Congress eliminates VA loan limits

 Loan Guidelines, Residential Mortgage  Comments Off on Congress eliminates VA loan limits
Dec 072019

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By G. Steven Bray

Starting Jan 1st, Veterans and servicemembers who are entitled to VA loan benefits are eligible for 100% financing regardless of the home’s price. The Blue Water Navy Act, passed by Congress earlier this year, has removed the loan limit for a VA loan.

Previously, federal law tied the maximum guaranty amount for a VA loan to the Freddie Mac conforming loan limit. This meant that in 2019 if a veteran wanted to purchase a home priced greater than the loan limit (just north of $484,000), the Veteran was responsible for 25% of the amount above that limit.

With the change, Veterans with full VA loan entitlement now can borrow the full amount of the purchase price without needing to factor a down payment. However, for Veterans with diminished entitlement, either from having an active loan or a default on a previous VA loan, VA still calculates their remaining entitlement based on the Freddie Mac loan limit.

The Act also changes the VA funding fee. Starting Jan 1st, the no down payment Funding Fee will be 2.3% for first-time use for all Veterans, whether Regular Military, National Guard, or Reserves. This is a slight increase for Regular Military, but a decrease for others. For subsequent VA loans, the Funding Fee rises to 3.6% for all. Congress intended the increase to fund other benefits that are part of the Act.

The Act also provides a new Funding Fee exemption for active duty servicemembers who have been awarded a Purple Heart.

Protecting military from foreclosure

 Regulations, Residential Mortgage  Comments Off on Protecting military from foreclosure
Feb 252015

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By G. Steven Bray

Those fighting for our country need to know the Servicemembers’ Civil Relief Act (SCRA). This law provides some important financial protections for our military.

One of those protections was set to expire at the end of last year, but Congress extended it to make it permanent. The measure prohibits lenders from foreclosing for one year following the servicemember’s return from active duty. The measure is particularly important to reservists and National Guard members who have to give up full-time jobs to honor their commitments to our country. One important point: The service member must have taken out the mortgage prior to starting active duty.

I’ve provided a link to information about the Act at the end of my blog.

Click here to visit the the Veteran’s Administration’s Web page about the SCRA.

Active duty military entitled to lower interest rates

 Interest Rates, Regulations, Residential Mortgage  Comments Off on Active duty military entitled to lower interest rates
Aug 282014

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By G. Steven Bray

I applaud the government for doing something right for a change. It partnered with a few of the big banks and mortgage servicers to help our servicemembers who have been called to active duty. Back in 2003, Pres. Bush signed the Servicemembers Civil Relief Act. The law provides a number of legal protections for active-duty servicemembers, including protection against eviction for non-payment of rent and the right to terminate a housing lease. It also prohibits creditors from charging more than 6% interest for any debt. This includes mortgage and credit card debt. And importantly, the creditor must reduce the servicemember’s monthly payment to reflect the lower interest rate and must forgive any amount of interest in excess of the 6% rate.

One deficiency in the law is that it requires servicemembers to ask that it be applied and prove they are eligible. The partnership alleviates that burden. The Dept. of Defense agreed to share its active duty database with these partner banks and servicers so they can notify servicemembers of their eligibility. Let’s hope they expand the initiative to other partners.