VA Loan Updates

Minnesota Attorney General-elect Lori Swanson got it right when she said, “We owe our veterans, our service members a great debt of gratitude.”

So it only makes sense that people to whom we owe a debt shouldn’t have to be saddled with debt after making sacrifices in the armed services. To that end, state lawmakers — many of whom haven’t even taken the oath of office — have pledged to pass a GI bill that would allow for free college tuition and other benefits for returning service members. Our newly elected state senator, Sharon Ropes, is in a key position to help shepherd this legislation through as the vice chairwoman of the Senate’s Agriculture and Veterans Committee.

She joined other lawmakers at the state Capitol last week to support the bill that would allow thousands of returning troops to move on with their lives by utilizing higher education.

Too often we read about veterans who leave behind families who struggle with both an emotional and economic loss. We hear about families who struggle to make ends meet while their loved ones risk lives half a world away. Then we learn about the rising cost of tuition and wonder how anyone who’s struggling financially possibly could get a college education?

This proposed bill seems to take care of the veterans who sacrifice and get them into college without worrying about a mountain of debt.

We hope the measure gets bipartisan support in both houses and a bill is passed quickly.

Moreover, we hope this is just the first in a line of bills aimed at getting a handle on higher education in the state. We know about the Minnesota — and, for that matter, Midwest — brain drain, where the best and the brightest from this region go off to college somewhere else, never to return. This leaves places like Minnesota and Wisconsin poorly positioned for the next generation of business innovation. If we want the best and brightest business leaders of the future, then we must do something to ease the tuition burden and provide incentives for education in the state. The competition in higher education is fierce and it’s global.

GI bills and measures aimed at curbing tuition are admittedly good for places like Winona. Even more important, they’re good for places like Minnesota, where we have a large number of people willing to sacrifice for their country and then forced to turn around to sacrifice for an education.

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Birmingham, MI, December 16, 2006 –(PR.COM)– CxT Group, Inc. (http://www.cxtgroup.com) was retained by Birmingham-based Shore Mortgage to optimize their online presence.

Shore Mortgage has been helping people with their mortgage needs since 1984. They are experts in helping homebuyers purchase and refinance their homes using government-insured products such as FHA and VA loans. Shore Mortgage has a unique program, “Loan First” which turns regular buyer into cash buyer! Shore Mortgage offers multitudes of information and product options online at www.shoremortgage.com that are available for homebuyers.

About CxT Group
CxT Group, Inc. is a technology company that identifies the latest innovative technology to help businesses compete in a fast-paced ever-changing economic environment. Their team helps you stay current with the highest-return technologies for your business. CxT Group provides quality web design, custom software development, database and reporting and e-commerce solutions with a worry-free guarantee. You can learn more about CxT Group, Inc. at www.cxtgroup.com

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WORLEY, Idaho - Native veterans convened on the Coeur d’Alene Reservation for the tribe’s first Tribal Veterans Symposium. Two days in early November were devoted to learning about new programs and ways of handling problems, exchanging information between tribes, and simply sitting down together to reminisce about their service in various wars and conflicts. For some, it was another step in the healing process that so many veterans have experienced.

Sharon Red Thunder, Colville/Moses, and Jeannie Louie, Coeur d’Alene, each spoke about the auxiliary and its support of veterans and their own experiences with their husbands after the war. Now they’ve each been married about 40 years with husbands who have not had alcohol for 25 years but alcohol and abuse were common for several years after returning from combat. The audience was absolutely silent as Louie spoke emotionally about ”the heroes” and what it was like to be the wife, mother or sister of a veteran.

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Minnesota veterans would get additional financial aid to attend college and active duty military duty personnel could get out of contracts for services such as cell phones and health clubs under legislation that Attorney General-elect Lori Swanson proposed today.

The federal GI bill is a great program, but it doesn’t go far enough, Swanson said at a Capitol news conference. The federal benefits are limited to four years, and only 36 percent of students at Minnesota public colleges and universities graduate within that period.

Under Swanson’s proposed “Minnesota GI Bill,” the state would provide tuition assistance to veterans who exhaust their federal benefits. It would reimburse them the full cost of tuition and fees at Minnesota state colleges and universities, including graduate-level study.

To be eligible, a veteran would have to be a Minnesota resident and have served honorably in a war zone for 90 days or two years in active duty.

Swanson’s bill is modeled after a Wisconsin veterans’ tuition program. She estimated it would cost the state around $15 million a year.

“We owe our veterans a debt of gratitude,” Swanson said.

Her consumer protection measure would allow military personnel who are called to active duty to cancel such services as cell phones and satellite television and health club memberships without paying penalties for early termination. Active duty personnel who own businesses also would be able to cancel service contracts or leases for their firms.

