VA Loan Updates

The GI Bill, passed in 1944 and meant for veterans of World War II, is still benefiting veterans today, including many USU students.

Lillian Tripp, staff assistant for VA, said 175 to 200 USU students are getting the GI Bill at any one time. Any soldier in any branch of the military can get it.

They can get it for 36 months, and the amount they get depends on how many credits they are taking, Tripp said.

Nate Lowe, a sophomore majoring in Spanish, said he is receiving the GI Bill now, after he spent a year in Iraq.

With the GI Bill, Lowe said he has been able to attend school and focus on his studies instead of focusing on work. He also receives tuition assistance from the National Guard.

Many soldiers are able to attend school because they get money from the GI Bill.

“Some of them would not be able to go to school if they didn’t have this,” Tripp said. “It’s good for most people.”

Lowe said he would probably still be going to school without the GI Bill, but he would have to work a lot harder.

“I’d be a lot poorer,” Lowe said. “It makes life a lot easier. I’d probably have to be taking out loans. I haven’t had to take out any loans yet because of the benefits.”

The GI Bill has been called one of the most significant pieces of legislation ever produced by the federal government, but it didn’t come without controversy.

On June 22, 1944, President Franklin Delano Roosevelt signed the Servicemembers’ Readjustment Act of 1944, or the GI Bill of Rights. Although the original GI Bill ended in July 1956, the Montgomery GI Bill continues today.

According to the Department of Veterans’ Affairs, people didn’t like the idea of paying unemployed veterans $20 a week because it was an incentive for them to not look for work. During a time when colleges and universities were reserved for the rich, people questioned sending veterans to school.

Others saw the GI Bill as an attempt to stop another depression. Soldiers coming home from World War I were given $60 and a train ticket home. Congress didn’t want to make that same mistake again, so they passed the GI Bill.

According to the VA, the soldiers who would have flooded the job market went to college instead. In 1947, veterans made up 49 percent of college admissions.

By the time the original GI Bill ended on July 25, 1956, 7.8 million of 16 million World War II veterans had participated in an education or training program. From 1944 to 1952, VA backed nearly 2.4 million home loans for World War II veterans.

In 1984, the GI Bill was restored and named the “Montgomery GI Bill” after a congressman from Mississippi.

“VA home loan guaranty and education programs continue to work for our newest generation of combat veterans,” according to the VA website.

The GI Bill was controversial when it began, but it has given a lot of people an incentive to join the military.

Lowe said it rewards the soldiers who have gone and served.

“I’m behind in school because I went [to Iraq],” Lowe said. “I gave up that time, so it’s kind of a reimbursement for that.”

Tripp said sometimes students don’t get enough money to pay for all of their schooling, but they get a stipend that helps them out. The soldiers who have been deployed and dependants of soldiers who were killed get considerably more money from the GI Bill.

“It’s an incentive for us to further our education,” Lowe said. “I think it’s a good idea.”

Even after spending a year in Iraq and six months in training, Lowe said he is glad he joined the Army.

“I’ve had to make some sacrifices,” Lowe said. “But I’ve been part of a bigger cause and I’ve set a foundation for school. I’d say it was worth it.”

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In December we published an article about a provision in the Tax Relief and Health Care Act of 2006 which was passed in the waning days of the 109th Congress (December 12, PMI Deduction Buried in the Closing Acts of Congress.) The bill, H.R. 6111 contained, among dozens of other provisions and a boxcar of earmarks and pieces of pork, a section that would provide some tax relief to homeowners who were obliged, by virtue of down payments of less than 20 percent on their homes, to carry private mortgage insurance (PMI.)

At that time the final version of the bill was not publicly available, nor is it now, but here is an update and the news is not quite as good for the taxpayer as it first appeared.

The House overwhelmingly approved H.R. 6111 on December 8 and the Senate passed corresponding legislation on December 9. The President signed the bill, probably on December 20, and it is now known as Public Law Number 109-432. As of January 25 the Government Printing Office had not produced a final printed copy of the bill.

