage to a good standing.

This article was written by Chris Birk of VA Mortgage Center.com, an online VA-only lender.

VA loans have been around for quite a while and seem to be more popular than ever after the subprime mortgage meltdown in the last few years. The VA loan program is offered to both Veterans and active-duty military personnel to help them get home financing with guidelines that are somewhat more flexible than traditional financing.

And yes, it is true that the Veteran’s Administration home loan program allows eligible veterans to buy a house with no money down. That is probably the most-marketed feature of VA loans: “buy a home with no money down”.

But there are still a few things about the VA loan program that I personally think could be improved – and here are three items that I could see improving VA home loan financing:

Allow some closing costs to be charged to the Veteran that are not currently allowed.

Currently, there is a list of “non-allowable closing costs” and in theory, it was designed to protect Veterans from paying unnecessary closing costs. What happens in real-life is that lenders just increase the allowable closing costs allowed on a VA loan in order to offset the VA non-allowable closing costs.

Some of the closing costs are “real” costs — and what happens is that if the lender doesn’t want to pay them, they just push the Veteran into another loan program that may not be as beneficial as the VA loan.

Getting a VA appraisal done could be quicker and easier.

Even before HVCC, the VA appraisal process was “long and wrong”. Most people in the industry know that the VA appraisal process will take a long time and many times the VA appraisal will not reflect a home’s true value. True, an inflated appraisal is not a good thing, but neither is an appraisal that comes in lower than the homes value – it impacts the Veterans ability to buy or refinance the home.

Non-spouses could be allowed to co-sign.

There are many different circumstances surrounding a Veteran wanting to buy a home due mostly to the deployment of so many Veterans and active-duty military people over the last few years. So in some cases where a veteran does not make enough money to qualify, it may make sense to allow a parent to co-sign for the VA loan (similar to the FHA kiddie condo rules). Currently, under VA loan rules this is not permitted.

Regardless of whether or not these three changes were made to the VA loan program, it is still a great way for Veterans to finance a home.

But these three ideas may make it even better.

TBW Announces They Now Require Minimum of 620 Credit Score For FHA/VA Streamline Refinances

Yesterday, an announcement was made by the last large lender (that we know of at least) in the US who used to not require a minimum credit score on FHA or VA loans that a minimum 620 credit score is now required on all FHA streamline refinance loans. The announcement from lender Taylor, Bean and Whitaker regarding their minimum of 620 credit score requirement means all major US lenders now require at least a 620 credit score.

Minimum Credit Score Announcement Details

An excerpt from yesterdays announcement:

FHA Streamlines (credit and non-credit qualifying) and VA IRRRL’s with Credit Scores below 620 must be LOCKED prior to July 13, 2009 AND must CLOSE (Note Date) no later than September 15, 2009, and must be delivered to TBW within 10 days after closing Loans in this category locked on and after July 13, 2009 will require a minimum FICO of 620. Clients will be required to obtain a 3 Repository credit report and utilize the standard method of determining qualifying FICO.

Any Conventional, FHA (including Streamline Refinance), or VA (including IRRRL) loan that exceeds $417,000 with a Credit Scores below 660 must be LOCKED prior to July 13, 2009 AND must CLOSE (Note Date) no later than September 15, 2009, and must be delivered to TBW within 10 days after closing Loans in this category locked on and after July 13, 2009 will require a minimum FICO of 660.

Clients will be required to obtain a 3 Repository credit report and utilize the standard method of determining qualifying FICO. In addition, any previously announced minimum Credit Score requirements that TB&W has put into place, that did not have a specified Closing date, will be required to be LOCKED prior to July 13, 2009 AND must CLOSE (Note Date) no later than September 15, 2009, and must be delivered within 10 days after closing. Therefore, any loan, regardless of whether it may be locked, registered or approved, that has a qualifying credit score below 620 (with the exception of those loans that have specified higher FICO requirements) must CLOSE (Note Date) no later than September 15, 2009.

TB&W will work as diligently as possible to accommodate all loans in the pipeline. We will be unable to grant any extensions or exceptions to these requirements.

What This Really Means

Remember, according to FHA/VA guidelines, the FHA/VA Streamline programs don’t officially require a minimum credit score – but now virtually all lenders require a minimum of a 620 credit score. TB&W was the last major US lender who was not requiring that  you had at least a 620 minimum credit score in order to participate in the FHA/VA streamline refinance programs. There may still be lenders who are able to do a FHA/VA streamline with no credit score,  but it will be more difficult to find them.

If you have a credit score below 620 and are interested in possibly refinancing your FHA or VA loan, it just became very difficult, if not impossible to get done.