In addition, the legislation would enable service members to keep their family’s heat and other utilities on when they are called to active duty, Swanson said. Military personnel whose incomes are less than the state median income would be allowed to make payment agreements with utilities to continue services by paying 10 percent of their monthly income toward their bills.

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Blackanthem Military News, WASHINGTON, D.C. – The Department of Veterans Affairs (VA) is reaching out to inform wartime veterans and surviving spouses of deceased wartime veterans about an under-used, special monthly pension benefit called Aid and Attendance.

“Veterans have earned this benefit by their service to our nation,” said Secretary of Veterans Affairs Jim Nicholson.  “We want to ensure that every veteran or surviving spouse who qualifies has the chance to apply.”

Although this is not a new program, not everyone is aware of his or her potential eligibility.  The Aid and Attendance pension benefit may be available to wartime veterans and surviving spouses who have in-home care or who live in nursing-homes or assisted-living facilities.

Many elderly veterans and surviving spouses whose incomes are above the congressionally mandated legal limit for a VA pension may still be eligible for the special monthly Aid and Attendance benefit if they have large medical expenses, including nursing home expenses, for which they do not receive reimbursement.

To qualify, claimants must be incapable of self support and in need of regular personal assistance.

The basic criteria for the Aid and Attendance benefit include the inability to feed oneself, to dress and undress without assistance, or to take care of one’s own bodily needs.  People who are bedridden or need help to adjust special prosthetic or orthopedic devices may also be eligible, as well as those who have a physical or mental injury or illness that requires regular assistance to protect them from hazards or dangers in their daily environment.

For a wartime veteran or surviving spouse to qualify for this special monthly pension, the veteran must have served at least 90 days of active military service, one day of which was during a period of war, and be discharged under conditions other than dishonorable.

Wartime veterans who entered active duty on or after September 8, 1980, (October 16, 1981, for officers) must have completed at least 24 continuous months of military service or the period for which they were ordered to active duty.

If all requirements are met, VA determines eligibility for the Aid and Attendance benefit by adjusting for un-reimbursed medical expenses from the veteran’s or surviving spouse’s total household income.  If the remaining income amount falls below the annual income threshold for the Aid and Attendance benefit, VA pays the difference between the claimant’s household income and the Aid and Attendance threshold.

The Aid and Attendance income threshold for a veteran without dependents is now $18,234 annually.  The threshold increases to $21,615 if a veteran has one dependent, and by $1,866 for each additional dependent.  The annual Aid and Attendance threshold for a surviving spouse alone is $11,715.  This threshold increases to $13,976 if there is one dependent child, and by $1,866 for each additional child.

Additional information and assistance in applying for the Aid and Attendance benefit may be obtained by calling 1-800-827-1000.  Applications may be submitted on-line at www.vabenefits.vba.va.gov/vonapp/main.asp.   Information is also available on the Internet at www.va.gov or from any local veterans service organization.

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Recruiting: Then versus now

Recruiting then: When he was an Army recruiter (1969-73) David Hack said enlistees joined for terms of three or four years (vs. the draft’s two years).

Starting pay was $125 per month.

The G.I. Bill provided post-service tuition assistance.

Hack said education in career specialties was the Army’s forte.

Recruiting now: Recruits join for terms of two to six years.

Basic pay is $1,427 a month. Bonuses (potentially upwards of $40,000) can increase that considerably. These include extra monthly pay for serving in special duty areas (up to $375), flight pay (up to $275) and foreign language proficiency (up to $500).

Bonuses of up to $15,000 a year are offered for high-demand specialties in artillery, satellite communications, bomb disposal, motor transport and more. For airborne, add $4,000. For a specialized civilian skill, tack on $5,000. And if you speak a Middle-Eastern language, figure an extra $10,000.

The Montgomery G.I. Bill and Army College Fund provide over $71,000 for college. Plus the Army has its own 401(k)-type retirement program in the Thrift Savings Plan.

Today, Hack says there are career-training programs representing more than 200 jobs.

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It has not been widely reported, but late in the closing session of the 109th Congress which adjourned this past weekend may have been a bit of good news for homeowners.

In a last minute flurry of votes Congress approved the Tax Relief and Health Care Act of 2006. As has been widely reported, the act was a mare’s nest of “earmarks,” amendments, and attachments among which were extensions to a number of earlier tax breaks that were due to or had already expired. Most of these were designed for the benefit of businesses small and large but the bill also included trade protection legislation and new laws relating to health care.

Buried deep within the Act at Section 419 was a one page attachment entitled “Premiums for Mortgage Insurance.” Tracking Congressional legislation requires more than a helicopter and a pack of search dogs. While there are a number of web sites - some government sponsored others operated by brave private individuals and organizations - following a bill from introduction to enactment is a morass. We can, after six hours on line guarantee nothing about what is to follow except the following.

