Schatz, Boxer, Gillibrand, Hirono Call for Extension on Home Loan Guarantees for Veterans in High Cost of Living Areas
Washington, DC – U.S. Senators Brian Schatz (D-Hawai‘i), Barbara Boxer (D-Calif.), Kirsten Gillibrand (D-N.Y.), and Mazie K. Hirono (D-Hawai‘i) have written Appropriations Committee Chairwoman Barbara Mikulski (D-Md.) and Ranking Member Richard Shelby (R-Ala.) requesting an extension to a provision that allows the Department of Veterans Affairs (VA) to increase the maximum home loan guaranty amount for veterans in high cost of living areas. A current provision enacted by Congress in 2008 gave the VA the authority to increase its maximum guaranty amount, making it easier for veterans in high cost of living areas to fulfill their dreams of homeownership. It is scheduled to expire on December 31, 2014.
“We cannot ask the men and women who have honorably served in our Armed Forces, and their families who have stood with them, to shoulder more of the burden of balancing the budget on top of the sacrifices they have already made in their service to the nation,” the Senators wrote. “We urge members of the Senate and House Appropriations Committees to take action to extend this provision in law through December 31, 2015.”
The full text of letter follows:
Dear Chairwoman Mikulski and Ranking Member Shelby,
We are writing on behalf of the veterans who will be affected on December 31, 2014, if the Department of Veterans Affairs’ (VA) existing authority to increase the maximum guaranty amount on loans for homes in high cost of living areas expires.
For years, the VA Loan Guaranty Program has helped America’s veterans fulfill their dreams of home ownership. Under current law, the VA is authorized to act as a mortgage insurance program through which eligible veterans can enter into mortgages with private lenders, with the VA guaranteeing that it will pay lenders a portion of losses that may be suffered as a result of a borrower’s default. In most cases, the VA guaranty covers at least 25 percent of the principal balance of a loan, helping veterans avoid making costly down payments that might otherwise prevent them from getting into a home.
Until enactment of legislation in 2008, the VA Loan Guaranty Program did not cover homes in high cost of living areas where the prices exceeded the Freddie Mac conforming loan limit of $417,000 (as determined by section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act). Congress took action, giving the VA the authority to consider the 25 percent maximum guaranty amount for a loan as equal to the higher of the Freddie Mac conforming loan limit, or 125 percent of the area median home price, but no higher than 175 percent of the limit determined under the Freddie Mac statute, making it easier for veterans to purchase homes in high cost of living areas without having to make a down payment.
Despite Congress’s well-intentioned efforts to ensure that veterans are able to fulfill their dreams of home ownership, the authority allowing the VA to increase the maximum guaranty amount for home loans in high cost of living areas will expire on December 31, 2014, leaving many veterans with dreams of buying a home in limbo.
We urge members of the Senate and House Appropriations Committees to take action to extend this provision in law through December 31, 2015. We recognize the hard choices that you must make as you evaluate tradeoffs between extending this $24 million authority and other budgetary priorities. But we cannot ask the men and women who have honorably served in our Armed Forces, and their families who have stood with them, to shoulder more of the burden of balancing the budget on top of the sacrifices they have already made in their service to the nation.
Thank you for considering our request and for your continued support of the veterans and their families we all serve.
Sincerely,
BRIAN SCHATZ
U.S. Senator
Barbara Boxer
U.S. Senator
Kirsten Gillibrand
U.S. Senator
Mazie K. Hirono
U.S. Senator
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