Ask the Expert: Lending to the Military and Veteran Community

February 4, 2021

Chuck Wood Welcome to Ask the Expert where we ask industry leaders about their unique perspective on how to navigate some of the most difficult challenges faced by the broader real estate and financial services ecosystem and also give you a chance to ask the experts some of the most pressing questions on your mind. Welcome, everyone. 

I’m Chuck Wood from the State’s Title Business Operations Team, and today I am very excited to welcome Bryan Bergjans, Senior Vice President and National Director of Military and Veteran lending at Caliber Home Loans to talk about “Lending to the Military and Veteran Community.” 

Some background on Bryan. He has over 16 years of experience in the mortgage industry, specializing in implementing strategic initiatives to achieve military and veteran portfolio growth. And he’s spent the last several years writing and designing military and veteran exclusive loan officer and realtor training curriculums to try to close that education gap within our industry and share his knowledge more broadly. So welcome, Bryan.

Bryan Bergjans Hey, thanks for having me. Looking forward to the discussion.

Chuck Wood I think we have a lot in common. We’re both third-generation military. Both of us served in Afghanistan. I think the main difference is your decision to join the Navy and mine to join the Army, which was definitely not based on anyone’s irrational fear of the open ocean, but very excited to talk today about VA loans.

Bryan Bergjans Me too, even though you are Army, it’s all good.

Chuck Wood We can shake hands for 30 minutes.

[Both laugh]

Chuck Wood All right. Well, just to get us kicked off, you know, a big part of your job is educating the broader market, both loan officers, realtors, and veterans themselves on understanding, what’s important about VA loans and lending to veterans. And I was wondering if you could just talk about what from your point of view is most important for everyone to understand about lending when it comes to the veteran community?

Bryan Bergjans Yeah, I think it’s a great question, Chuck. I think the big thing here that a lot of people forget is it’s a benefit, right. We’re not talking about a loan here, really. We’re talking about a benefit. And it’s an earned benefit. So people doing FHA loans and conventional loans and stuff like that, they are not earning. They don’t serve or put their life on the line or enlist in the military for 15 years to go and be able to get a conventional loan. So you have to do certain things to earn this benefit. 

Understanding it’s a benefit also helps as to why we would always ask the question that people, “have you served?” Right, because we want to make sure that the folks who have earned this benefit get an opportunity to use it because it’s a fantastic benefit and one that’s well deserved. I think all lending professionals out there that might be watching this and even the real estate professionals or anyone in the industry over the last couple of years could argue that VA has great rates. Hundred percent financing, no money down. You have a little bit out of pocket here and there. But structurally wise it’s the best in the business for these folks who have earned that benefit. And I always tell people, you want to give our veterans an opportunity to use it. I think unfortunately as an industry, we have not done enough to ensure that our veterans and our active duty military, and our reservists are getting the opportunity to use it.

Chuck Wood Yeah, and that’s a great point. That is a benefit, and I think, you know, perhaps people are thinking, where’s the catch and what’s different about this program? And you’ve done a lot of work, a tremendous amount to explain these topics that you’ve talked about here on VA Loans, and that it is a benefit. How do you see this as your education efforts and everyone kind of learning a bit more about the program? How does that support business development on the lender and realtor side?

Bryan Bergjans We have this commitment to community engagement through education, right? And I think you can just take the VA factor out of the equation. Any time you’re willing to educate folks to help them make a more informed decision on the biggest investment they’ll ever make in their entire life is a win-win for everybody. A win for our industry and a win for the consumer. Now, you take a niche program, a niche benefit like VA, and one that we know for a fact that there is a huge gap of knowledge from perception and reality, right. Myth and reality out there. And now you’re giving people the accurate and timely knowledge that they need to better serve, whether it’s one veteran or military person a year a hundred. Giving them the knowledge that they have never had offered to them before. And that’s huge. 

Any time you’re willing to educate folks to help them make a more informed decision on the biggest investment they’ll ever make in their entire life is a win-win for everybody.

What happens after a while, especially if you’re committed to this demographic and you’re providing accurate and timely information to your business partners and consumers, you become the go-to subject matter expert or a trusted advisor for that specific customer base. And that’s something you’re really passionate about and enjoy doing. I love working with the military and vets. And I love working with folks, transitioning out the military and all that stuff, because I’ve been in the military since 1995. It’s in my DNA. I want to help. And I just think when you offer yourself out there to do that after so much of putting yourself out there and educating people, you will be the go-to, and the law of reciprocity kicks in. And you get back what you get. So that’s why I think education is a big piece of it. And we can all work together, collaborate more as an industry to ensure that we are educating these folks.

