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Improvements made to VA home loan benefits

President Obama signed the Veterans Benefits Improvement Act 2010 into law on Oct. 13. Included in the bill are several improvements to the VA Home Loan Guaranty Program. The areas of the VA loan program that are affected include:

• The VA funding fee

• Specialty Adapted Housing (financed with or without VA loans)

• Modified VA loans

The first improvement has to do with changes to the VA funding fee. Before the bill was signed, veterans receiving disability compensation received an exemption from paying the VA funding fee associated with VA loans. As a result of the new law, the funding fee exemption has been extended to veterans who once received disability compensation, but, because of reenlistment or recall to active duty, currently receive active duty pay that replaces disability compensation. The new VA funding fee waiver extension is effective immediately.

A second improvement as a result of the signed bill involves payment of outstanding VA-guaranteed loans. From time to time, a VA borrower may experience financial distress. One of the ways to help is through VA loan modification which can make adjustments to the terms and/or principal of the loan resulting in lower monthly payments. If a VA-guaranteed mortgage has been modified and the VA borrower still has trouble making payments, then the VA secretary is authorized to pay the mortgage holder the balance of the loan plus any interest owed. The borrower would still be responsible for repaying the VA-guaranteed loan, only the debt would now be owed to the VA.

A third change as a result of the new legislation has to do with Specialty Adapted Housing (SAH). Veterans with certain disabilities may need SAH that can include wheel chair ramps, lifts, and specially adapted appliances and fixtures for wheel chair accessibility. Effective Oct. 1, 2011, up to one million dollars per year in grants will be available to researchers developing assistive technologies to make SAH improvements on homes financed with or without VA home loans. This grant authorization will end Sept. 30, 2016.

For additional questions regarding the VA home loan program, contact an experienced VA mortgage professional.

Please see your local county veterans service officer if you have any questions. You can contact your local VSO at (218) 631-7617 or by e-mail at As always, have a great week.