Ginny and the Group of Blue Star Gold Star Parents

Washington, D.C., Jul 11 -

U.S. Representative Ginny Brown-Waite (FL-05) today announced that she has introduced legislation to extend two separate veteran mortgage benefits, keeping the benefit from expiring and saving veteran homeowners money.  The legislation, H.R. 6465, would extend the demonstration project on adjustable rate mortgages (ARM), and the demonstration project on hybrid adjustable rate mortgages, two highly utilized and low-cost mortgage products for veterans.  The extension that comprises Rep. Brown-Waite’s legislation is supported by both the American Legion and the Veterans of Foreign Wars.

“One of the first bills I passed in Congress was legislation to modernize the VA home loan limits,” said Rep. Brown-Waite.  “Today, people across the country are facing the twin threats of tight credit and lower home values.  One of the lessons learned from the recent mortgage crisis is that too many borrowers used risky private sector high-cost adjustable rate mortgages that got them in over their heads and put them on the path toward foreclosure.  VA loans, however, are protected from much of that risk because the adjustments to interest rates cannot change more than one percent each year, or five percent over the life of the loan.  This stability ensures that more veterans and their families will keep their homes and continue to live the American Dream.”

Traditional ARMs are loans in which interest rate adjustments occur on an annual basis.  The VA-guaranteed ARM program limits the annual interest rate adjustments to a maximum increase or decrease of 1 percentage point.  Additionally, interest rate increases for VA ARMs are limited to a maximum of 5 percentage points over the life of the loan.  Hybrid ARMs function in a similar manner but have a fixed interest rate for a predetermined number of years at the start of the loan.

“The VA’s ARM programs have proven to be very popular alternatives to conventional home financing for our nation’s veterans,” continued Rep. Brown-Waite.  “Typically offering a lower than normal initial interest rate, these ARMs make it easier for our veterans to obtain affordable financing when purchasing or refinancing their homes.  At a time when the housing market has become so uncertain, this program provides our veterans with a safety net that lets them realize the dream of home ownership.”