VA Loan Updates

ng restriction could make more local veterans eligible for low-interest home loans

BARSTOW — A state loan program that helps older veterans afford homes will be expanded if a proposed law is enacted. The proposal would make hundreds of recent veterans eligible for low-interest mortgages.

The Qualified Veterans Mortgage Bonds program now allocates $340 million annually for home loans but offers loans only to those whose military service began before 1977. Due to lack of demand, the program only lent out $205 million in the 2006-2007 fiscal year. A bill under consideration by the US Congress, “The Home Ownership for Veteran’s Act,” would allow California to lift the 1977 restriction, which could stir interest in the program.

“A lot of the older veterans already own homes,” said Jerry Jones, chief of legislative affairs of the California Department of Veterans Affairs, which administers the program. “Due to restrictions, we’re running out of people who were eligible. This change would open up the pool to younger vets.”

Recent veterans of the Iraq and Afghanistan wars would be most affected, he said.
The federal Tax Reform Act of 1984 restricted the loan benefit to veterans who had served before 1977. Additionally, it limited the amount of loans California could lend to $340 million per year. The restrictions were enacted to reduce revenue losses to the federal government from the sale of the tax-exempt bonds issued to fund the program, Jones said.
California finances the loans by issuing tax-exempt $5,000 bonds, and the program does not use taxpayer money, Jones said. The bond investors are repaid by veterans’ mortgage payments.

Dee Tidwell, home loan coordinator with Victorville-based Wells Fargo Mortgage, said he doubts the change would cause a rush of new vets to buy homes.

“We haven’t had a lot of vets coming forward asking about the program because it’s so restrictive,” he said.

He said he processes 30 to 40 federal VA loans a year compared with three to four state-funded veterans’ loans. Veterans prefer the federal VA loans because they offer 100 percent financing and fewer restrictions, Tidwell said.
Helen Young, loan officer with Clarity Mortgage in Victorville, disagreed.

“It’ll make a huge difference, especially for our vets coming back from Iraq. Anything we can do to make more veterans available to afford home is great. There is no downside to that,” she said.

Charles O’Neal, a 20-year veteran who recently retired, supports the change. All vets, he said, should receive the same benefits.

“Every other veteran who has served has been given these benefits,” he said. “The new veterans have earned these benefits through service to their country.”

A large majority of veterans’ loans have been made to moderately priced areas such as San Bernardino and Riverside counties, Jones said. According to data from the 2000 census, about 3,000 veterans live in Barstow, representing nearly 20 percent of the population. More than 135,000 live in San Bernardino county.

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