"Why are people taking advantage of our veterans?"

One company looks to dominate the VA loan market

"Why are people taking advantage of our veterans?"

Let’s face it, VA mortgages are harder to close than their conventional counterparts and let’s not even get started with the prerequisite inspections – like wood rot or missing flooring – that must be repaired before a sale can proceed. Right?

Wrong, say the principals of California-based Sunnyhill Financial, who told Mortgage Professional America the notoriety VA loans have obtained is largely unfounded. CEO Tyler Flora (pictured right) and VP/mortgage counselor Brian Cooke (pictured left) are going all in VA loans.

Both noted another reason to be enthusiastic in providing such loans: What better borrower class to go all out for if not those who’ve served their country?

Veterans are being charged more

“There are a couple of holes in the market – one of which Brian is capitalizing on, which is the VA market,” Flora said during a telephone interview. “If you were to look at the margins for the average VA loan versus a conventional loan, the VA loans are generally quite a bit higher in margin because there’s less competition, fewer people are approaching them. The companies that are doing a lot of business in the sector just generally market to them and charge quite a bit more.”

There’s something of a dirty secret in the VA loan space, he suggested: “One of the niches we feel needs to be talked about is there are a lot of companies out there, not just Sunnyhill, that can actually offer better loans to veterans than companies that have the word ‘veteran’ in it,” Flora said. “I come from a military family, my father’s a West Point grad. So it’s ingrained in me to take care of our veterans, people who serve our country, and I run into clients all the time who tell me ‘this is the quote I got’ and I look at it and it’s a half a percentage higher in interest rate. I just think: ‘Why are people taking advantage of our veterans?’”

He described the segment as comprising borrowers with the same aspirations and dreams of achieving homeownership: “Veterans come out of the service,” Flora said. “they wait to buy a home and start a family and they want to put trust in somebody that will take care of them. We want more companies to take care of our veterans, not just us. If they’re not going to do it, we’re going to try our best to do it.”

They’re off to a running start. Since making the pivot to focus on the VA market, Cooke now does from 25-30 VA loans a month, he said. About half of his business now comprises VA loans, he added.

A Memorial Day epiphany

Appropriately, it was on the most solemn of holidays meant to honor those who gave the ultimate sacrifice in defending their country when Cooke realized what his focus should be, he said. “I made the decision three months ago, maybe – it was Memorial Day – to switch all my resources to go all-in on veterans,” he said. “That was the gap that I saw. I often come across other loan estimates that are a percent higher than what we’re writing loans at.”

How does this happen? “There are just not as many players in the game when VA loans have a stigma of being more difficult to originate,” Cooke said. “There are a few more rules and regulations, hurdles that you come across,” he added, positing such dynamics as attributable to the dearth of VA loan origination. A lot of originators out there don’t know how to do VA loans and give wrong information to veterans. We constantly have to correct what people have been told.”

Flora echoed the assessment: “Most lenders don’t educate their loan officers when they hire them and train them past conventional conforming,” he said. “Think about it: How does a loan originator come across it as a profession? There’s no school for it. You have to join the company and a majority of companies are conventional-based – Fannie Mae and Freddie Mac, especially mid-sized companies. They just don’t train on those loans.”

Exodus from retail exacerbates the problem

The continuing exodus from retail to wholesale, along with the outright shuttering of some mortgage companies, exacerbates the problem, he added. “What we’ve seen over the last five years, especially in the migration from retail shops and then companies shutting down,” he said, “those loan originators leave retail and end up in the broker space, and when you end up in the broker space you have all these options.

“The issue is, you may not know how to do an FHA, how to do a VA, how to do a reverse mortgage. So what they end up doing is steering them into the products they know. It’s difficult to talk about what to do for a VA loan when you have no idea what the difference is between a conventional loan and a VA loan.”

They are different – what with no mortgage insurance required and the ability to entice with 1% down – and maybe a tad more challenging than conventional loans. But VA loans are in Sunnyhill’s sights with no less an aim than industry dominion, Cooke suggested: “I figure it’s going to be a long-term play for us to dominate the market.”

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