Does VA have a 5% override policy?

[Oh No Not Him]

Ive been a VA appraiser for quite some time, but was surprised to hear a broker who was involved in a Tidewater case state that the VA underwriter said that VA has a 5% override..meaning if the appraised value was within 5% of contract price they could still do the loan....is this true?

 

[Don Clark]

Ive been a VA appraiser for quite some time, but was surprised to hear a broker who was involved in a Tidewater case state that the VA underwriter said that VA has a 5% override..meaning if the appraised value was within 5% of contract price they could still do the loan....is this true?

VA makes loans based on the amount of eligibility that a veteran has. There are many cases where a loan is made on a property that exceeds the VA guranty. For example. I did an appraisal of a property recently(this year) for a million$+. With full eligibility that far exceeds what VA will guarentee. Lenders typically would want a down payment of 25% of the amount of the loan that exceeds the VA guarentee. Individual lenders may have differing amounts that would be brequired. The 5% above a VA appraisal is a 5% risk the individual lender would take, and that 5% would not be covered by the eligibility unless the VA agrees with that amount. Also, a lender can reduce the amount of the loan they are willing to make on any property.

The VA policy is the same througout the country. Why not speak to a local SAR that you may know?

 

[Mike Garrett RAA]

Underwriters do have the ability to raise the appraised value, I thought it was up to 3%.

 

[Aprazr]

3% is ALL I have heard for 30 years. (Up or down)

 

[Don Clark]

3% is ALL I have heard for 30 years. (Up or down)

Many years ago(maybe 10-12) I had a VA SAR reduce the appraised value by 5%. Agents wanted to blame me. Comps were model matches. I told them that the underwriter had lowered the loan amount, not me. The agent then could not ask for a reconsideration of value. Oh how times have changed.

 

[johnnyboge]

Not sure if all RLC's are consistent, but from the Cleveland RLC Training Guide, Page 40:​

"LAPP SARs are authorized to issue the NOV with a difference of up to 5% of the appraised value with adequate documentation. This adjustment can be done with or without the appraisers additional input as long as the adjustment can be supported."​

 

[David Beasley]

Yup, 5% up or down. Done at the lender level, not the VA - though as cited above it is done with the VA's knowledge and requires "adequate documentation" and support from the lender...which is why it doesn't happen much. They can't usually be bothered to supply us with a contract or contact numbers in a timely fashion so altering an appraised value based on legitimate "support" is generally one of those things you hear about but seldom if ever actually see in person. Like a snipe.