Institutions and Geographic Concentration in VA Mortgage Lending

Kerry Spitzer, Lauren Lambie-Hanson

The US Department of Veterans Affairs (VA) home loan guaranty program lowers the cost of homeownership for veterans and their families by removing the barriers of a down payment and private mortgage insurance. Even with the recent growth in the program and the attractive terms, many veteran homeowners have not used it. As a consequence, some areas of the country with large numbers of veterans have disproportionately few VA loan originations, even after controlling for area housing market conditions. We explore the role of institutions in explaining the disproportionate concentration of loan originations in county-level Home Mortgage Disclosure Act data, and we test whether the presence of military installations, VA facilities, and veterans service organization posts within each county contributes to lending patterns. We find that close proximity to a military site is a strong positive predictor of county-level rates of VA mortgage lending, even after controlling for the number of veterans and service members living in the area.

This paper was originally presented at a national Symposium on Housing Tenure and Financial Security, hosted by the Harvard Joint Center for Housing Studies and Fannie Mae in March 2019. A decade after the start of the foreclosure crisis, the symposium examined the state of homeownership in America, focusing on the evolving relationship between tenure choice, financial security, and residential stability.