Fiscal Year 2004 Performance and Accountability Report Published November 15, 2004
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FY 2004 Obligation ($ in Millions) |
% of Total VA Resources |
Strategic Goal 2: Ensure a smooth transition for veterans from active military service to civilian life. |
$3,281 |
4.7% |
Objective |
Performance Results
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2.3 Improve the ability of veterans to purchase and retain a home by meeting or exceeding lending industry standards for quality, timeliness, and foreclosure avoidance. |
Foreclosure Avoidance Through Servicing ratio declined to 44 percent (goal was 47 percent) |
$394 |
0.6% |
Performance
The primary measure of the degree to which the Department is meeting Objective 2.3 is the extent to which VA is able to assist veterans in avoiding foreclosure. During FY 2004, foreclosures would have been 44 percent higher had VA not pursued alternatives to foreclosure. While this share was somewhat below the performance goal for the year, the Department continued to assist numerous veterans in making home ownership a reality. Last year VA guaranteed over 375,000 home loans worth nearly $50 billion. About 80 percent of the veterans who used the housing program would not have qualified for a conventional loan. VA's home loan program does not require a down payment, and the overwhelming majority (88 percent) of housing program participants cited this as the key reason why they used this program. Even after adjusting for demographic differences related to age and income, veteran home ownership rates exceed those of the general population by 5 percent. This is an excellent indicator of the overall success of the housing program in improving the ability of veterans to purchase a home.
Program Assessment Rating Tool (PART) Evaluation
The PART review of the housing program that relates to the accomplishment of Objective 2.3 is being conducted as part of the formulation of the FY 2006 budget. The results of this review will be presented in future reports.
Major Management Challenges
Neither VA's Office of Inspector General nor the Government Accountability Office identified any major management challenges related to Objective 2.3.
Program Evaluations
An independent evaluation of VA's housing program was completed in 2004. A key conclusion of the study was that the Department successfully and efficiently operates the program to meet legislative requirements for eligibility determination, lender monitoring, and loss mitigation. Over the past decade, significant consolidation of field operations and technology advances have decreased full-time equivalent VA administrative staff from about 1,800 to 900. The consolidation has resulted in greater consistency and accuracy. Dramatic increases in speed of service have complemented the increases in administrative efficiency. Key recommendations from the final report include the suggestion that VA retain the program's multiple use feature; consider indexing the maximum loan amount based upon the conventional loan limit; and more vigorously use current data systems to routinely report on multiple use, default/foreclosure rates, and cost-efficiency.
New Policies and Procedures
Several procedures have been implemented in the recent past that support the achievement of Objective 2.3. For example, VA has:
- Consolidated most of its supplemental servicing activities in loan administration sections at nine regional loan centers in order to improve the ability to effectively assist veterans who are delinquent on their mortgages.
- Improved customer service by providing veterans with toll-free telephone access and increased hours of operation.
- Implemented several applications to support electronic submission of appraisals, and is now using a new automated application that permits lenders to request a certificate of eligibility online in a matter of seconds.
In FY 2005 and beyond, VA will work to implement many of the policy and technical program recommendations presented in the independent program evaluation completed last year.
Objective 2.3 - Key Performance Goal: Improve the Foreclosure Avoidance through Servicing (FATS) ratio to 47 percent.
Foreclosure Avoidance Through Servicing (FATS) Ratio
| |
2000 |
30% |
2001 |
40% |
2002 |
43% |
2003 |
45% |
2004 Actual |
44% |
2004 Plan |
47% |
2005 Plan |
47% |
Strategic Target |
47% |
Description, Importance, and Results
The Foreclosure Avoidance through Servicing (FATS) ratio represents the extent to which foreclosures would have been greater had VA not pursued alternatives to foreclosure. By lowering the level of foreclosures, the costs to the government are reduced.
The Loan Guaranty Service did not meet its goal for FY 2004. Economic factors such as interest rates, real estate appreciation, and employment levels have impacted on the ability of veterans to purchase a home and avoid foreclosure in the event of default.
Management and Policy Issues
In FY 2003 VBA conducted an internal quality review of the FATS ratio. There are five components of this measure. Four of these are financial transactions that can easily be audited for accuracy. The fifth component is successful interventions, whereby VA staff actively intercedes with lenders to help veterans cure the delinquency on their guaranteed loans. The most common successful intervention is a repayment plan agreed to by all parties involved. VBA quality findings indicated that field offices were misinterpreting the requirements of what is considered a successful intervention. As a result of the review, VBA made a downward adjustment to the final (actual) FATS ratio in FY 2003. VBA issued revised ratios to field offices as well as new instructions on the criteria for successful interventions. The lower figure for FY 2004 reflects the more consistent and stringent requirements established in FY 2003.
At the management and operational levels, we will continue to emphasize the importance of delinquent loan servicing.
Achievement of this performance goal is not directly dependent on other agencies; however, there is close interaction with the real estate industry.
Data Quality
Please refer to the Key Measures Data Table.
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