Trump signs bill that could resolve the ‘VA orphan loan’ issue
President Trump has signed the Protecting Affordable Mortgages for Veterans Act, which aims to address concerns that rules around certain VA refinances were impeding those loans’ inclusion in secondary market pools.
The bill “will remove duplicative requirements that are causing many mortgages guaranteed by the Department of Veterans Affairs, and refinanced in 2018, to remain ineligible for Ginnie Mae pooling,” according to the Mortgage Bankers Association.
“MBA is pleased that President Trump has signed this important piece of legislation that clarifies when Department of Veterans Affairs home loans qualify to be pooled into Ginnie Mae securities,” said Bob Broeksmit, president and CEO of the Mortgage Bankers Association, in a press release. “We specifically want to thank Reps. David Scott, D-Ga.;Lee Zeldin, R-N.Y.; Mike Levin, D-Calif.; and Andy Barr, R.-Ky.; as well as Sen. Kyrsten Sinema, D-Ariz., and Thom Tillis, R-N.C., in addition to the authorizing committees and congressional leaders, for their efforts.
“This issue has significant importance to our members, and we have worked tirelessly with members of Congress, in both chambers and on both sides of the aisle, to alert them of the need to address the ‘VA orphan loan’ problem.”
The concern arose after the 2018 implementation of the Economic Growth, Regulatory Relief and Consumer Protection Act.
The 2018 law included some requirements for VA-insured loans aimed at discouraging rapid refinancing if it wasn’t in consumers’ best interest.
The MBA said the passage of the bill “does not weaken any of the consumer protections that are necessary for refinances to obtain a VA guaranty.”