Bipartisan VALOR Act Aims to Ease Home Loan Fees for Disabled Veterans

Understanding the VALOR Act

Recently, two lawmakers reintroduced the bipartisan VALOR Act, which is designed to refund Veterans Affairs (VA) home loan funding fees for veterans whose disability ratings are approved after their loan closes. Currently, veterans are only exempt from these fees if they receive their disability rating prior to closing, which often leaves many in a financial bind.

This act seeks to classify these funding fees as overpayments, giving veterans the right to reimbursement when they file a disability claim or a notice of intent to file before closing but receive a qualifying rating afterward.

Why This Matters

The proposed change is crucial because it acknowledges the delays many veterans face in acquiring their disability ratings. Under the current VA rules, those with service-connected disabilities miss out on fee exemptions. The VALOR Act directly addresses this timing-related barrier to homeownership by offering a pathway for reimbursement after a qualifying disability rating is granted. This could potentially save veterans thousands of dollars and ease their transition into civilian life.

The Legislative Push

Representative Mike Levin, a California Democrat, introduced the VALOR Act on February 17, with Republican delegate James Moylan from Guam as a cosponsor. Levin's office indicated that if passed, it would require the VA to treat the paid funding fees as overpayments and issue reimbursements to eligible veterans who filed their claims on time.

This effort has garnered wide support, including endorsements from organizations such as the American Legion and the National Association of Realtors. Such support highlights the importance of making the home loan process more equitable for veterans, particularly those awaiting their disability ratings.

The Implications

The VA funding fee is not a trivial expense; it can range from 0.5% to 3.3% of the loan amount. Exemptions exist for veterans receiving compensation for service-connected disabilities, Purple Heart recipients on active duty, and others. However, many veterans, especially those transitioning from military to civilian life, can't always manage these fees effectively. By modernizing the VA home loan fee structure, the VALOR Act aims to alleviate financial burdens that prevent veterans from achieving homeownership.

Reactions to the VALOR Act

Rep. Levin stated: “Disabled veterans should not pay fees when getting a VA home loan. However, many veterans who have long waits for their disability rating are still paying burdensome fees, which can be a barrier to homeownership.” He expressed hope for swift movement on the bill.

Son Nguyen, founder of the Veterans Association of Real Estate Professionals, echoed this sentiment: “The VALOR Act helps ensure veterans are refunded the VA funding fee when a disability claim pending at closing is later approved. This strengthens fairness and confidence in the VA home loan benefit.”

Next Steps for the Legislation

The VALOR Act has been referred to the House Committee on Veterans' Affairs for further review. It will be fascinating to see how it progresses, especially given the bipartisan support behind it.

Conclusion

Overall, the reintroduction of the VALOR Act signifies a positive shift toward addressing the needs of disabled veterans in the home loan sector. With potential for substantial financial relief, this act could indeed help many veterans begin their civilian lives on more solid financial ground.