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About 2.3 million home loans still in effect today were purchased through the VA's home-loan guaranty program, which made those home loans more affordable for veterans, active-duty members and some surviving spouses. More than 90 percent of VA-backed home loans were given without a downpayment.


Today, when many veteran homeowners are finding it difficult to pay their mortgages, there is support available from the Veterans' Benefits Improvement Act of 2008, signed into law on October 10, 2008.


The Veterans' Benefits Improvement Act offers assistance to veterans with subprime mortgages, helping them refinance into a safer, more affordable VA loan; and it provides loan counselors at the Department of Veterans Affairs (VA) whose goal is to work closely with veterans and substantially reduce the number of veterans defaulting on home loans.


In this way, the VA is reaching out to veterans, both those who use VA home-loan programs and even veterans who don't, in order to keep more veterans in their homes, commented Secretary of Veterans Affairs Dr. James B. Peake.


As part of the same Veterans' Benefits Improvement Act, veterans with conventional home loans also now have new options for refinancing to a VA guaranteed home loan.


Veterans in financial distress due to high rate subprime mortgages are potentially the greatest beneficiaries. This is the first time the VA has ever stepped forward to guarantee subprime loans. Veterans who wish to refinance their subprime or conventional mortgage may now do so for up to 100 percent of the value of the property.


Additionally, Congress raised VA's maximum loan amount for these types of refinancing loans. Previously, these refinancing loans were capped at $144,000. With the new legislation, such loans may be made up to $729,750 depending on where the property is located. Increasing the loan-to-value ratio and raising the maximum loan amount will allow more qualified veterans to refinance through the VA, allowing for savings on interest costs and potentially avoiding foreclosure.


VA's authority to guaranty Adjustable Rate Mortgages (ARMs) and Hybrid ARMs was extended under this new law through September 30, 2012. Unlike conventional ARMs and hybrid ARMs, VA limits interest rate increases on these loans from year to year, as well as over the life of the loans.


In addition, VA counselors at nine regional loan centers are waiting to support veterans who have VA-guaranteed loans and need financial counseling or special financing arrangements. Depending on a veteran's circumstances, the VA can intercede with the borrower on the veteran's behalf to pursue options - such as repayment plans, forbearance, and loan modifications - that would allow a veteran to keep a home. VA counselors have helped about 74,000 veterans, active-duty members and survivors keep their homes since 2000, a savings to the government of nearly $1.5 billion.


Foreclosures were down more than 50 percent in 2008 compared to the same period in 2003. The VA attributes this to prudent credit underwriting standards, supplemental loan servicing programs and VA financial loan counselors.


If you need help from a VA financial counselor, call VA toll-free at 1-877-827-3702.


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