A bill cosponsored by U.S. Representative Lee Zeldin to aid veterans in receiving affordable mortgages has passed the House of Representatives unanimously.
The Protecting Affordable Mortgages for Veterans Act revises ambiguous language in 2018’s Economic Growth, Regulatory Relief, and Consumer Protection Act. According to Mr. Zeldin’s office, that ambiguity made approximately 2,500 Veterans Affairs loans totaling $500 million ineligible to be pooled through the Government National Mortgage Association, Ginnie Mae. Pooling these mortgages, taken out in May and June 2018, would maintain liquidity in the VA home loan market while lowering rates and closing costs for veteran borrowers, Mr. Zeldin’s office stated.
“This fix is essential to prevent a liquidity crisis in the veterans home loan market and ensure that the brave men and women who have served our nation in uniform have access to affordable mortgages,” Mr. Zeldin said as he spoke on the House floor to advocate for the bill.
While the 2018 law had provisions to protect veterans from predatory lenders, its unclear timelines and the way Ginnie Mae implemented the law adversely impacted loans taken out at the time, he explained. “These mortgages are now considered orphan loans because they are no longer eligible for Ginnie Mae securitization, even though they met all federal requirements and are backed by the VA.”
Once the bill becomes law, as it is expected to, the affected loans will be eligible to be pooled and securitized. Ginnie Mae can then purchase the mortgages from the lenders, pool them together, and sell mortgage-backed securities to investors.
The bipartisan bill was also cosponsored by Democrats David Scott of Georgia and Mike Levin of California and Republican Andy Barr of Kentucky.
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