Should a Bank Refuse an Offer Due to a VA Loan?

Yesterday, my client’s offer was rejected because he wanted to use his VA eligibility to purchase a bank owned duplex. Using a VA loan would benefit my client due to a lower interest rate and down payment than a conforming loan.  Although my client is capable of purchasing the home with a conforming loan, the higher down payment would exhaust his reserves.  He wouldn’t have money for the needed repairs and upgrades.

I cannot understand the seller’s decision. As a government guaranteed loan, VA loans are easier to qualify for than conforming. I realize some sellers are unwilling to pay for the items the Veteran is prohibited to pay. In this case, the buyer had bumped up his offer to include these costs. As a result, the net proceeds to the seller would be the same.

Personally, I think we do too little for our Veterans. The VA home loan guarantee is intended to benefit men and women for their service to our country.  It levels the playing field with those who were able to pursue education and careers while the Veteran was serving his country.

The duplex in question is bank owned. The bank’s decision makes no sense to me. In this example, the proceeds from the sale would be the same as if the buyer used any other type of financing. Are banks intentionally discriminating against Veterans?

As I was trying to understand a bank not accepting offers based on VA financing, I started thinking about a book I just finished.  “Unbroken” by Laura Hillenbrand is the story of Louis Zamperini, a US Olympian who’s B24 Bomber was shot down over the Pacific during World War II. After surviving 46 days in a life raft, Lieutenant Zamperini was captured and sent to a POW camp in Japan. There, he was regularly tortured due to his Olympic notoriety.  The book’s graphic descriptions provide insight into what our servicemen and women endure.

Most of us have family who served in World War II, Korea, Vietnam and the War in the Middle East. My dad served on a B29 in World War II. Like most Veterans, he never spoke of his wartime experiences. “Unbroken” is an amazing story providing insight to what our military heroes have sacrificed and endured to insure the freedom and the quality of life we all enjoy.  Books like this should included in our school’s curriculum to keep us from forgetting the sacrifices are service men and women have made. Our Veterans have paid a very high price for their VA benefit. The bank that rejected the offer, simply because the client wished to use his VA eligibility, should be ashamed.

 

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