At the time of our original article we noted that H.R. 6111 appeared to include provisions from H.R. (which stands for House Resolution) 6408 and Senate 132. At the time it was presented to the House in early December it contained the following wording in 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.

We are relying on information on the law as signed by President Bush provided by BNA Tax Management a tax advisory site. According to BNA the following restrictions apply to what seemed like a general deduction for homeowners for private mortgage insurance premiums. These may have come about during conferences to resolve differences between House and Senate versions or may have been earlier defined by Section 6050H of the IRS Code to which Section 419 was appended.

The Act defines qualified mortgage insurance as that provided by the VA, the FHA, or the Rural Housing Administration or by private carriers and specifies that it be treated as interest on a qualified residence. This, however, is modified by the following “that premiums paid or accrued for qualified mortgage insurance by a taxpayer during the taxable year in connection with acquisition indebtedness.” This is interpreted by BNA as meaning that the deduction is only available to homeowners who assume PMI payments during 2007. In other words, you may not qualify for the deduction if you bought a house subject to PMI in 2006 or earlier even though you are currently paying premiums.

Deductions seem to be further limited to 2007 by the following: no benefit will currently accrue to taxpayers for any amount paid or accrued beyond December 31 of this year “or properly allocable to any period after that date.” We are not lawyers or tax authorities and we advise you, strongly, to consult your own tax professional, but it appears that this deduction is only available to taxpayers during the current calendar year and that paying premiums ahead as taxpayers are often advised to do with mortgage interest or property taxes at year end when deductions are needed will not work in this situation.

As we stated in our earlier article, the original House and Senate legislation was income-limited to $100,000 per household (or $50,000 for married homeowners filing separately) a provision that appeared to disappear from the bill that was finally voted on in December. BNA, however, states that this provision did survive into the final version and that the allowable deduction for PMI is phased out by 10 percent for each $1000 the taxpayers adjusted gross income exceeds $100,000 (or every $500 above $50,000 for the married who file separately.) This would mean that the deduction is not available for anyone with adjusted income exceeding $110,000 or $55,000.

So, it appears that few homebuyers will be eligible to use this PMI deduction and that it will only be available for 12 months. It seems strange that Congress would pass such limited legislation and interpretations could be different as corresponding IRS regulations are written. Still, if you buy a house or refinance this year make a mental note to alert your tax advisor to check on this small perk before you file for the tax year ending December 31, 2007.

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Question: I am a Korean War veteran. I started getting an annual check from the U.S. Treasury several years ago. I noted a printed statement on the check indicating “INS DIV”; I assumed this is a dividend for a life insurance program. I knowingly have never received any letter or other correspondence concerning VA benefits, i.e. hospitalization, burial, etc. Who can I contact to receive a comprehensive VA benefits brochure?

Answer: Your check is an insurance dividend check. Veterans eligible for the dividends have had VA life insurance policies in effect since they left the military. Dividends are paid each year to veterans holding certain government life insurance policies and who served between 1917 and 1956. For VA benefits information and brochures, contact your nearest VA health care facility or VA regional office. The primary brochure you are looking for is the “Federal Benefits for Veterans and Dependents.” The brochure can also be purchased from the Superintendent of Documents, P.O. Box 371954, Pittsburgh, PA 15250-7954 for a $5 fee. Check the VA’s Web site.

Here in Hawaii, contact the VA Medical Center at 433-0600 or the Honolulu VA Regional Office at (800) 827-1000.

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Q: Can a veteran get a VA loan to pay off the mortgage or other liens of record on his or her home?A: Yes. In most cases, the loan may not exceed 90 percent of the reasonable value of the property as determined by an appraisal, plus the funding fee, if required. The loan may include funds for any purpose that is acceptable to the lender, plus closing costs, including a reasonable number of discount points. A veteran must have available home loan entitlement. An existing loan on a manufactured home (except as noted below) may not be refinanced with a VA guaranteed loan.The loan amount is limited to the balance of the old loan plus the closing costs, discount points, funding fee, and up to $6,000 in energy efficient improvements. An existing VA loan on a manufactured home may be refinanced to obtain a lower interest rate. For additional information on a home loan guaranty, call the Honolulu VA Regional Office at (808) 827-1000.