The original legislation was introduced in the House in 2005 by Congresspersons Paul Ryan (D-WI), William J. Jefferson (D-LA), and Eric Cantor (R-VA) as HR 3098 and in the Senate by Senators Gordon Smith (R-OR) and Blanche Lincoln (D, AR) as S 132.

The Tax Relief and Health Care Act of 2006 as presented to the House contained the following wording, very similar to that in the above referenced bills as Section 419:

Section 6050H of the Internal Revenue Code of 1986 (relating to mortgage interest) is amended by adding at the end the following new subsection:

In general.–Premiums paid or accrued for qualified mortgage insurance by a taxpayer during the taxable year in connection with acquisition indebtedness with respect to a qualified residence of the taxpayer shall be treated for purposes of this section as interest which is qualified residence interest.

The Tax Relief and Health Care Act of 2006 was, by media accounts, passed by both the House and the Senate but has not yet been signed by President Bush.

Beyond that, even The Congressional Record as of Dec. 12 could not provide definitive information as to the final form of the bill as it was passed but all indications are that the PMI amendment was included.

Basically this means that those homeowners who put down less than 20 percent of the purchase price in securing a mortgage can now deduct the cost of the private mortgage insurance (PMI) they were required to purchase to protect their mortgage lender in the event of default. This amount can now be treated as mortgage interest by itemizers when filing Schedule A of the federal tax return.

With monthly PMI payments tending to run in the vicinity of $100 or more per month this will be bit of a help to homeowners who are using all of their interest rate deduction but still owing income taxes. There was a cap in the original legislation in which the amount that could be written off begins to decline incrementally when income reaches $100K, but this seems to have disappeared in the final bill.

This is good news for many taxpayers but the legislation was, of course, designed more to benefit private mortgage insurers which have been lobbying for such a change for some time. Once home buyers and loan officers caught on to a little wrinkle that allowed buyers to avoid PMI by using blended or piggy-back mortgages the use of PMI and thus the profits of the companies that write it plummeted. Blended mortgages allowed borrowers without a 20 percent down payment to take out a home equity line or a traditional second mortgage simultaneous with a first mortgage to provide the necessary down payment. This form of financing has a number of benefits (Check the archives on this site for several articles on PMI in August and September 2005) but one of them was that the interest on the junior mortgage payments (with some limits) was deductible.

Passing such a bill does not mean that everything will proceed as written. The IRS will issue regulations interpreting the act and hopefully this will be done in time for the April 15 filing deadline. If you are responsible for paying PMI make sure that your tax professional is aware of this new legislation and understands how it may result in a slightly lower price tag on the bottom line of your 1040.

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Trade group urges against tighter lending regulations 

An increase in delinquencies on subprime and FHA-backed loans helped push the overall delinquency rate on all mortgage loans up 28 basis points in the third quarter, to 4.67 percent, the Mortgage Bankers Association said Wednesday.

The increase in delinquencies took place across the board for all major loan types, but was noticeably larger for subprime loans — particularly subprime ARMs, said MBA Chief Economist Doug Duncan.

Duncan said that although payment performance “has deteriorated somewhat from the very strong performance of recent years,” the market is responding to changing economic conditions. He urged lawmakers not to take regulatory or legislative action that would impede an efficient market.

The increase in delinquency in subprime loans “is not surprising given that subprime borrowers are more likely to be susceptible to the cumulative increases in rates we’ve experienced, and the slowing of home price appreciation that has resulted,” Duncan said of the results of MBA’s National Delinquency Survey.

The survey, which covers more than 42.6 million first-lien mortgages on one- to four-unit residential properties, revealed that the third-quarter delinquency rate for subprime ARMs increased by 98 basis points from the previous quarter, with 13.22 percent of all such loans past due. That’s a 267-basis-point increase from the same quarter in 2005. Prime ARMs saw a less dramatic 36-basis-point increase in delinquencies in the third quarter, to 3.06 percent.

The delinquency rate for FHA loans was up 35 basis points for the quarter to 12.8 percent, while the percentage of VA loans past due was up 23 basis points to 6.58 percent.

Further increases in delinquency and foreclosure rates are expected in the quarters ahead before the housing market fully regains its footing in the middle of 2007, Duncan said

In arguing against tighter regulations, MBA’s chief economist said there is no evidence that the increases in delinquency and foreclosure rates are the result of nontraditional loans such as interest-only or payment-option mortgages, and that market forces are curbing their use.

Investors are demanding higher returns, and widening credit spreads in the secondary market mean higher rates for borrowers, Duncan said. Lenders reduce credit to less creditworthy and subprime borrowers first, he said.

