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OF
BENJAMIN H. BUTLER National Association for Uniformed Services BEFORE THE SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS VETERANS AFFAIRS COMMITTEE U.S. HOUSE OF REPRESENTATIVES ON Department of Veterans Affairs Loan Guaranty Service 16 MARCH 2000
NATIONAL MILITARY/VETERANS ALLIANCE 5535 Hempstead Way Springfield, VA 22151 Curriculum Vitae and Organizational Disclosure Statements Benjamin H. Butler Associate Legislative Counsel National Association for Uniformed Services Master Gunnery Sergeant Butler, US Marine Corps, Retired, has been an Associate Legislative Counsel, the Director of Chapter Management and an Associate Director of the Legislative Political Action Team at NAUS since August 1996. MGySgt Butler's military career spanned 21 years of active service. His years in the military started with the infantry, serving with the 2nd Marine Division at Camp Lejeune NC and as an instructor at Officers Candidate School in Quantico VA. He also spent several years working as a recruiter. He worked at all levels of recruiting for the Marine Corps starting as a canvassing recruiter. He also managed several different recruiting stations in both upstate NY and the Washington DC area. He also served as a Regional Recruiter Instructor as well as an Instructor at Recruiters' School in San Diego CA. MGySgt Butler then spent 4 years as a member of the national training team for Marine Corps recruiting in Washington DC. During this tour he traveled from coast-to-coast, assisting recruiters and recruiting commanders. He has had extensive training in sales and management and is certified as a sales and management trainer. Disclosure Neither the National Military Veterans Alliance,or the National Association for Uniformed Services (NAUS) have received grants (and/or subgrants) or contracts (and/or subcontracts) from the federal government for the past three fiscal years. Mr. Chairman and distinguished members of the Committee, the National Military Veterans Alliance would like to express its appreciation to you for holding these important hearings. The testimony provided here represents the collective views of our members (See Exhibit A). The National Military Veterans Alliance (NMVA) is a loosely confederated group of 21 different military and Veteran associations with a combined membership of 3.5 million nationwide. Collectively we represent all seven of the uniformed services, all ranks, all grades, all components, family members and survivors and we collectively work from an annual set of Alliance goals and objectives. Mr. Chairman, the National Military and Veterans Alliance strongly supports the Veteran’s Loan Guarantee Program. A benefit program is still necessary to assist veterans with obtaining home loans. The no down payment provision of the DVA loan guaranty program gives the program a significant advantage over commercial lending institutions. Further, the qualification criteria used in determining eligibility for a DVA guaranteed loan is less stringent than that for a commercial loan. For example, the debt to income ratio is more lenient in DVA than in commercial lending and the residual income formula is also more generous. These items give veterans a distinct advantage in loan qualification in DVA that is not commercially available. As currently structured, the DVA loan guaranty program primarily attracts only the marginally qualified veteran homebuyer. We would like to recommend that fees, closing costs, and down payment requirements should be restructured to attract all veteran buyers, thereby reducing the overall risk to the program. The best way to attract new veterans is to eliminate fees. In addition to the structure of the benefit, the structure of the program itself also needs to be changed. If DVA is going to remain in the home loan business, they should be allowed to do so in a competitive way. There is no reason why DVA should write only high-risk loans. DVA should be able to compete across the mortgage spectrum. As opposed to the current structure of the program, DVA should be able to write it's own loans and maintain a portfolio of income producing loans. In short, DVA should be allowed to do the same things as the commercial home loan industry. NMVA supports any program that provides housing assistance to veterans. We believe that any such programs should preserve the no down payment feature, as well as the more liberal qualification criteria of the current DVA program. Reusability of the home loan benefit is another important feature. We believe the reusability feature is of tremendous importance, particularly for active service members who are required to relocate many times during a career. In the past it was recommended that this program be administered by an agency, other than the Department of Veterans Affairs, such as the