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How many veterans or family members have no idea what veteran benefits are available? You see it time in and time out, veterans benefits are the last thing thought of and usually when they are, it’s after a veteran dies.
Sometimes veteran spouses and family members never seek out benefits that are authorized. Veterans have served their country with pride, honor, and sacrifice, and the benefits listed here go with that service.

The following benefits are available to survivors of military service members and veterans:

Burial - Most veterans are eligible for burial in a VA national cemetery. The unmarried surviving spouse and dependent children of an eligible veteran may also be buried in a national cemetery.

Headstone or Marker - A headstone or marker is provided for the veteran’s gravesite at a national or private cemetery. Spouses and dependent children are also eligible for a headstone or marker at a national cemetery.

Flag - An American flag is provided to drape the casket or accompany the urn of an eligible veteran. The flag is presented to the veteran’s next of kin upon burial.

Plot Allowance - For veterans who are not buried in a national cemetery, a plot allowance is paid to an eligible claimant.

Reimbursement of Burial Expenses - A burial allowance is paid to an eligible claimant to help offset expenses of a veteran’s funeral and burial.

Presidential Memorial Certificate - A certificate signed by the president is issued to survivors to honor the memory of the veteran.

Dependency and Indemnity Compensation - DIC is a monthly benefit paid to the surviving spouse and dependent children of a veteran who died during active military service, or who died after military service because of a service connected disability, or was receiving or entitled to receive VA compensation for a service connected disability that was rated total disabling for at least 10 years immediately before death or since the veterans release from active duty and for at least five years immediately preceding death.

Other benefits are Parents DIC, Death Pension, Health Care, Home Loan Guaranty, Life Insurance, Education and Training, Education Program Refund, Civil Service Preference, Commissary and Exchange privileges.

If you would like to find out more, call the Sarpy County Veterans Service Office 593-2203, or call the toll free VA assistance number 1-800-827-1000.

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After nearly a decade of trying, Democrats will again push for legislation this year establishing an assistance program to help families on the verge of foreclosure make their mortgage payments for up to three years.The program, which would apply only to government-insured mortgages such as FHA- and VA-backed loans, would allow borrowers to keep their homes by making monthly payments not to exceed 35 percent of their incomes.

The government would cover any additional amount owed to lenders for up to three years, at which time those receiving assistance would be expected to resume making full mortgage payments. Beneficiaries would be required to repay the program for the assistance they received, plus interest.

Attempts to establish the program under the authority of the Department of Housing and Urban Development date to 1998, when Rep. Luis Gutierrez, an Illinois Democrat representing parts of Chicago in Congress, introduced the Homeowners’ Emergency Mortgage Assistance Act, or HEMA.

The bill, HR 4745, had no co-sponsors and was promptly referred to the Subcommittee on Housing and Community Opportunity and never heard from again.

When Gutierrez reintroduced the bill again the following year as HR 595, it gained the support of 56 co-sponsors, including Democrats Nancy Pelosi of California and Barney Frank of Massachusetts.

Pelosi is now seaker of the House, and Frank is chairman of the House Committee on Financial Services. But in 1999, with Republicans in control of Congress, the HEMA bill was once again referred to the housing subcommittee, where it died.

It would be four years before Pennsylvania Democrat Rep. Chaka Fattah resurrected a nearly identical version of the bill, HR 1357. That incarnation of HEMA, introduced in 2003, languished in the same committee as its predecessors.

