VA Reverses Policy; Loans for Homes on Catchment OK

The US Department of Veterans Affairs today announced it will resume its policy of allowing homes with water catchment systems for use as collateral for VA loans.

According to US Rep. Tulsi Gabbard, since 2011 veterans in Hawaii have been unable to take advantage of VA benefits to purchase homes or refinance existing loans on homes served by catchment systems.

That policy has been especially difficult for veterans on the Big Island, where most of the state’s homes without municipal water sources are found.

That includes most of the large subdivisions in Puna and Ka`u.

According to the University of Hawaii, in 2010 an estimated 30,000 to 60,000 people in the state were dependent on catchment systems.

Veterans purchasing homes with catchment over the past several years have had to turn to private lenders. VA loans are usually preferable because they often don’t require down payments and other costs included in conventional mortgages.

Gabbard said efforts by her and the state Department of Health to get the policy changed required overcoming “tremendous obstacles.”

“For too long veterans who have served our country have been caught in an unacceptable bureaucratic stalemate which has prevented them from using the benefits they have earned and deserve,” Gabbard said in a statement.

“The solution announced today by the VA recognizes the unique needs of Hawaiʻi veterans and will allow them to purchase homes served by rainwater catchment, which many times are the only homes available in places like Hawaiʻi Island,” she said.

“I commend the efforts of the Hawaiʻi Department of Health and the VA for coming to a resolution that provides a straightforward approval process and resuming the home loan guaranty program for our veterans and their families.”

Water quality meeting the standards of local health authorities has always been a requirement of VA loans, the agency said today, and the Hawaii Department of Health’s policy was that catchment systems “were not safe for domestic uses.”

“After discussions with VA, DOH has determined that water catchment systems may be made safe for domestic use if certain guidelines are followed,” the VA said.

The agency said effective immediately, the VA will process home loans for homes with catchments systems as long as the guidelines are met.

The guidelines, which can be found here, include providing the veteran with information on catchment systems, and testing of the home’s catchment water by a laboratory certified by the DOH.

According to the VA statement, the new policy is in effect until at least Jan. 1, 2016.

***Updated Feb. 21.***