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President Bush Signs NAHB-Supported VA Loan Guarantee Bill

President Bush signed the “Veterans Benefits Improvement Act of 2004” into law on Dec. 10, immediately bringing the maximum amount for no-downpayment loans under the VA loan guaranty program to $333,700. The maximum increases further, to $359,650, with the start of the new year.

Under Freddie Mac’s charter, the maximum initial loan amounts are 50% higher for properties in Alaska, Hawaii, Guam and the U.S. Virgin Islands.

The new law indexes the VA guaranty, which is 25% of the loan, to the Freddie Mac conforming loan limit. It also revives the VA’s authority to guarantee adjustable-rate mortgages (ARMs) and extends hybrid ARMs through Sept. 30, 2008. VA has not had the authority to guarantee ARMs since a pilot program expired in 1995, and its authority to guarantee hybrids would have expired next year.

The VA also announced that it is increasing the maximum annual adjustment for hybrid ARMs with initial fixed periods of five years or longer from 1% to 2%, brining the VA’s program in line with other hybrid ARM programs, a move that should improve the competitiveness of the VA loans in the mortgage market.

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The new law also increases the ceiling from $46,000 to $50,000 for Specially Adapted Housing grants that are awarded to veterans with certain permanent and total service-connected disabilities.

The NAHB Board of Directors adopted policy in support of indexing the VA guarantee at its fall meeting in 2003, and the association sent letters to the House leadership and to members of the House Committee on Veterans’ Affairs urging swift passage of the legislation, noting that the program provides an important homeownership benefit to those men and women who have defended, and are defending, their country through their service in the armed forces.

For more information about the VA Loan Guaranty program, click here.

For further information, e-mail Bill Renner, NAHB’s director of single-family finance, or call him at 800-368-5242 x8597.
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