VA Loan Updates

The House Veterans’ Affairs Committee is focusing on how to use the veterans’ home loan program to help service members and veterans who risk losing their homes.

Reps. Steve Buyer, R-Ind., and Mike Michaud, D-Maine, introduced a bill Thursday that would greatly increase the maximum loan amount that the Department of Veterans Affairs guarantees. The bill, HR 4539, would raise the current $417,000 limit to a new maximum of $521,250.

Buyer, the former committee chairman, said the chief reason for the increase is that the $417,000 cap is so low that it precludes service members and veterans from using the program in some high-cost areas of the country.

“Rising housing costs are keeping many veterans out of the market,” Buyer said. “And those who are able to purchase the American Dream are paying significantly higher closing costs.”

Buyer said the bill also would make it easier for people with non-VA loans to refinance under the government guaranty program by capping refinancing fees - which currently are larger for refinancing than for new loans - and could relax rules on who must pay closing costs, both actions that would make the VA loan program more attractive.

“With affordable housing so scarce in many areas of the nation, the increased guaranty and closing cost assistance should be very advantageous to both our nation’s veterans and home builders,” said Michaud.

Buyer and Michaud may be the first out of the gate, but the committee’s chairman, Rep. Bob Filner, D-Calif., said Friday that he is working on his own home loan plan that would provide maximum loans of $620,000, waive or relax fees, and cut some red tape that makes it especially difficult to use the VA program to purchase certain types of housing, such as condominiums.

Filner said he is even thinking about including a provision that would prevent a lender from foreclosing on the home of anyone on active duty.

Filner called the current VA loan program “irrelevant” because of the loan caps, high fees and strict underwriting and appraisal requirements that discourage homebuyers, real estate and mortgage brokers and sellers from using the program.

Filner said it is not clear that any veterans’ loan-related legislation could pass Congress this year, “but at least we can get started.”

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