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Title: IS THE FUNDING FEE ENOUGH?: A QUANTITATIVE ANALYSIS OF THE VA MORTGAGE PROGRAM
Authors: Joseph H. Haslag
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Joseph H. Haslag University of Missouri-Columbia
MLA 8 Haslag, Joseph H. "IS THE FUNDING FEE ENOUGH?: A QUANTITATIVE ANALYSIS OF THE VA MORTGAGE PROGRAM." Int. j. of Social Science and Economic Research, vol. 7, no. 7, July 2022, pp. 2178-2216, doi.org/10.46609/IJSSER.2022.v07i07.030. Accessed July 2022. APA 6 Haslag, J. (2022, July). IS THE FUNDING FEE ENOUGH?: A QUANTITATIVE ANALYSIS OF THE VA MORTGAGE PROGRAM. Int. j. of Social Science and Economic Research, 7(7), 2178-2216. Retrieved from https://doi.org/10.46609/IJSSER.2022.v07i07.030 Chicago Haslag, Joseph H. "IS THE FUNDING FEE ENOUGH?: A QUANTITATIVE ANALYSIS OF THE VA MORTGAGE PROGRAM." Int. j. of Social Science and Economic Research 7, no. 7 (July 2022), 2178-2216. Accessed July, 2022. https://doi.org/10.46609/IJSSER.2022.v07i07.030.
References [1]. Arnold, Althea, Megan Bolton, and Sheila Crowley (2013) Housing Instability Among Our Nation’s Veterans Washington, D.C.: National Low Income Housing Coalition. [2]. Fetter, Daniel K. (2013) How Do Mortgage Subsidies Affect Home Ownership? Evidence from the Mid-Century GI Bills, American Economic Journal: Economic Policy 5 (2): 111–147. [3]. Quigley, John M. (2006) Federal Credit and Insurance Programs: Housing, Federal Reserve Bank of St. Louis Review 88 (4): 281–309. [4]. Spitzer, Kerry and Lauen Lambie-Hanson (2020) Institutions and Geographic Concentration in VA Lending Program, Cityscape, 22(1), 75-102. [5]. Vigdor, Jacob L. (2006) Liquidity Constraints and Housing Prices: Theory and Evidence from the VA Mortgage Program, Journal of Public Economics 90 (8): 1579–1600.
ABSTRACT: The purpose of this report is to do three things: (i) review the history of the user fee that the VA has implemented in its home-loan guarantee program; (ii) describe the methods used to compute the claims the VA pays for the home-loan guarantee program; and (iii) review the existing data on the revenues and costs of the program. Based on the numerical analysis conducted, we conclude it is possible to reduce the funding fee rate on zero-percent loans by at least one percentage point while maintaining revenues sufficient to cover annual claims made on foreclosed VA mortgages. Since 2012, funding fees collected each fiscal year have exceeded claims paid by the VA. By 2020, the excess funding fee collected reached $2.3 billion. In order to be revenue neutral, The funding fee schedule could reduce the rate on zero-percent down loans to 1.3 percent along with minor reductions on the fees paid on refinances and mortgages with some down payment. The projected reduction in funding fee collections would be approximately $1 billion. If implemented, veterans with zero-down payment mortgages would save more $3,000 in user fees based on the average mortgage in 2020.

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