When Fattah introduced the most recent version of HEMA as HR 378 in January 2005, it had the support of 19 co-sponsors, including 11 members of the Congressional Black Caucus — but not Pelosi, Frank or Gutierrez. It, too, was disposed of in the Subcommittee on Housing and Community Opportunity without coming to a vote.

Fattah said he plans to reintroduce yet another HEMA bill and his staff is hopeful that it will have the support of leading Democrats, including Pelosi and Frank.

The Philadelphia congressman’s communications director, Debra Anderson, said HR 378 received limited support because Democrats had other issues that were higher priorities — not because those who had supported the bill in the past had changed their stance.

“I would suppose those same people (who co-sponsored previous versions of the bill) will sign on,” Anderson said — including Pelosi and Frank.

Fattah’s legislative director, Nuku Ofori, said the Congressional Budget Office has not made a recent estimate of the cost of the program, which would require funding through a separate appropriations bill. Ofori said that based on a previous estimate, the cost could be $50 million or more.

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When Ryan Boehm of New London joined the U.S. Navy in 1993, the 20-year-old was satisfied with his high school diploma.

But the seaman recruit soon made a discovery that would shape his life. “I realized I was the lowest person on the totem pole,” Boehm recalled.

“I’d see officers with four-year degrees from the Naval Academy and think, ‘Gee, I know more than they do. I have experience,’ but I was swabbing decks and taking out the trash. That was the turning point.”

Plain old experience, he concluded, means little if you want to get ahead in this world. He needed a college degree.

Over the next four years, including time stationed in Washington and overseas serving on a supply ship, he became even more determined.

“You need that piece of paper, ” he said, describing how he earned military and technical college credits and then made his final push through the University of Phoenix over the last two years.

On Jan. 7, at age 34, he earned his bachelor’s degree in management. At his request, he received his degree at the Naval Reserve Training Center in Green Bay in front of his Seabees unit. That, he said, “meant a lot more to me than walking across a stage.”

Boehm hopes he planted a seed with fellow reservists and civilians who wonder if they have the drive.

“Hopefully other people will see education is important. You have to have perseverance and discipline to pursue your dreams, and it may mean very long nights and very little sleep and a lot of Mountain Dew, but things are out there for you if you work for it.”

It hasn’t been easy, Boehm said, describing how he has juggled a full-time job, the reserves, school and a personal life, and has given up things like hunting and fishing in order to keep his eye on the prize.

A looming deadline cutting off G.I. Bill funding for his education provided incentive.

So did an ultimatum from his fiancee, who agreed to delay their wedding for his schooling. “Carrie said you’ve got one year. I couldn’t blow it.”

The challenge was carving out time. “I didn’t have a lot of time to go to a four-year school, I didn’t want to quit my job and I needed something flexible to fit my schedule,” he said.

The University of Phoenix fit the bill and Boehm just made it under the wire. He finished his last class Dec. 14, attended his wedding rehearsal the next day and got married Dec. 16.

Michael Cullup, enrollment manager for the University of Phoenix Fox Valley Learning Center in Appleton, said Boehm fits the demographic the university serves.

“These are individuals looking not to compromise their life too much. They want to fit school in with all their other commitments.”

That said, he noted Boehm’s single-minded motivation to finish. “He’s a model student. I can’t say they all have his dedication.”

Boehm said he relied heavily on support of family and friends, including his project teammates Joe Janiak, Cathy Beach and Tricia Verkuilen.

Boehm, currently employed at Gerdau Ameristeel, Greenville, would like a job that combines environment, health and safety.

He has some advice for kids who think finishing high school is sufficient.

“Right now a high school diploma doesn’t get you far,” he said. “A person has to keep on learning.”

Boehm is taking a breather now, but says his classroom days are not over.

“I’ve been looking at a master’s program.”

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How To Buy Your First Home - (1st Time Home Buyer Secrets Revealed)

If you’re about to purchase your first home, let us be the first to congratulate you! You’ve made a great decision.

