Easing the Process of Home Buying Through Loan Guaranty Services

The Loan Guaranty Service (LGY) is a service provided through the Department of Veteran Affairs (VA) that allows veterans who have served their country the benefit of owning a home. Over 21 million men and women who currently work or have worked in the military have received a home loan through this service, which does its best to provide help to veterans by having relatively easy to meet requirements of minimum service time, and the promise to guaranty a portion of the loan against default and other foreclosure options, up to $104,250 if the veteran has full eligibility. This allows individuals who otherwise may not qualify for a civilian loan the benefit of obtaining one, at competitive rates and with little to no down payment. The LGY program is conducted within the Veterans Benefits Administration and is accessible to the public through Regional Loan Centers located in eight major cities across the United States, with Regional Offices across the country. These regional loan centers service every state in the country and all of the US’s offshore territories. Using these regional offices and loan centers, veterans can obtain mortgage loans through external lending institutions such as Veterans United and USAA, or government-funded programs like the Native American Direct Loan Program or the LGY-provided Vendee Loan program. Through these external lenders more than 740,000 loans were guaranteed in 2017, with the estimated total loan amount at more than $180 billion dollars.

In the event of a loan default, mortgage servicers continue to provide primary servicing, and the VA Loan Electronic Reporting Interface (VALERI) enables VA staff to conduct oversight to ensure that veterans are afforded every possible opportunity to retain their home. Overhauled in 2017, VALERI is the system that manages servicers and VA staff, and provides loss-mitigation assistance to individuals who have defaulted on their loans.

Although LGY is a government program, it is participating external lenders who delegate loan origination, underwriting, appraisal review, and loan closings. LGY direct loans are currently originated and underwritten using a manual process. Because the LGY program is so large, many lenders have VA automatic approval status, which means that lenders can guaranty the closing of loans to qualified veterans without prior approval of the VA. Supervised Lenders who do not have automatic approval authority are required to submit loan packages to the nearest Regional Loan Center for Prior Approval, and a commit letter is automatically generated in order to make the loan process easier. LGY processed 3,658 Prior Approval Loans in the 2016 fiscal year alone.

Geek Source’s primary goal on the LGY project is to provide the web-based functionality needed for users to complete the process of property appraisal that is required by the VA. Properties that are currently part of, or may be part of, the VA Home Loan process must go through a valuation process that determines the current worth of a property. The section of the application that we worked on eliminated the need for a separate appraisal system by consolidating appraisal information for new loans and interest rate reduction loans, as well as liquidations, into the enterprise development tool, WebLGY. Through our work, Geek Sources improved the overall communication among interfacing systems and users by allowing the appraisal tool in the WebLGY application to handle the end-to-end process. Now, everything from the appraisal request to the issue of the valuation notice is handled through the WebLGY application. To be precise, we reduced Technical Debt from over 6,000 open defects (Release 17.1) to 600 (Release 17.2) to zero (Release 17.3), thus achieving Authority to Operate (ATO) within two releases. During this time frame, we also increased development Velocity from 5 (Release 17.1) to 150 (Release 17.3), which provides additional economies of scale. This level of rapid adaptation and performance gives our customers the proven advantage to execute highly efficient business operations.

If you’re unfamiliar with the VA Home Loan Appraisal System, it was the original repository for the veteran home loan valuation information before 2010. The appraisal system, called TAS, provided the agents who participated in the LGY program access to appraisal and case information, status of appraisal requests, and the verification and updated basic reference file information. Working in tandem with this system was the E-Appraisal system that was introduced in 2004. Using the E-Appraisal system, TAS automatically updated every appraisal record as “pending review”, which allowed Staff Appraisal Reviewers to immediately review the appraisal and issue a Notice of Value without having to wait for an appraiser or lender to send reviewers an appraisal. This moved the valuation process along significantly.

In 2010, TAS was incorporated into the WebLGY application and an even more streamlined process was initiated. While working on WebLGY, Geek Sources designed the application to maximize data-processing performance. Before WebLGY, lenders and appraisers needed to use TAS and E-Appraisal as separate systems, but now the loan-processing, appraisal processing, and eligibility functions are in one handy design and are much easier to use. The entire process was streamlined for both end-users and LGY representatives alike. Geek Sources is proud of the work we’ve done to improve the operational efficiency of the automated appraisal process in terms of response time, accuracy, consistency, and transparency.

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