Statements of Introduced Bills and Joint Resolutions - S. 2522

STATEMENTS OF INTRODUCED BILLS AND JOINT RESOLUTIONS

By Mr. CORZINE:

S. 2522. A bill to amend title 38, United States Code, to increase the maximum amount of home loan guaranty available under the home loan guaranty program of the Department of Veterans Affairs, and for other purposes; to the Committee on Veterans' Affairs.

Mr. CORZINE. Mr. President, I rise to introduce legislation to increase the VA home loan guaranty so that veterans participating in the program may secure a mortgage comparable to what they could obtain in the conventional mortgage market.

The VA home loan guaranty program, which Congress created in 1944, has assisted millions of veterans-many of whom missed the opportunity to accumulate savings or build credit during their time of service-purchase a home. Under the program, an eligible veteran may purchase a home through a private lender and the VA guarantees to pay the lender a portion of the losses if the veteran defaults on the loan.

Unfortunately, the VA currently only guarantees a maximum of $60,000 on a loan. This means, effectively, that a lender will only loan four times the amount of the guaranty, or $240,000, to a veteran seeking a home loan.

While a loan of this size is sufficient to assist many veterans in purchasing a home, it is insufficient for many other veterans, particularly those living in high cost areas, like my state of New Jersey. In most places in my State, the cost of purchasing a home exceeds $240,000. For example, the median home sale price is Newark, New Jersey in 2003, was $331,200. In Middlesex, Hunterdon, and Somerset, the median sales price in 2003, was $314,000.

Thus, unfortunately for many veterans living in these high cost areas, the VA home loan program is inaccessible because the guaranty is so low.

My legislation would increase the VA guaranty to 25 percent of the Freddie Mac conforming loan limit, or $83,425. With such an increase, a participating veteran could borrow up to $333,700-which is the conventional loan limit-towards the purchase of a home. And, because Freddie Mac updates its conforming loan limit annually to account for changes in average housing prices, pegging the VA home loan guaranty to this index would ensure that the guaranty and available mortgage limits rise with housing inflation.

My legislation, which the House Veterans Affairs Committee recently approved, would ensure that more veterans have a chance at the American Dream of owning a home. What is more, my legislation would not cost the U.S. Treasury a cent. In fact, according to the Congressional Budget Office (CBO), it would raise approximately $42 million a year, through increased user fees associated with the VA home loan program.

This legislation is simple, it's cost effective, and it would assist our veterans, who have traded years of traditional employment to serve our country, purchase a home. I hope that my colleagues will join me in supporting this important piece of legislation.

I ask unanimous consent that the text of the bill be printed in the RECORD.

There being no objection, the bill was ordered to be printed in the RECORD, as follows:

S. 2522

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. INCREASE IN MAXIMUM AMOUNT OF HOME LOAN GUARANTY FOR CONSTRUCTION AND PURCHASE OF HOMES AND ANNUAL INDEXING OF AMOUNT.

(a) Maximum Loan Guaranty Based on 100 Percent of Freddie Mac Conforming Loan Rate.-Section 3703(a)(1) of title 38, United States Code, is amended by striking "$60,000" each place it appears in subparagraphs (A)(i)(IV) and (B) and inserting "the maximum guaranty amount (as defined in subparagraph (C))".

(b) Definition.-Such section is further amended by adding at the end the following new subparagraph:

"© In this paragraph, the term 'maximum guaranty amount' means the dollar amount that is equal to 25 percent of the Freddie Mac conforming loan limit limitation determined under section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)) for a single-family residence, as adjusted for the year involved.".