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A New Chapter

National Mortgage Professional
Aug 25, 2005

2004 VA bill expands veterans’ homeownership opportunitiesMortgagePress.comGeorge W. Bush,Home Loans,Veterans,Department of Veterans Affairs President George W. Bush recently signed the Veterans Benefits Act of 2004 (S. 2486). The new law, which goes into effect Jan. 1, includes an important new provision to increase the maximum home loan amount that the Department of Veterans Affairs will guarantee under its home loan guaranty program. Currently, the VA will guarantee 25 percent of a qualified home loan up to $240,000; under the new law, the maximum qualified home loan limit would rise 40 percent to $333,700, the maximum level allowed by the federally chartered Freddie Mac/Fannie Mae programs. This level will be indexed in future years to the Freddie Mac/Fannie Mae maximum amounts. This allows veterans and military personnel to get no-down payment loans of up to the Fannie Mae/Freddie Mac conforming loan limit. “The National Association of Mortgage Brokers is pleased that Congress has passed legislation which will help our nation's veterans become homeowners,” said NAMB President Bob Armbruster. “In light of the rise in home prices over the past few years, this legislation is especially relevant to the new veterans who will be entering the marketplace after serving our country.” The U.S. Senate passed S. 2486 on Oct. 8 and the U.S. House of Representatives passed the bill on Nov. 17, and in fiscal year 2004, VA originations totaled approximately $44 billion. Lenders and veterans supported the increase, saying that home price appreciation, especially in high-cost areas, left many veterans without access to the VA program. “This is a big boost for the VA program,” said Keith Pedigo, director of the VA's Loan Guaranty Service, noting that the VA had received several complaints from veterans who were unable to use their home loan benefits. “The veteran's benefits legislation, which the House and Senate Veterans' Affairs committees have produced, will be a great assistance to America's veterans,” said Pennsylvania Sen. Arlen Specter, Chair of the Senate Veterans Affairs Committee and sponsor of S. 2486. “This legislation will not only enhance the lives of the men and women who fought for our country, but also their families who have supported them and who carry on their legacy.” S.2486 also renews the VA's authority to guaranty one-year adjustable-rate mortgages and gives the VA secretary the authority to change the maximum adjustments allowed on hybrid ARMs. Previously, hybrid ARMs could not adjust by more than one percentage point, which made it difficult for lenders to offer hybrids with an initial term of five years or more. According to Pedigo, the new law represents, “probably the most significant piece of legislation for the VA program in the last 35 years.” For more information, visit
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