Department of Housing and Urban Development. As a general proposition, NMVA has no objections. Experience though cautions us to not give this notion a blanket endorsement. Within the Department of Veterans Affairs, veterans are the focus and the priority. That’s not the case for veterans programs within other agencies. Under the National Housing Act loan program, HUD currently administers a loan program for veterans – but few veterans even know that it exists. If veterans housing programs were transferred to HUD, an Assistant Secretary for Veterans Programs would have to be established, just as we established the Assistant Secretary position in the Department of Labor. Even an advocate in HUD, to make certain the interests of veterans are protected and visible within the agency, might not be enough in NMVA’s view. The legislation authorizing such a transfer would have to be very clear and explicit as to the priority to be accorded to veterans. Finally we would like to make the following suggestions on the appropriate "mix" of benefits for veterans in the 21st century. NMVA believes the loan guaranty program for members of the Selected Reserve has been a success. As the Committee knows, the Reserve loan guaranty program was authorized as a temporary initiative. We believe the program should be permanent. In addition to making the Reserve Loan guaranty program permanent, NMVA believes two other changes should also be made. We see no logical basis for the disparity in funding fees between the regular program and the Reserve loan guaranty program - funding fees for Reservists are three-quarters of a percentage point higher. In our view, funding fees should be identical for all loan guaranty program participants. We also believe that eligibility for the Selected Reserve Loan guaranty program should be revised and clarified. Currently, a Guard or Reserve member can only qualify for the benefit by drilling six years. It seems to us that qualification for the benefit should be established if the member honorably satisfies the terms of their enlistment or period of obligated service. In other words, an enlistment for six or eight years, that requires three or four years of participation in the Selected Reserve, followed by either Individual Ready Reserve or Standby Reserve service, should satisfy the qualification criteria. Today, there are less Guard or Reserve initial enlistment programs that require a full six years of drilling participation in the Selected Reserve. The governing criteria to establish eligibility should be honorably satisfying the terms of enlistment or obligated service. The 1984 Tax Act imposed several restrictions on the issuance by the States of tax-exempt bonds to fund home loan mortgages made to veterans. A major restriction was the narrowing of the class of veterans eligible to receive mortgage loans under a state program. Specifically, the Act provided that a veteran must have served on active duty before 1977 to be eligible for a loan. This restriction was enacted as part of a general cutback in the authority of states to issue tax-exempt bonds. The rule, requiring pre-1977 active duty, means that fewer and fewer veterans are eligible for loans under state veterans mortgage programs. Obviously, the great majority of the servicemen and women in the Persian Gulf were not in the armed forces before 1977. In NMVA’s view, the pre-1977 active duty rule is unfair in forcing the states to exclude these veterans from mortgage programs. NMVA believes that section 143(l)(4) of the Internal Revenue Code should be deleted and thereby establish eligibility under state veterans mortgage programs for members who enlisted after 1976. Conclusion In conclusion Mr. Chairman, National Military and Veteran’s Alliance thanks you again for this opportunity. We believe that the DVA Loan guaranty program is a valuable and important benefit that should be retained. Without question though, the program has eroded over the years. The attention of this Committee to help restore the DVA Loan guaranty program to its full potential, as a tangible benefit for all veterans, is genuinely appreciated. Thank you. NATIONAL MILITARY/VETERANS ALLIANCE Air Force Sergeants Association American Military Retirees Association American Military Society American Retirees Association Catholic War Veterans Class Act Group Gold Star Wives Of America Korean War Veterans Association Military Order Of The Purple Heart Military Order Of The World Wars Legion Of Valor National Association For Uniformed Services Naval Enlisted Reserve Association Naval Reserve Association Non Commissioned Officers Association Society Of Medical Consultants The Retired Enlisted Association TREA Senior Citizen League Tragedy Assistance Program For Survivors Veterans Of Foreign Wars Vietnam Veterans Of America Women In Search Of Equity Exhibit A Back to Witness List |