Rep. Van Orden: “VA’s Home Loan program is an important benefit for veterans to achieve the American dream of home ownership.”

Hearing

"Good afternoon.

The Subcommittee will come to order.

Before we begin the hearing today, I would like to take a moment to speak about Mike Gill from the Housing Policy Council.

Mike was a tremendous source of knowledge on housing policy to all of us in this room, and a good friend to many of those present here today.

We appreciate all of the work he did to make the lives of veterans better, and his impact on so many people.

We are so sorry to have lost him at such a young age and our hearts go out to his family and friends.

Will everyone please join me in a moment of silence?

Thank you,

I want to thank everyone for being here today to discuss V.A’s home loan program. As I have said many times, this is not a bipartisan subcommittee, it is a nonpartisan subcommittee and today’s hearing continues in that spirit.

V.A.’s Home Loan program is an important benefit for veterans to achieve the American dream of home ownership. I believe it is essential that we support that dream for our veterans who have served our country.

Last year, V.A. helped 145,480 veterans stay in their homes through various programs and communication efforts. This is a great feat, and I applaud the V.A. for its efforts on behalf of veterans.

Today, our Subcommittee has come together to evaluate V.A.'s home loan program and its performance in the current competitive market. I have used this program myself to help house my family and it is fantastic. So have many of my friends. This program must be protected.

This year, V.A. intends to roll out the Veterans Affairs Service Purchasing Program, or VASP, as a new approach to try to keep veterans in their homes. I have grave concerns about this proposed program and the unintended consequences this may have on the home loan program. I am concerned that it could ultimately destroy it.

During the COVID-19 pandemic, V.A. was given the authority to operate a Partial Claim Payment Program to address the potential surge in foreclosures for veterans. There have also been proposals to reinstate this authority as an alternative to VASP.

Let me make it clear that I firmly believe V.A. has the best intentions to serve our nation's veterans. V.A. employees across the country work hard to ensure that veterans can use the home loan benefit they have rightfully earned by defending our country. So I am eager to hear the witnesses answers to some questions I have about the proposed changes and how the current program is operating.

However, over the last year, this Subcommittee has received little information about how the proposed VASP program would operate. We have also received little information about the expected cost of the program, and even less information regarding how such a program would affect the larger mortgage markets.

Recently, we have seen a push from the administration for a moratorium on foreclosures, and we have no idea how that is affecting the markets. All of this is cause for concern.

While V.A. has promised to be transparent about this program, Congress, mortgage lenders, and veterans have been left in the dark for most of the last year.

Even though this Subcommittee has asked for multiple briefings and explanations regarding VASP, and has even sent a bipartisan letter, V.A. has been silent.

Our current understanding is that VASP would allow veterans who are at least two payments delinquent to refinance their loan down to a 2.5% interest rate, and that VA would then take over servicing of the loan.

While this program may benefit some veterans who are at risk of foreclosure, it also poses a real moral hazard of encouraging veteran borrowers to become delinquent to take advantage of a much lower monthly payment.

It also poses a risk for V.A. and the taxpayers who would become responsible if VA-financed loans experience high delinquency rates. According to OMB just last week, V.A. could be responsible for nearly 21,000 loans under this program.

This is concerning to me, and makes it seem like this program is going to be used as a short-term election gimmick from the White House, rather than a viable program that would help veterans.

Mr. Bell, I would like to have a follow-up discussion with Josh Jacobs and the Full Committee Chairman to discuss the proposals for this program. I would appreciate it if you would communicate that message to him and ask him to arrange that with Committee staff.

I have also heard from stakeholders about the shortage of information on the veteran home loan program and the rising number of foreclosures. This data is essential to understanding the effect of these programs on the mortgage industry and the markets.

While I plan to introduce a bill shortly that would require VA to publicly report their home loan data, we need answers on VASP today.

These recent concerns and unanswered questions from V.A. must be solved before V.A. can move forward with VASP in good faith. V.A. must also be held to the highest standard to ensure the efficient delivery of benefits without the need for Congress to intervene repeatedly.

My focus continues to be on ensuring that veterans remain in their homes whenever possible, and on mitigating housing instability in cases where maintaining a mortgage has become untenable.

However, the potential delays and issues with the VASP program's rollout are concerning, especially given that they could evolve into a financial burden of billions of dollars in bailouts, which would fall on the shoulders of taxpayers to bear.

Once again, I thank everyone for coming today. I look forward to a productive discussion on what is going well and what can be improved in the V.A. home loan space.

With that, I now yield to the Ranking Member for his opening remarks."

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