Chuck Wood I totally agree with you. And I keep thinking of examples of companies like USAA and other companies that have been able to form really strong, kind of multigenerational relationships with military and military families. What do you think? Is it something about understanding the language of the military community, or how does a company position itself to kind of understand outside of the education on just the kind of nuts and bolts of what is a VA loan? What can they do to build those better, stronger relationships with military customers? 

Bryan Bergjans Well, I think, to be honest, they are the market you want to serve. So one thing that we have done a really good job of, especially with our group that focuses on supporting the military, is we hire veterans and military spouses and folks that are near the market that we’re trying to serve. It’s extremely difficult for somebody who’s never served a day in their life or been associated with the military to create and design programs and initiatives to address pain points for that group. They might not even know the right questions to ask and have never been there and have never done that. They never relocated. They never deployed. They don’t know about employment history or about spousal employment programs, all that kind of stuff that goes into better serving that demographic. That’s why I would say to hire those folks that you want to serve on your team. You know, transitioning military veterans, military spouses, they’re all important keys and pieces to the puzzle, to being able to effectively work with and address concerns. 

Because the bottom line is with consumers, it’s a value and product, right? Well, we’re all homes and mortgages, but now it’s what your value proposition is. We have people who generally understand what you’re going through helping you. So you don’t feel like you’re having to work hard as a consumer to try to explain to this organization what’s going on or how you’re relocating or your husband or wife is deployed and you’re left by yourself relocating on your own house hunting. And you’ve got someone on the line saying “what are you even talking about?” So it’s that type of sincerity and full on commitment to helping, translates huge. Some organizations have probably gotten away with having a pretty good impact on hiring a lot of vets. And I get it. But to me personally and as a military person and the folks that I spoke with and talked to that I trust and in the industries and having folks like that serving those folks is huge and it’s a benefit to the consumer and it’s a benefit to your organization.

Chuck Wood And I’d argue that the next step there also is encouraging those veteran employees to share their experience and talk to the rest of the team. I don’t think we may ever get to a point where every VA loan is served by a veteran. 

Things like what you’re doing here and what you’ve done over the past few years are really kind of tremendously important to spread that information and get a better-shared understanding on the team.

Bryan Bergjans And one of the things that I so support, and before the pandemic, obviously, we traveled a ton. I think my average was about 30 days on the road a year. And so the folks on my team. But what you get out of that is you get to talk to real people in real communities about real issues that they’re having. And most folks won’t open up with somebody unless they feel like they have something in common with that person. 

You get to talk to real people in real communities about real issues that they’re having. And most folks won’t open up with somebody unless they feel like they have something in common with that person.

So being that like we talked about before Chuck, you get a bunch of vets in a room and all of a sudden within an hour, you have the ones who have been deployed over here, the ones that haven’t been deployed over there, they went over here. Everybody came there because they’re vets. But within an hour, they start to get into the groups of people that they really have something in common. Same with the military community. Going out there and serving. We’re out there traveling and teaching and educating and finding out that spouses carry most of the burden of the whole moving, PCS situation. Why wouldn’t we want to hire spouses to work with spouses to find out what’s really going on and how we can help and relieve a lot of those pain points as a lender through education and whatever else we can do. So I think that part right there is something that a lot of folks just need to seriously consider if they want to get in and want to work with this. The military is underserved. We already know it’s not a secret. It’s a very underserved demographic, number one. Number two, the program itself is underutilized. And that’s and those are two big problems.

Chuck Wood Yeah, it’s interesting, you mentioned, the military spouse and how important they are in the buying and selling process. 

I remember growing up in a military family, there was always a big decision. Do we buy a house? Do we rent? There are those kinds of decisions, to me, it seems, comes up maybe more often than the general consumer when you’re talking about moving every three to five years.

The question for me is that I’m out of the military, I’m not super keen on moving again within three years. How does that translate to you? How do you see the difference between the active duty servicemember versus the veteran who’s left the service? And how do you drive a distinction between how you serve those two?

Bryan Bergjans Well, one thing that is different about veterans that we found interesting, and also eye-opening is you have a large group of veterans, especially Vietnam era, the 80s, early 90s before anything really started happening that were in the reserves. They had no idea that they even qualify or that they’re even entitled to a VA loan benefit in general. And we owe a lot to the Vietnam vets to be frankly honest, especially to all of us who have served overseas that post 9/11 and their endless efforts to make sure that we always did welcome home, something to be extremely proud of. And I thank those guys and gals from the bottom of my heart all the time, but they don’t even know that they are even entitled to this stuff. 

