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  The Nation's #1 Independent Veterans Web Site Click here to make VA Watchdog dot Org your homepage VA NEWS FLASH from Larry Scott at VA Watchdog dot Org -- 06-08-2008 |
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The Nation's #1 Independent Veterans Web Site Click here to make VA Watchdog dot Org your homepage VA NEWS FLASH from Larry Scott at VA Watchdog dot Org -- 06-08-2008 |
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Lawmakers are pushing legislation to raise VA loan ceilings, lower VA funding fees and expand the VA's ability to help veterans to refinance loans.
Story here... http://www.stripes.com/article.asp?section=104&article=55366 Story below:
------------------------- VA, Congress assist veterans in mortgage messBy Tom Philpott, Special to Stars and Stripes
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VA’s effort to reach mortgage holders in
distress now includes a help line —(877) 827-3702 — that automatically
directs callers the nearest of nine VA regional loan centers. VA loan
counselors have helped 74,000 homeowners since 2000, including half of all
VA loans in serious default last year, thus saving the government nearly
$1.5 billion, officials contend.
The VA Loan Guaranty program avoided the subprime loan debacle. While
delinquency rates have climbed over the past five years for subprime, FHA
and prime mortgages, delinquencies have fallen for VA-backed loans.
During the easy mortgage money frenzy that led to the housing market
crash, VA-backed loans with no down payment lost favor with home-buying
veterans who needed bigger loans for more costly houses than the VA would
approve, or were tempted by teaser loans and unchecked credit.
"We never did the same things [as mortgage companies] as far as changing
rules for what it takes to get a loan," said Judith Caden, director of the
VA Loan Guaranty Service, in a phone interview. "We’ve required
underwriting and always had underwriting standards. We’ve always required
that [applicant] income and credit be documented. We made sure that
someone getting a VA loan could afford that loan."
That doesn’t mean VA loans operated well during the housing market bubble
or mortgage crisis, according to Rep. Bob Filner, D-Calif., chairman of
the House Veterans Affairs Committee. VA loans
have
"basically become irrelevant," Filner told Military Update. "Especially in
California [where] they gave out less than 100 loans last year."
A more accurate figure for VA loans in California last year is 2,000,
according to VA data. But officials get Filner’s point. The ceiling on VA
loans is $417,000, which, more so before the housing bubble popped, didn’t
cover many new mortgages in Filner’s state. VA loan rates and fees often
were seen as less competitive than other offerings.
As a result, VA-guaranteed loans nationwide fell from a recent peak of
nearly 500,000 in 2003 to 133,000 last year. The trend seems to have
bottomed and VA loans across the country are rising. In California, 3500
VA loans have been approved through the first eight months of fiscal 2008.
Filner said the two major successes of the World War II-era GI Bill were
in education and housing. Congress is moving to approve an initiative from
Sen. Jim Webb, D-Va., for a new wartime education benefit. Filner said
he’d like to lead a similar effort to enhance the VA home loan program.
"I’m in Congress because of the GI Bill of ’44. My dad came back from
World War II, got some education but more important he bought us a house
for $3,000 and all of a sudden we were in the middle class," Filner said.
Too many military people today in and around his district in San Diego
have been "devastated" by the mortgage crisis, Filner said. "The problem
is they can’t work out something with the bank and they can’t turn to the
VA."
Filner’s Helping Our Veterans to Keep Their Homes Act (HR 4884), would
raise the maximum VA home loan to $730,000; eliminate a requirement that
veterans have 10 percent equity in a home to be able to refinance through
a VA loan; and lower VA home loan funding fees by moving to a flat fee of
one percent regardless of type of home loan.
Sen. Daniel Akaka, D-Hawaii, chairman of the Senate veterans’ affairs
committee, also has a bill to raise the loan ceiling to $730,000. He noted
that veterans in February were left out of the Economic Stimulus Act of
2008, which raised ceilings identically for other federal home loan
programs. Akaka proposes only lowering the equity requirement for a
veteran to refinance a mortgage with a VA loan, from 10 percent down to 5
percent. Filner’s call to eliminate any equity requirement for VA
refinancing, and to lower most funding fees, are opposed by VA officials
as too risky.
"That’s our job," Filner said, "to take the risk for the young people who
served our nation. It is part of the cost of war."
In 2004, when the VA loan maximum was $240,000, Congress indexed that
amount to rise automatically with the single family home loan limits used
by Freddie Mac and Fannie Mae to fuel the broader mortgage market.
Congress, however, failed to index VA loan guarantees for refinancing of
non-VA-backed loans. This has left many veterans unable to use VA
refinancing to retire subprime non-VA-backed mortgages larger than
$144,000.
Rep. Steve Buyer of Indiana, ranking Republican on the veterans affairs
committee, has a bill (HR 4539) that would, among other things, raise that
ceiling for VA-backed loans for refinancing to at least $417,000.
Until that becomes law, a lot of veterans with subprime loans aren’t able
to use VA refinancing. A $144,000 loan ceiling, a 10 percent equity
requirement and falling home values, Caden said, means "we really can’t
help very many veterans in that position."
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posted by Larry
Scott
Founder and Editor
VA Watchdog dot Org
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