Media Center

Today, the House of Representatives passed H.R. 1988, the Protecting Affordable Mortgages for Veterans Act of 2019. This bipartisan piece of legislation, introduced by Congressman David Scott with Rep. Lee Zeldin (R-NY) of the Financial Services Committee and Reps. Mike Levin (D-CA) and Andy Barr (R-KY) of the Veterans’ Affairs Committee, provides a technical fix critical to maintaining liquidity in the veteran home loan market and ensuring continued access to affordable VA mortgages. 

“I am so pleased that the House moved swiftly to pass my bill, H.R. 1988,” said Congressman Scott. “It is absolutely essential that we strengthen the veteran home loan market and preserve safe, affordable, and accessible borrowing opportunities for our military personnel and veterans. This bipartisan legislation will preserve critical VA refinancing protections for our veterans while at the same time allowing for these orphaned veteran loans to be securitized. Making this change will free up liquidity, enabling lenders to make new loans and ensuring that veteran borrowers have access to the VA home loan benefits they have earned.  I want to thank my bipartisan cosponsors, Representatives Lee Zeldin, Mike Levin and Andy Barr for their leadership on behalf of our servicemembers in moving this bill forward.”

“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,” said Congressman Zeldin. “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, which is why I look forward to the President signing this important legislation into law. I thank my colleagues, Congressmen David Scott, Andy Barr, and Mike Levin, for working across the aisle to fight for our nation’s brave service men and women.”

 “As a member of the House Committee on Veterans’ Affairs, I was proud to support this bipartisan bill to help ensure our veteran homeowners have access to affordable home loans,” said Congressman Barr. “This legislation maintains the protections intended for our service members and their families while strengthening the veteran home loan market to ensure that veteran homeowners do not face uncertainty and unaffordable home loans. I’m grateful to my colleagues, Reps. Scott, Zeldin, and Levin for their support. But most importantly, I am grateful to the sacrifice our veterans have made to this country and will continue to fight for the benefits they deserve.”

Last year, Congress passed S. 2155, the Economic Growth, Regulatory Relief, and Consumer Protection Act, which included bipartisan reforms to protect veterans from the predatory practice of loan churning, the process of rapidly and repeatedly refinancing home loans to generate fees and profits for lenders with little or no benefit to the veteran homeowner. S. 2155 reforms included refinancing requirements mandating that lenders allow loans to adequately mature and directing them to demonstrate a material benefit to consumers when refinancing their mortgages. 

Unfortunately, a technical error in the language of S. 2155, combined 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 ineligible for 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.