Just to clarify, who is requiring this? Is it the lender?
If it's the lender, there could be several reasons.
1) Investor overlay - this could be a lender specific requirement. If so, have your friend shop around.
2) It could be a requirement from the AUS or automated underwriting system based on your friends total credit profile. There are multiple triggers that could cause this. For example: if your friend has another home that is a rental property or if his debt to income ratios are on the high side it may require the additional reserves to offset the risk.
3) This one is probably way out in left field but another possible reason would be if your friend is "short" on his VA entitlement.
Please feel free to contact me for more information or help.
Senior Mortgage Banker
Peoples Bank & Trust Co.