Scott Bill to Preserve VA Home Loan Affordability Becomes Law

Press Release

Today, the Protecting Affordable Mortgages for Veterans Act was signed into law by the President. This bipartisan piece of legislation was introduced in the House by Congressman David Scott with Rep. Lee Zeldin (R-NY) on the House Financial Services Committee and Reps. Mike Levin (D-CA) and Andy Barr (R-KY) of the House Committee on Veterans' Affairs, as well as in the Senate by Sens. Kyrsten Sinema (D-AZ) and Thom Tillis (R-NC).

Earlier in July, H.R. 1988, the Protecting Affordable Mortgages for Veterans Act passed the House of Representatives. "Our bill, H.R. 1988, is a bipartisan bill to correct this, and it will preserve critical VA refinancing protections for our veterans while at the same time allowing for these veteran loans to be securitized, which means rolled into securities into investments into market securities," said Congressman Scott.

Last year, Congress passed S. 2155, the Economic Growth, Regulatory Relief, and Consumer Protection Act which included bipartisan reforms to refinancing requirements for loans to protect veterans from the predatory practice of loan churning. These reforms included refinancing requirements, requiring lenders to demonstrate a material benefit to consumers when refinancing their mortgages, as well as a 210-day seasoning period from the initial loan date.

Unfortunately, a technical error in the language of S. 2155 along with unclear timelines for implementation of the new requirements caused a cohort of approximately 2,500 refinanced loans, which met federal requirements at the time of closing and were guaranteed by the VA, to be barred from Ginnie Mae securitization. These "orphaned loans" are barred from the secondary market, creating a strain on liquidity for lending institutions and potentially driving up future borrowing costs.

Rep. Zeldin said, "Our nation's service members, veterans and their families have made a tremendous sacrifice in service to our great nation and the freedoms and liberties that make this country the greatest in the world. They have earned nothing less than our unwavering support when transitioning back into civilian life, and such a critical part of living out the American dream they fought so hard to protect is the dream of homeownership. Ensuring certainty in the market and access to affordable mortgages for our nation's veterans is the least we can do as they transition into civilian life. I applaud all those, from my colleagues, Congressmen Scott and Barr, in the House, to the President, who helped usher this important legislation into law."

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