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What’s New at the VA? A Q&A With Its Chief Appraiser

by Isaac Peck, Publisher

Since 1944, the Department of Veterans Affairs (VA) has held a unique role in helping eligible veterans, active service members and family survivors build, buy or refinance a home. It’s financing programs work by guaranteeing that originating lenders will be partially protected from losses if borrowers fail to repay their mortgages. In its history, the VA has backed more than 25 million loans.

The advantage of veteran home loans is that they may offer better terms than traditional financing, with nearly 90 percent of VA-backed loans made without a down payment, according to the VA. In a record-setting 2020, the VA issued guarantees totaling more than $375 billion, which accounted for 12 percent of all single-family home mortgages issued that year, according to the Congressional Budget Office.

In addition to being a favorable avenue to homeownership for eligible veterans, the VA is also known throughout the valuation community for respecting the work of appraisers. As market uncertainty and headwinds persist, Working RE reached out to James Heaslet, chief appraiser at the VA, to get his thoughts on several topics specific to the VA and the profession at large. Heaslet is a retired Marine Corps veteran and a second-generation appraiser who began his valuation career as a trainee at his father’s office in 2007.

In the following Q&A, we asked Heaslet for an update on some of VA’s programs and initiatives, including the Assisted Appraisal Processing Program (AAPP), as well as steps the VA has taken to address bias in appraisals and its role on the Interagency Task Force on Property Appraisal and Valuation Equity (PAVE). Here’s what he had to say:

Question: Can you give us an update on the VA’s AAPP program?

Heaslet: The Assisted Appraisal Processing Program was launched Jan. 1, 2020, to lead the industry in developing an appraisal program that enables VA to better serve veterans in rural areas, reduce appraisal processing turn times and encourage individuals to join the appraisal profession. Under AAPP, the appraisal report, which is required for a VA home loan, may be completed based solely on information gathered by a person contracted with the VA fee panel appraiser. The AAPP has been instrumental in providing flexibility to reach rural areas with limited numbers of local appraisers. New appraisers are trained through AAPP which benefits all homebuyers and homeowners in rural areas. Because VA believes this program adds much value to its home loan program, VA extended the policy on Jan. 1, 2024, to sustain the benefit, especially to rural areas with fewer onsite appraisers.

The data shows that the AAPP did have a positive impact on the appraisal process, with Notices of Values (NOVs) raising in three subsequent calendar years. According to VA records, in calendar year 2020, 11,455 NOVs were issued. In 2022, 19,321 were issued. In 2023, 14,249 NOVs were issued, with a reduction most likely following the market trend. As far as average appraisal turnaround time, in Q2 FY2024, it was 6.8 days nationwide, down from 9.2 days in FY2022.

For more information about AAPP, including guidance and requirements, see VA Circular 26-19-31.

Question: What steps is the VA taking to address discrimination and bias in appraisals?

Heaslet: VA is part of the PAVE Task Force, which President Biden announced on June 1, 2021, as part of the White House initiative to advance racial equity and support for underserved communities through the Federal Government. It’s composed of 13 federal agencies and co-led by the U.S. Department of Housing and Urban Development and the White House Domestic Policy Council. VA implemented guidance from the Task Force to “strengthen its efforts in eliminating discriminatory practices in the appraisal process.”

Actions being taken by VA include adding oversight procedures to detect potential discriminatory bias in appraisal reports, and encouraging training in appraisal bias, fair housing and fair lending for all VA Fee Panel appraisers and lender-approved staff appraisal reviewers. VA also maintains a toll-free number for SARs [staff appraisal reviewers] to use if potential discriminatory bias is identified.

For more information, see VA Circular 26-23-05.

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Question: What role does the VA play on the PAVE Task Force?

Heaslet: As a federal housing agency and a member of the PAVE Task Force, VA wholly embraces efforts to promote transparency, foster collaboration and support the enforcement of fair housing laws, and is committed to government-wide efforts to identify, investigate and eliminate all instances and forms of discriminatory bias.

Two processes that are unique to the VA Home Loan program are the Tidewater Initiative and Reconsideration of Value, both which allow appraisers to request additional sale information prior to the appraisal being completed to assist when relevant sales are not typically available. Furthermore, these two processes challenge low VA appraisals, ensuring that veterans get the most out of their home loan benefit.

Question: What updates or changes has VA made with respect to the items listed in HR 7735?

Heaslet: The Improving Access to the VA Home Loan Benefit Act of 2022 became law on December 27, 2022. The act requires VA to “update regulations, requirements and guidance related to appraisals for housing loans guaranteed by the VA.” VA submitted a report to Congress with recommendations for improving appraisal timeliness. VA is currently reviewing the process to identify ways to further streamline the appraisal recruitment. An update was made to the va.gov website to provide a list of counties where appraisers are in high demand.

VA is also in the process of updating the Assisted Appraisal Processing Program rulemaking to remove the provision currently allowing lenders to “opt-out” of this program, as it is beneficial for the entire industry to promote the training of new appraisers. As far as Minimum Property Requirements (MPRs), a review is currently being conducted of all comments received from an Advance Notice of Proposed Rulemaking on VA’s MPRs that closed on Feb. 9, 2024.

Question: Has VA considered a uniform measuring standard, such as ANSI (American National Standards Institute)?

Heaslet: The simple answer is “no.” However, appraisers follow established industry practices, and these are monitored by the state agencies that license appraisers.

Question: What improvements is the VA planning to its appraisal process?

Heaslet: Key enhancements to the appraisal system will include improved appraisal tracking features.

Question: What changes to MPRs is the VA considering? When might we expect a decision on those?

Heaslet: VA issued an Advance Notice of Proposed Rulemaking seeking public input on potential changes to the Minimum Property Requirements on Dec. 11, 2023. VA collected comments through Feb. 9, 2024. We’re currently reviewing and cataloging the comments to determine next steps.

Question: In what states and localities is the VA looking for more appraisers?

Heaslet: There are several counties across the nation that have been identified as “High Demand Counties” due to a shortage of available appraisers. To help bring more appraisers to the areas that need it, a link to a downloadable PDF of the counties can be found here. VA encourages all who are eligible to apply.

Question: Anything else to add on VA home loans and appraisals?

Heaslet: It’s important to VA that our appraisers have all the resources, tools and information available to support them in doing an exceptional job for our veterans.

Some appraisers have the misconception that because they are on the VA approved panel, VA will protect them if legal action is initiated against them by a borrower or lender in relation to the appraisal process. While the appraisers are eligible to receive appraisal requests from VA and provide property appraisals for VA to guarantee mortgages, individual appraisers are responsible for claims made against them. So, while VA does not require its appraisers to carry errors and omissions insurance, and it may never be needed, it may be worthwhile to consider.

To learn more about the VA loan program, visit their website here.

About the Author
Isaac Peck is the Publisher of Working RE magazine and the President of OREP Insurance, a leading provider of Appraiser E&O insurance that includes additional Discrimination Claim Coverage for appraisers (many programs exclude this important coverage). OREP serves over 10,000 appraisers with comprehensive E&O coverage, competitive rates, and 14 hours of free CE for OREP Members (CE not approved in IL, MN, GA). Visit www.OREP.org to learn more. Reach Isaac at isaac@orep.org or (888) 347-5273. CA License #4116465.

OREP Insurance Services, LLC. Calif. License #0K99465