[Congressional Record Volume 154, Number 71 (Thursday, May 1, 2008)]
[Senate]
[Page S3715]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. AKAKA:
  S. 2961. A bill to amend title 38, United States Code, to enhance the 
refinancing of home loans by veterans; to the Committee on Veterans' 
Affairs.
  Mr. AKAKA. Mr. President, today I introduce a bill that will offer 
veterans more options for refinancing their mortgages. My legislation 
would raise the guarantee on VA refinance loans and decrease equity 
requirements for refinancing to a VA loan. These provisions would allow 
more qualified veterans to refinance their home loans under the VA 
program.
  At present, the maximum VA loan guaranty limit for all loans in 
excess of $144,000, except regular refinance loans, is equal to 25 
percent of the Freddie Mac conforming loan limit for a single family 
home. Presently this is $104,250. This means lenders making loans up to 
$417,000 will receive at least a 25 percent guaranty, which is 
typically required to place the loan on the secondary market.
  However, current law limits to $36,000 the guaranty that can be used 
for a regular refinance loan. This restriction means a refinance over 
$144,000 will result in a lender not receiving 25 percent backing from 
VA and probably not making the loan at all. This situation essentially 
precludes a veteran from being able to refinance his or her existing 
FHA or conventional loan into a VA guaranteed loan if the loan is 
greater than $144,000.
  To assist veterans in overcoming this obstacle in refinancing, this 
legislation would increase the maximum guaranty limit for refinance 
loans to the same level as conventional loans--25 percent limit for a 
single family home. Importantly, this increase would make the maximum 
VA home loan guaranty equal across the board.
  This bill will also increase the percentage of an existing loan that 
VA will refinance from the current maximum of 90 percent to 95 percent, 
thus allowing more veterans to use their VA benefit to refinance their 
mortgages. Many veterans do not have ten percent equity and thus are 
precluded from refinancing to a VA home loan. Given the anticipated 
number of non-VA adjustable mortgages that are approaching the reset 
time when payments are likely to increase, it seems prudent to 
facilitate veterans refinancing to VA loans.
  In light of today's housing and home loan crises, these further 
refinancing options will help some veterans to bridge financial gaps 
and allow them to stay in their homes and escape possible foreclosures.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 2961

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

     SECTION 1. ENHANCEMENT OF REFINANCING OF HOME LOANS BY 
                   VETERANS.

       (a) Inclusion of Refinancing Loans Among Loans Subject to 
     Guaranty Maximum.--Section 3703(a)(1)(A)(i)(IV) of title 38, 
     United States Code, is amended by inserting ``(5),'' after 
     ``(3),''.
       (b) Increase in Maximum Percentage of Loan-to-Value of 
     Refinancing Loans Subject to Guaranty.--Section 3710(b)(8) of 
     such title is amended by striking ``90 percent'' and 
     inserting ``95 percent''.
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