The House of Representatives Veterans’ Affairs Committee chairman, Rep. Bob Filner, a Democrat from California, called the current VA loan program “irrelevant” for a number a reasons including the loan caps, high fees and strict underwriting and appraisal requirements all of which discourage homebuyers, real estate and mortgage brokers and sellers from using the program.
That’s why he and other members of his committee are working on legislation that would raise loan rates and possibly cut through some of that red tape in order to encourage use of the program.
Filner’s plan has yet to be completed but he says the maximum loan limit in his plan would be $620,000, up from the current $417,000. He is also considering a provision that would prevent lenders from foreclosing on the home of anyone on active duty.
Rep. Steve Buyer, an Indiana Republican, and Mike Michaud, a Democrat out of Maine, introduced their bill last week would raise the maximum loan amount the Department of Veterans Affairs can guarantee. While their proposed limit is not as high as Filner’s uncompleted plan, theirs is still worth paying attention to. Buyer and Michaud’s bill would raise the maximum from $417,000 to $521,250.
Buyer was the former committee chairman and cites the low maximum loan limit as the primary reason the veterans are straying away from the program. In high cost areas of the country the $417,000 cap is much to low and forces service members and veterans from using the program.
Buyer says, “Rising housing costs are keeping many veterans out of the market. And those who are able to purchase the American Dream are paying significantly higher closing costs.”
Buyer and Michaud hope to increase some of the guaranty of the program, making refinancing using the VA loan program a viable option. Right now it isn’t really an option. “With affordable housing so scarce in many areas of the nation,” says Michaud, “the increased guaranty and closing cost assistance should be very advantageous to both our nation’s veterans and home builders.”