That’s why it goes back to the simple question of always asking people “have you served?” Because those folks who served in the reserves in Vietnam or served in the 80s, don’t even think that this even benefits them when you talk to them. They’re like “I didn’t even know that this is something that I was even entitled to.” And so educating them is extremely important because they don’t even know. They’re not even attached to the military anymore. They wouldn’t even have any idea because VA didn’t even change the rules for reservists until 1992. The veteran population is way bigger than the active duty population. So this is where education and awareness come into play and it all starts with us. You know, the industry, like realtors and loan officers, to ask a simple question, “have you served?” A lot of it’s unfortunate. I think anybody who raises a right hand deserves all the credit in the world, regardless if you serve in the reserves or not. But unfortunately, in that period of time and the reserves in the 80s, a lot of those people don’t even feel like their service is even working and talking about them. So we have to get through that.

Chuck Wood And we talked about, even today, when you’re transitioning out of the military, you’ve got maybe a couple of weeks to understand the full range of benefits, medical, all these things that are happening. And you may not even remember that the VA loan was talked about. It might just be a blur of you know, you have to pay for your own health care now kind of conversations.

So I take the point on education and asking, “have you served”, is really important in these conversations. 

Bryan Bergjans I mean, you’re going to have to if you’re talking to a veteran who’s to have a military for twenty five years and has had a civilian job for a long time and the military thing could potentially be way in their past, but if you don’t ask them if they “have served?”, they are going to put them in a long program or product or something like that, that might not be as good as a VA home loan benefit, having known that they qualify for it. So I just think its just the one simple question, “have you served?” That’s where it all starts. 

So I just think its just the one simple question, “have you served?” That’s where it all starts.

Chuck Wood Yeah. And that reminds me of the Blue Water Navy Vietnam Veterans Act. Speaking of that era, veterans has just been out in effect for about a year plus now.

I was wondering if you could talk to more of the tangible benefits that have created and maybe things that veterans may not be aware of through that act.

 Bryan Bergjans Yes. So obviously long overdue benefits to our Vietnam Navy Veterans. This law that went into effect is obviously very impactful to that group. But because of the pandemic, because of covid, this huge change to the VA home loan, that kind of just rolled under the cover of night. Right, for the last 13 months. And basically, I think it’s a win-win across the board for everybody, veterans and military, active duty military people that are about to retire because what happened was and it’s been long overdue, the VA has no loan limits anymore. It used to be tied to the conventional loan limit. That’s kind of how you can agree with the calculation stuff. But it used to kind of be tied to that, right, where you can only go in at a certain level and anything above that would require a down payment from the bank. 

Now they removed it. So basically, anybody that has full entitlement ill be able to go into any market, and as long as they can afford it and the lenders are willing to lend to that number, realistically by a million dollars, two million dollars, two and a half million dollar house with no down payment. And what I love about this is our active duty folks who are transitioning into retirement. They’re going to work somewhere else. It’s a big win for them because you get people who serve in the military for thirty years and really their retirement is the annuity, the monthly annuity, basically payment that they get for the rest of their life. Right before TSP really came into play in this blended retirement system, I mean, that was it. So now you have people they can’t really go and buy their forever home, but one that they really want because they want to have two hundred and fifty grand to put down. Now this gives people the opportunity, if they can afford it, to go buy their forever home that they’ve been waiting thirty years to do because now the program allows for that to happen, which I think is awesome. Extremely excited for that. 

That’s just something that’s long overdue and absolutely fantastic for those folks and for veterans that have been in the civilian sector for years, that have to work on the coast, were it’s highly competitive. The prices are rising buying a million-dollar house now in California and Seattle. And now folks can come in and not have a down payment. I mean, that’s huge. I mean, that is a game-changer and one that we still don’t talk enough about because I think with the pandemic and refi boom and all the other stuff that a lot of things that kind of overshadowed it. But that’s a significant impact with that law. And one other little tidbit about that law that’s very impactful is now folks that are serving on active duty with a Purple Heart are exempt from the funding fee, where before they have to wait until they get out of service. And there’s a lot of people serving in the military, especially the brothers and sisters in the Army with Purple Hearts and Marine Corps folks too.  That’s long overdue, too, right. So two big impactful things to the actual veteran out of that law. And there’s some other stuff in there, too. But most like to have big impact right there out of that.

Chuck Wood We’ll awesome. Thanks for sharing all that information with us. We do have a question from the audience. So the question is, appraisers and real estate agents are often or sometimes hesitant to deal with VA loans, as I think either the appraisal will come in low or there’s a lot more work involved or things of that nature. How can lenders educate the other professionals involved in this process to reassure them that this is a loan, this is a benefit, and it’s something that we want to be involved in? 

Bryan Bergjans Well, that’s an awesome question. And I’m actually glad that came up, because typically when we’re teaching and traveling, when I’m at the part of my presentation where I tell people that the VA appraisal is actually the best appraisal in the game, typically everything goes silent and you can hear a pin drop. Because unfortunately, appraisers, especially VA appraisals, have had a bad rep for decades. They always used to joke around back when I first got into the business, but that’s where a deal went to die. 

