Final answer:
The main appeal of VA mortgages is that regulatory changes made it cheaper and easier for banks to make home loans, mainly through the securitization process, which reduced the risk for banks and made loan approvals more accessible to borrowers.
Step-by-step explanation:
The main appeal of VA mortgages to borrowers lies in several factors that made it easier and more affordable to obtain a home loan.
Historical policies, such as those enabled by the GI Bill after World War II and other federal home-loan guaranty programs, helped millions of American families transition from urban renters to suburban homeowners.
However, discriminatory practices such as redlining and restrictive covenants often impeded nonwhite veterans from benefiting fully from these programs.
The federal government's regulatory changes to banking made it cheaper and easier for banks to offer home loans, by allowing the securitization of mortgage loans.
This means that banks could sell the loans and not bear the financial consequences should borrowers fail to repay, thus reducing the risk for banks and making loan approvals more accessible.
Moreover, for local banks, the ability to sell loans quickly and pool them into financial securities relieved them from needing significant extra funds to make a loan.
The process of securitization also meant that banks could diversify their financial risk by investing in mortgage-backed securities that were based on home loans from various parts of the country, rather than being overly exposed to the financial health of the local economy.