Tue September 1st, 2020
Sponsor: Rep. Mike Bost — R — IL
Makes two changes to the home loan guarantee program administered by the Department of Veterans Affairs (VA). The bill expands eligibility for loan guarantees to members of the Selected Reserve who serve at least 90 days on full-time duty with the National Guard, at least 30 of which are consecutive. Under the bill, borrowers with VA-guaranteed loans whose homes are substantially damaged or destroyed as a result of an event that is declared a major disaster by the President would be charged a lower fee if they get another VA-guaranteed loan to repair or replace the property within three years. Under current law, VA typically pays lenders up to 25 percent of the outstanding mortgage balance if a borrower defaults on a guaranteed loan. Those guarantees enable eligible borrowers to obtain better loan terms, such as lower interest rates or smaller down payments. Military personnel and veterans who have served at least 90 days on active duty or six years in the Selected Reserve are eligible for those loan guarantees. Most borrowers pay a fee to VA to participate, and they may use the benefit more than once after they have repaid a guaranteed mortgage. Fees are higher for subsequent uses of the benefit. The fees reduce the subsidy cost of the guarantees by partially offsetting the costs of defaults.
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