What I will tell you to be a part of the VA appraisal process is actually the best in the business. And I tell you why. Because conventional FHA loans. Right. If the appraisal is about to come in low, that’s it. You’re done. They submit it. That’s the value, you move on. With VA, if it’s about to come in low, the realtor initiates a thing called Tidewater. Which Tidewater gives an opportunity to the listing agent or whoever else is involved to provide comps to support a purchase, the purchase price. So it’s kind of like, “hey, we haven’t submitted it. This is what we think it’s going to be. Submit to me be anything that would support the purchase price.” And then they do. And then the appraiser like, oh, you don’t want to miss that comp here. Let me adjust this comp to the first position or however, they do it. No right. No harm, no foul. They haven’t even submitted it to the VA yet. And where you have the tug of war in our industry is that you mentioned a conventional or FHA loan, that when someone comes in low and you ask somebody to change it, it’s being graded on how accurate their appraisals are, what do you think they’re going say? They don’t win either way. They don’t. So you’re going to lose every single time, no appraiser is going to go “my bad, I messed up.” And, “let me fix that for you.” But Tidewater provides that opportunity, that safe place where people can have the conversation and show accounts to fix that. 

Another caveat, too, about appraisals. And this is why our real estate professionals and our lenders have to work together because VA has minimum property requirements. So a lot of that is around the safety, sanitary, and soundness of the house. So we don’t want stuff falling off the house and all the roof caving in. And you don’t want the foundation jacked up, exposed, electric, all those things. My philosophy is, “if you’re a lender and a realtor and you know this domain, then you probably don’t want to show a veteran around a bunch of houses that need renovation.” Or they need a lot of work to it. If you’re not expecting if you want a 30-day transaction. There’s other things you can do, renovation loans and stuff like that. But I’m just talking and I do want a smooth, painless transaction. Just don’t show houses like that if you can. I know in some markets it’s tough because inventory is low and you just got to do what you have to do. But having these conversations with everybody is important and make sure the lights are turned on. There are no exposed electrics, the water goes on and all that stuff will save tons of time and frustrations with the appraisal process itself. But to go back to what you’re saying, Tidewater is the best in the game. And I can tell you it works, it’s a great process. And when you dig deep into a loan, sometimes after it doesn’t even meet back with Tidewater, you can send it to the VA to have one of their appraisers review it again. You can’t get that with a conventional FHA.

Chuck Wood And you mentioned the low inventory market. So this audience question says, thank you for your service. I’ll thank you for your continued service from me, of course. In a low inventory market like Seattle. Do you have any tips on how to get a VA loan offer accepted?

 Bryan Bergjans So one of the things I always tell folks, and we do a lot of conversations with the consumer, and one of the things that we tell them, obviously, is to be prepared for this. So the way I look at it is that when you have a consumer coming in that wants to use a VA home loan benefit, I think what scares sellers the most is they get these contracts. But there’s a lot of what if’s behind that contract.

How to win a VA sales contract a lot of times is to make sure that the consumer’s already been through the rounds with underwriting. That income assets and everything has already been approved. So now the customer only needs to find a house. That alleviates a ton of issues already.

My suggestion on how to win a VA sales contract a lot of times is to make sure that the consumer’s already been through the rounds with underwriting. That income assets and everything has already been approved. So now the customer only needs to find a house. That alleviates a ton of issues already. When your realtor is going to the seller saying, “hey, he’s already approved, all he’s finding is a house.” And now they don’t have to worry about missing closing times because the appraisal turn time is less than two weeks in every market pretty much across the United States unless you live seven hours away in the middle of rural somewhere. You just cut the time down and it gives that seller way more confidence in the process. Also, to work with your buyers and your consumer to say, “hey, is there a little bit of information we might be able to share with the seller”, letting them know that you are in a good financial position. Unfortunately, the unconscious bias with VA has always been for some odd reason, because it’s a government-backed loan, people think it’s a subprime customer and that it’s just not the case. Now, last year, the average FICO score for VA was well into the seven hundreds and it’s been like that for years. And the consumer FICO scores never reached seven hundred until 2019. The consumers have assets, plenty of money, and a great credit score. And I think if the sellers knew that going in, they wouldn’t feel so bad. 

Chuck Wood Yeah, makes a lot of sense, I’ve agreed with you throughout this. I think there’s still tremendous opportunity. And what I’d like to say, again, thanks for your service and thank you for coming on to Ask the Expert and continuing your campaign of education on this.

Bryan Bergjans Thank you for having me, and I appreciate everybody attending. And I look forward to helping more vets.

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