Two representatives in the U.S. House proposed bipartisan legislation last month aimed at keeping veterans from foreclosing on VA loans, and becoming homeless thereafter. The Veterans’ Homelessness Prevention and Early Warning Act of 2010 plans to put safeguards in place for VA loan borrowers facing default. Rep. John Boozman (R-Ark.) and Rep. Tim Walz (DFL-Minn.) introduced the bill to tackle veteran homelessness before it starts. The act would require:
- The Department of Veterans Affairs to notify case managers within seven days of a VA loan going into default, and
- Case managers create plans for alternative housing for veterans who do end up losing their home.
If the bill becomes law, the VA must develop and submit a plan to execute these new provisions within six months of the law’s enactment. Within 12 months of the law going into effect, the VA must put the new requirements into action.
Even though VA loans have one of the lowest default rates on the market — lower than 2.5 percent– the mortgage collapse still took its toll the last few years. Even with the alternatives provided by the VA, the VA loan program processed 8,113 foreclosures in 2007 and 15,145 in 2009.
Active-duty and veteran borrowers in Denver and all over the country would be less prone to be homeless in the unlikelihood of foreclosure. With the advent of Boozman and Walz’s legislation, military homeowners would have a safety net that prevents homelessness. Already, the VA home loan program comes with resources — such as advisers and payment plans — to help borrowers avoid foreclosure.
The VA guarantees up to 25 percent of each VA loan, so lenders get recompense from the VA in the unlikely event that a borrower defaults. And the standard VA loan limits are over $400,000, giving military men and women a lot of bang for their VA-backed bucks.
“American heroes living on the streets, out of cars and on the couches of family members is a disgrace,” Walz told Arkansas RealEstateRama. “These men and women fought for our country and we must do everything we can to address their unique needs, which all too often are a contributing factor in homelessness amongst this population.”
This post comes to you from James Kelley of VA Benefit Blog. A law school student at the University of Missouri, James Kelley works to educate the public on government financing options for home purchases. He is a co-founder of Military Basebook, a facebook application that helps connect military members based on where and when they served.