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Wednesday, June 2, 2010

Mortgage Reform Could Actually Hurt Veterans...

Republished with permission from the arthor...

Memorial Day — established to honor the men and women who have fought and died for our country — is upon us once again. But this year there are more reasons to speak out for veterans and military persons, as their VA Home Loan benefits may be in danger.

Officially proclaimed on May 5, 1868, Memorial Day is a holiday that has grown to be nationally recognized. Some of the first tributes to those who have fallen began with small tokens of respect, such as women’s groups in the South painting the gravestones of those who died in duty. Following its first observance on May 30, 1868, traditions such as community parades and ceremonious Flag raisings began to take place and still do today.

Celebrating the devotion and commitment of military members one weekend a year is a small tribute to their service, which is one reason the Department of Veterans Affairs decided to create the VA Loan Guaranty in 1944. Yet another way to thank those who served, the VA Home Loan has benefits available only to Veterans and military members. It allows many to become homeowners while 8-10 of Veterans and those who serve would not qualify for a conventional loan because of its stricter guidelines.

The national observance of Memorial Day has weakened tremendously over the years; the change in the holiday from a single day to a three-day weekend has given people the opportunity to forget the meaning and focus on vacations and time off from work instead. Add to this the Financial Services bill that is making its way through Congress, which has the potential to harm the VA Home Loan program and its less strict qualifications.

The bill itself is intended to help buyers: the sketchy loans of the past would be no more, meaning a closer-eye on the mortgage industry and increased consumer protection. However, an amendment made by Sen. Jeff Merkley (D-Oregon) calls for stricter underwriting and verification guidelines for all loan programs, including the VA Loan Guaranty program. Obviously this amendment is also meant to protect consumers, but that is exactly what the VA Loan program already does.

VA Loan borrowers will wind up wasting a lot of their time going through the underwriting and verification processes, and in the end, those who do qualify will spend more money on lending costs. Here is proof that the VA program is safe: among the other loan programs, the VA has the lowest percentage of foreclosures at 2.46% compared to Prime at 3.31%, FHA at 3.57% and Subprime at 15.58%.

There is no problem with the VA Loan Guaranty; therefore there is nothing to be fixed. Even though this bill is meant to help consumers, what it will do is hurt the chances of purchasing a home for many military men and women. It is important that we recognize what our military does for us — we need to speak up and fight for their rights as they fight for ours. Contact an elected official here U.S. Senate and the House and tell him or her how important it is to keep the VA Loan Guaranty program as it is.

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