Brown-Waite Bill Would Extend Mortgage Programs For Veterans

BROOKSVILLE - Two programs that provide low-risk mortgages to veterans set to expire this year would be extended under a bill filed by U.S. Rep. Ginny Brown-Waite.
The bill would extend adjustable rate mortgages, or ARMs, offered through the Veterans Administration until 2018. So-called hybrid mortgages would be available at least until 2012.
In traditional ARMs, interest rates are adjusted on an annual basis. Many homebuyers got into trouble when the rates went up and they could no longer afford payments.
The VA-guaranteed ARM program, however, limits the annual interest rate adjustments to a maximum increase or decrease of one percentage point. Hybrid ARMs have a fixed interest rate for a predetermined number of years at the start of the loan.
"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," Brown-Waite, R-Brooksville, said in a release announcing the bill.
The VA estimates the cost to taxpayers to be $14 million over 10 years. The money would be used to cover any defaulted loans.
The American Legion and Veterans of Foreign Wars support the measure.
So far, indications are that the VA-guaranteed adjustable rate mortgages "give veterans options" and haven't produced any of the "horror stories" found in the private sector, said Steve Robertson, legislative director for the American Legion.
"It's an alternative that we think, if done properly, is an advantage for veterans and their families," Robertson said.
In the military, servicemen and women have scheduled rank and pay increase that allow them to plan for the interest rate hikes, Robertson said. The predictable increases also mean one less thing to worry about for military personnel who get redeployed, he said.
"It gives a veteran some piece of mind he's not being taken to the cleaners while he's overseas," Robertson said.
The extension also would give the VA more data to find out which mortgages are most suitable for veterans' needs, he said.
Sen. John Ensign, a Nevada Republican, is sponsoring the bill in his chamber. Brown-Waite also has put out a call for House co-sponsors.