In keeping with past trends, the survey showed fixed-rate mortgages continue to have lower delinquency rates than adjustable-rate loans, and fixed-rate loans also saw less dramatic increases during the third quarter.

The delinquency rate for prime, fixed-rate mortgages inched up 10 basis points in the third quarter, to 2.1 percent, while 9.56 percent of subprime fixed-rate mortgages were past due, a 35 basis-point increase from the second quarter.

For all loan types, the states with the highest overall delinquency rates were Mississippi (11.05 percent), Louisiana (9.5 percent), and Michigan (6.68 percent). The states with the largest increase in overall delinquency rate in the past year were Michigan (135 basis points), Rhode Island (128 basis points), and Ohio (96 basis points).

The survey also looked at new foreclosures and the foreclosure inventory rate.

States with the highest foreclosure inventory rates across all loan types were Ohio (3.32 percent), Indiana (2.9 percent), and Michigan (2.2 percent). States with the largest annual increase in foreclosure inventory rate were Michigan (59 basis points), Rhode Island (46 basis points), and Maine (43 basis points).

By loan type, the percent of new foreclosures increased one basis point for prime loans (to 0.19 percent), three basis points for subprime loans (to 1.82 percent), and four basis points for FHA loans (to 0.79 percent). The percent of new foreclosures for VA loans decreased three basis points to 0.32 percent.

The foreclosure inventory rate was up across all loan types. For prime loans, the foreclosure inventory rate increased three basis points to 0.44 percent. The foreclosure inventory rate for subprime loans was up 30 basis point to 3.86 percent, eight basis points for FHA loans to 2.28 percent, and two basis points for VA loans to 1.12 percent.

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A major victory for New York City veterans came this Friday as the Veterans Benefits, Health Care, and Information Technology Act was passed by both the House of Representatives and the Senate.The bill, written by Rep. Carolyn Maloney (D-Manhattan, Queens) and Sen. Charles Schumer (D-NY) allows veterans to apply VA loans to co-ops, which make up the majority of housing in New York. Currently, the VA loans could only be applied to homes, townhouses, trailer homes and condos.

The VA loan program allows veterans to buy homes with no down payment and limited closing costs. The new bill is intended to make more housing choices available to veterans.

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A bill setting new requirements for how the Department of Veterans Affairs should handle data security breaches was approved by Congress early Saturday, although the VA’s technology chief said Monday that he does not expect any more serious losses of personal information.

Included in a larger omnibus veterans’ bill passed by Congress is the VA Information Security Enhancement Act of 2006, the congressional response to the temporary loss last year of records of more than 26 million veterans and service members.
The Bush administration had opposed the data security legislation, but Rep. Steve Buyer, R-Ind., the House Veterans’ Affairs Committee chairman, insisted on its inclusion in the final compromise bill.

Buyer accepted one major change from the initial bill that he had been pushing. He wanted to create a new VA undersecretary position to oversee information technology, something the White House’s Office of Management and Budget opposed. When most of his other ideas, including putting current policies and responsibilities into law, were accepted as part of the compromise, Buyer ended up accepting a slightly lower-profile assistant secretary as the person in charge of information technology for VA.

Under the provisions, a new information security program would be established that includes periodic risk assessments of how much damage would be caused if data kept by VA was lost or stolen.

In May, when a laptop computer with data on millions of veterans and service members was stolen from the home of a VA employee, widespread identity theft became a very real possibility. VA had begun drawing up plans to provide credit monitoring services at government expense when the information was recovered by law enforcement agencies, and the FBI announced it did not believe any of the information had been compromised.

The bill does not demand an ironclad security system but instead requires the development of programs that will provide a cost-effective way of reducing risks “to an acceptable level.” Assessments would have to be done on each separate information system within VA.

Annual security awareness training also is required under the bill for all VA employees, contractors or anyone else allowed access to sensitive VA records.

If information is lost, stolen or misplaced, the bill sets procedures for VA to follow. Within 180 days, VA is required to have policies to perform an immediate risk analysis for any loss of personal data. If there is potential for the information to be used to steal a veteran’s identity, VA must provide credit protection services, including monitoring credit for individuals and data mining to determine if lost data is being misused.

VA’s assistant secretary for information and technology, retired Army Maj. Gen. Robert Howard, said Monday he is “pretty confident” there would not be another large security breach at VA.

According to a report from the International Data Group News Service, Howard said in a speech before the industry advisory council of the American Council for Technology that the VA has improved its security.

“No more excuses,” he said, according to the report. “We have got everything we need — we have got the organization, we have got the authority, we have got the money. We still have a lot of work to do in that area, but we’ve clearly improved the awareness of folks with respect to treating information the same way they’d want their information treated.”

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