But before you begin that home buying journey, we want to educate and inform you. That’s why we have put together this NO-COST report, entitled ‘First-Time Home Buyer Secrets Revealed’.

In this report, you will discover how easy it really is to become a homeowner and finally own a piece of the ‘American Dream’. Sit back, relax and enjoy this NO-COST Report.

WHY HOMEOWNERSHIP IS SMARTER THAN RENTING

- Income Tax Savings - As a homeowner, you can deduct your mortgage interest from your personal taxes. This can really add up. That’s thousands of dollars per year - in your pocket! If you add up the tax savings, you might be surprised to find out that, after you factor in tax savings, you can own a home that has more room than your apartment - and still end up paying less than you are paying right now for rent!

- Home Equity - Every time you write a check to your landlord, you might as well be flushing that money down the drain. It’s gone forever. But when you own a home of your own, you will be building equity in something that belongs to you. The principal you pay each month is similar to depositing money into a savings account. After many years of paying into the home, you will have a tidy nest egg saved up that you can use for emergencies, your children’s education, or retirement.

- Security, Comfort, and Privacy - There is a reason people call homeownership ‘The American Dream’. A home is something special that you can call you own. You can be proud to invite your friends and family over and show them ‘your home’.

THE MONEY - HOW TO GET THE FINANCING YOU NEED

- Banks vs. Mortgage Lenders - You first need to understand the difference between banks and individual mortgage originators like us. Banks handle savings accounts, car loans, investment accounts, etc. Mortgages are just one of many services they provide. We’re different because we only deal in mortgage loans. We sleep, eat, and breathe mortgage loans and nothing else. Would you go to a general physician to have heart surgery performed? Of course not. So why go to a big bank, when what you need is a mortgage specialist?

- Timing is Everything - It has never been cheaper and easier to borrow money to buy a home than it is right now. Even if rates go up a bit, they will still be monumentally lower than they were back in the 1980s, for instance. Back then rates were as high as 20%! Nowadays, even people with bad credit regularly get rates much, much lower than this. But don’t wait too long. Rates are cyclical. They will start rising again, and you will have missed your chance at homeownership.

UNCLE SAM WANTS TO HELP YOU BUY A HOME

- Uncle Sam is Your Friend - The U.S. Government wants for you to own a home and they will go the extra mile to help you afford one. Why? Well, every time one home is built, the effect on the economy is quite significant. Think of all the people involved in the construction of a new home, for instance. Welders, Electricians, Carpenters, Plumbers, Framers, Roofers and others are greatly affected by your choice to purchase a home.

- Little or NO Down Payment - Uncle Sam has programs like FHA and VA that can help you get into a home with a low down payment, or in some cases, with ZERO down.

- FHA and VA Programs - If you read our mortgage glossary, which is available for download by visiting my website, you will discover that FHA stands for ‘Federal Housing Administration’ and that VA stands for ‘Veteran Affairs’. Get familiar with these programs, because they just might be your ticket to the American Dream.

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I would advise State News readers to scrutinize the recent column “Congress should not alter student loans” (SN 1/16), by Brian Riedl concerning the possible reduction of interest rates on student loans. The key sentence is: “Perhaps it’s not in society’s best interest to tax society at large to further subsidize the 24 percent with college degrees and higher lifetime earnings.”Of course, Mr. Riedl is being a bit disingenuous here. Look at that sentence again. See any hot-button issues there? Tax! Subsidize! First, the American public is not being “taxed” to provide any “subsidy” to any students — the subsidy goes to private lenders, not students. As far as students are concerned, these are loans — you have to pay it all back with interest! And it is this interest rate that is being adjusted. It will have minimal effect on overall government spending.

The student loan program costs the U.S. taxpayers very little. In fact, studies have shown that investing in the GI Bill for education benefits after World War II was wildly profitable for the federal government, resulting in about $2 of added tax revenue for every $1 spent. This does not include the tremendous boost to the economy as a whole, estimated to be over $5 for every dollar spent on that very successful subsidy program. So, in total, that adds up to a 700 percent return on investment.

