VA Home Loans, Action slows on vets' benefits upgrades

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news/2008/04/ military_ veteransbills_ delays_043008w

Action slows on vets' benefits upgrades

By Rick <mailto:rmaze@atpco. com?subject=Question from ArmyTimes.com reader>
Maze - Staff writer
Posted : Thursday May 1, 2008 8:30:57 EDT
The House Veterans' Affairs Committee approved major improvements in
veterans' education and home loan programs Wednesday, but details in the
bills could delay or even prevent the initiatives from becoming law.

The home loan bill, HR 4884, would increase the maximum loan available to
veterans for new and refinanced homes to $729,750; allow refinancing even if
the homeowner has no equity; and order a new streamlined process for buying
condominiums with veterans' home loans.

The bill is called the Helping Our Veterans to Keep Their Homes Act.

Rep. Bob Filner, D-Calif., the committee chairman and chief sponsor of the
bill, said the update is a response to criticism that the VA loan program
has become irrelevant because of the current $417,000 cap on new loans and
the $147,000 limit on refinancing, and a requirement that homeowners have at
least 10 percent equity in their home to qualify.

The problem with the bipartisan bill, which passed the committee by voice
vote, is that it also eliminates loan origination fees for all loans except
for those related to refinancing, which Filner said is necessary to make the
VA home loan program competitive.

Fees now range from 1.4 percent to 3 percent for regular loans, depending on
the amount of down payment, and are just 0.5 percent when refinancing an
existing VA loan to reduce the interest rate. All those fees would be
eliminated, leaving just a 1 percent fee for someone refinancing a non-VA
loan with a new loan from the VA program.

Fees generate money intended to cover administrative costs of the loan
program. Eliminating them would create a $1.4 billion to $1.8 billion hole
in the VA budget that will prevent the bill from being taken up by the House
unless lawmakers can find a way to make up the difference, said Rep. Steve
Buyer, R-Ind., ranking Republican on the committee.

Buyer offered an amendment to keep the current fees, which he said would
guarantee the House could take up the bill right away, but his effort was
defeated on a voice vote.

Filner said he hoped to find a way to pass the bill without imposing fees
for most home loan users.

Also approved by the veterans' committee was a bipartisan GI Bill
improvement package amended, at Buyer's urging, to include provisions that
would boost education benefits for National Guard and reserve members
mobilized in support of contingency operations.

The bill, HR 5684, would raise active-duty GI Bill benefits to $1,450 a
month, up from the current $1,101 payment; pay a $500 monthly stipend for
living expenses; give people up to 15 years after leaving active duty to use
their benefits, rather than the current 10; and allow up to $6,000 in GI
Bill benefits to be used each year to repay student loans.

Buyer's amendment would modify a current program for active-duty troops,
making GI Bill benefits available top reservists based on cumulative rather
than consecutive service, and make benefits more generous.

There was no controversy over the amendment, which was adopted by voice
vote, but adding reserve benefits to the measure requires the bill to be
referred to the House Armed Services Committee, which has jurisdiction over
Guard and reserve education benefits.

The referral slows down, but does not necessarily halt, a vote by the full
House on the bill, the Veterans Education Improvement Act, because passing
GI Bill improvements has becoming a top priority for House and Senate
leaders.

Posted by: "Colonel Dan" colonel-dan@sbcglobal.net