To: The Honorable Johnny Isakson, Chairman
The Honorable Jon Tester, Ranking Member
Senate Committee on Veteran’s Affairs
Russell Senate Building – Room 412
Washington, D.C. 20510
Date: February 26, 2019
The Community Mortgage Lenders of America (THE CMLA) supports the efforts of Congress to ensure veterans who were harmed by herbicides, such as Agent Orange, are provided the best medical care possible.
We are concerned, however, that the funding provisions in last year’s Blue Water Navy Veterans Act would have resulted in veterans and armed service personnel losing the earned benefit of a VA mortgage because of unaffordable, increased G-Fees to pay for the required medical care.
The bill proposed increased fees on first-use and subsequent-use VA loans with no down-payment to 240 basis points (bps) and 380 bps of the loan amount, respectively, and fees on loans with a 5% or 10% down-payment would rise to 175 bps and 145 bps.
At that time, the CBO estimated that raising the VA guarantee fees would decrease direct spending by $1.1 billion over the 2019-2028 period, but at what cost to veterans who might want to use their mortgage guaranty benefit?
Increasing VA fees for first-use veterans from 215 bps to 240 bps and raising the fees for subsequent-use veterans from 330 bps to 380 bps could make some VA mortgages the most expensive of all US housing programs. Increasing the G-Fees for the VA Loan Guaranty Program such as the effort in last year’s Blue Water Navy bill or for any other “pay-for” use, will certainly hurt a veteran’s ability to access his or her earned benefit and to purchase a home.
THE CMLA and its members are dedicated to providing mortgage programs for veterans and their families, by serving all communities throughout the country. As midsize and small lenders, we take pride in being a part of each community served and ensuring veterans receive the opportunity to purchase a home. Unlike the “too big to fail” banks, our members have continued to serve veterans in small and midsize markets while others only focus on large areas without regard to the families in less populated areas.
As we continue to focus on all veterans’ ability to purchase their first, or subsequent home, it is imperative that they do not have the burden of overcoming a disproportionate level of fees and equity position when buying a home.
Given that VA mortgages are zero down-payment, veterans and active duty servicemembers usually capitalize these fees into the mortgage, which means they are in a negative equity position for a longer period of time. By increasing fees, the Congress would make it much more difficult for these homeowners who may want, or be required, to move.
Despite their low-risk profile, higher fees on subsequent use loans, would make VA mortgages expensive, and may make the program unusable for many veterans and servicemembers, removing an earned benefit for these individuals and families.
We, the undersigned understand the importance of the earned benefit of home ownership for veterans and will continue to strive to provide superlative service in each market we represent.
Additionally, the VA itself has expressed the same concerns we have provided within this letter.
THE Community Mortgage Lenders of America, and the undersigned companies below, thanks you for the opportunity to present our viewpoint.
THE Community Mortgage Lenders of America
1st Priority Mortgage, Inc.
Akt American Capital Mortgage
Allied Mortgage Group
American Mortgage Service Co.
Atlantic Bay Mortgage
Bangor Savings Bank
Century Lending Company
Churchill Mortgage Corporation
Cornerstone Mortgage Co.
Golden Empire Mortgage, Inc.
Homestar Financial Corporation
Jersey Mortgage Company
Mid America Mortgage
Mission Mortgage of Texas, Inc.
Mortgage Investors Group
Mortgage Research Center, LLC
NJ Lenders Corp.
Paramount Mortgage Company
Priority Financial Network
Republic State Mortgage Co.
Residential Wholesale Mortgage
Southwest Funding, LP
Success Mortgage Partners Incorporated
Summit Mortgage Corporation
Thrive Mortgage, LLC
Tidewater Home Funding
Town Square Mortgage & Investments, Inc.
Trident Mortgage Company LP
Victorian Finance LLC