Although this data is from 1999, I suspect these numbers haven’t changed all that much: Federally-subsidized student loans cost the federal government $13.32 per $100 loaned, versus $.39 for each $100 of direct loan. So, to return to Mr. Riedl’s argument: If the government wants to save some money, it would be very cost effective if they would simply convert every subsidized loan into a direct loan. Remember, the subsidy goes to the bank, not to you.

Phil Bellfy
writing rhetoric and American culture associate professor

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Thousands of America’s newest veterans should be receiving their benefits. Those who served in Iraq and Afghanistan have special programs to benefit them at the Department of Veterans Affairs (VA). For two years after discharge, these veterans have special access to VA health care, even those who have no service-connected illness. Veterans, not only regular active-duty but also Reserve or National Guard members should enroll with VA during this two year period. Hospital care, outpatient treatment and nursing home services are offered at 1,400 locations nationwide. VA’s broad range of benefits includes disability compensation and pension, vocational rehabilitation and employment, education and training, home loan guarantees, automobile and specially adaptive equipment grants, home modification programs for the disabled, life insurance and traumatic injury protection, and survivor benefits. VA has launched an ambitions outreach initiative to ensure that combat veterans know about the VA benefits. Because of the large number of reservists and Guard members mobilized in the last four years, VA has made a special effort to work with their units to reach all veterans involved. VA and the Department of Defense have improved collaboration and communication. VA employees are based at military treatment facilities to brief service members about VA health benefits, disability compensation, vocational rehabilitation and employment. Many of the challenges facing the soldiers returning from Afghanistan and Iraq are stressors that have been identified and studied in veterans of previous wars. VA has developed world class expertise in treating chronic mental health problems, including post-traumatic stress disorder (PTSD). PTSD involves a reaction to a trauma suffered in war. One scientific study indicated the estimated risk for PTSD from service in the Iraq war was 18 percent, for Afghanistan it was 11 percent. VA research has led to scientifically developed treatment guidelines covering a variety of modern therapies with which clinicians have had success. All these treatments and benefits are available to the newer veterans at their nearest VA medical center.

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It’s hard to have an objective debate about the “ultimate sacrifice,” but lawmakers need to do just that with a proposal from state Rep. Steve Wieckert, R-Appleton.

Wieckert will offer a bill next month that gives state businesses a one-time $8,000 tax break for hiring military veterans. The feeling is that young adults just discharged from the service can be less-attractive job candidates for a number of reasons, whether it’s because they suffered severe injuries in combat or don’t have as much training as others who have gone to college.

Wieckert’s recognized a problem few see: the 21.5 percent unemployment rate for state veterans between the ages of 20-24, according to U.S. Census figures. And it’s admirable that he’d like to do something for the roughly 1,500 unemployed Wisconsin veterans in that age range.

But if this bill gets every single one of them hired, the state stands to lose about $12 million in tax revenue. That’s not peanuts.

And when one considers that the bill would apply to about 276,000 state veterans 64 years old or younger — although only about 6 percent of them are unemployed, same as the overall state average — that figure stands to skyrocket.

Unfortunately, Wieckert’s bill is little more than a feel-good measure in a time of war that won’t face much opposition because no one can argue against any benefit the state gives veterans who risk giving the “ultimate sacrifice”: their lives.

But veterans aren’t neglected by the state. They get tuition at any University of Wisconsin System institution, as do the families of veterans killed or disabled. They get special terms for home loans. Reservists get state income tax exemptions for pay earned on active duty and receive state money to make up the difference between their civilian and military earnings while serving. And none of that takes into account federal and military benefits, such as the Montgomery GI Bill.

If we separate emotion from the discussion, if we put aside the gratitude and respect we all have for those brave enough to shoulder a pack or fire a weapon, and look at the proposal on its own merits, it may be more than Wisconsin can responsibly afford to do for its veterans.

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