Washington Report: VA Loans for Veterans Overlooked

Written by Posted On Sunday, 16 March 2008 17:00

On Capitol Hill, it's known as the biggest goof-up relating to housing in years: Working with the White House, Congress passed a bipartisan $150 billion stimulus bill that raised mortgage limits for home buyers in high cost areas across the country.

But guess what? The stimulus increased loan maximums for Fannie Mae, Freddie Mac and the FHA to $729,750 from the previous $417,000, but totally forgot about a program that helps finance more than 11,000 homes a month: VA loans for veterans.

How could that be? Maybe one answer is another question: How could Congress have a public approval rating in the low 20 percent range?

"We just blew it, we didn't catch it," said one committee staff member who is not authorized to speak publicly. Congressman Steve Buyer of Indiana, the ranking Republican on the House Veterans Affairs committee, blamed the omission squarely on the Democratic leadership who put together the package.

He said that both he and a Democratic colleague on the committee warned Speaker of the House Nancy Pelosi and others that the VA program shouldn't be left out.

"Unfortunately," he said in a statement last week, "in the rush to complete the economic stimulus package, the VA program was not included. As a result, veterans desiring to use the program do not have the same advantages as other borrowers using non-VA" loans.

One disabled veteran who's been shopping for a house with his family in the Washington DC area for a year, Greg Rasnake, said the zero-downpayment feature of VA loans is crucial for him. And the $417,000 current VA limit is too low for even modest single-family homes in the area.

"You'd think that in a time of war, when you're doing a stimulus bill and raising all the other loan limits, you might remember the vets," he said. "But that didn't happen."

Embarrassed Congressmen and Senators are now rushing to rectify their error.

Congressman Buyer introduced a bill last week that would tie the VA loan limit to the Fannie-Freddie limit. The Democratic chairman of the House Veterans committee, Bob Filner of California, is pushing a bill that would permanently raise the VA limit to 150 percent of the Fannie-Freddie maximum.

And a staff member in the office of Senate Veterans Affairs committee chairman David Akaka said his committee expects to introduce a VA "stimulus fix" bill in the near future.

We'll keep you posted on how fast -- or whether -- Congress and the White House actually do follow through and correct the problem.

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