Banks Denying VA-Backed Mortgages

As part of the Huffington Post's efforts to bear witness to the effects of the current economic environment on ordinary Americans, we're rounding up some of the most compelling stories reported by local news organizations around the country.
Air Force Staff Sgt. Jason Goul is one of many veterans and soldiers trying to buy foreclosed homes for their families. The soldier, his two young children and his wife, Judith, looked for a place around the town of Fairfield in northern California, and placed a couple of bids using a mortgage backed by the Veterans Affairs Department. The plan was to get a home started before he was deployed to the Middle East in August. Unfortunately, though, their offers were repeatedly denied by banks which preferred to sell houses to investors who could pay in cash -- even if the bid was lower, reports Carolyn Said of the San Francisco Chronicle. Sgt Goul has since been shipped overseas and the couple still don't have a home of their own.
In a growing trend, banks are refusing to honor VA-backed loan agreements -- which do not require a down payment and are more amenable to customers with bad credit -- preferring instead to sell foreclosed homes for less money, but quick and immediate cash.
Banks and VA representatives blame the high standards that houses must meet to qualify for VA-backed loans: home repairs must be completed before escrow closes, the escrow period is longer and if escrow does not close the buyer's fees are repaid. Other loans have no such requirements and make it easier to sell damaged and structurally insecure homes. LinkHere