September 24, 2020

Hirono Provision to Help VA Home Loan Recipients Rebuild After Natural Disasters Passes Senate Veterans’ Affairs Committee

WASHINGTON, D.C. – Senator Mazie K. Hirono (D-Hawaii), a member of the Senate Veterans’ Affairs Committee, supported passage of the Veteran Benefits Enhancement and Expansion Act, which includes her Veteran Home Loan Disaster Recovery Act. The bill was approved by the Senate Veterans’ Affairs Committee yesterday. Senator Hirono’s provision would allow veterans replacing homes lost to natural disasters through the Department of Veterans Affairs (VA) Home Loan Guaranty Program to access a lower fee rate—as if they were a first-time participant in the program.

The Veteran Home Loan Disaster Recovery Act responds to concerns Senator Hirono learned about from Tam Hunt, a Hawaii Island Army veteran who faced unexpected costs financing a replacement for the home he lost in the 2018 Kilauea Volcano eruption. The eruption destroyed as many as 700 homes, including at least one home purchased using the VA Home Loan Guaranty Program. 

“After the Kilauea eruption, hundreds of families on Hawaii Island worked to rebuild their homes and lives. But a constituent of mine—veteran Tam Hunt—was surprised to find out that he would have to pay higher fees to replace his home. The Senate should swiftly consider and approve this legislation so that no veteran has to pay a higher rate for a new house because their home was destroyed by a natural disaster,” Senator Hirono said.

“After losing my first home to the 2018 Kilauea lava eruptions on the Big Island of Hawaii I was shocked to find out that buying a replacement home entailed a much higher VA loan fee because my new purchase was considered a second home purchase rather than a first home. The amount went up from about $7,500 for the first home VA loan fee to over $11,000,” Tam Hunt said. “This new legislation will fix this unfair issue and will allow veterans who lose homes due to disasters to buy a replacement home without an increased loan fee. This is a great step forward for helping veterans in a time of increasing disasters and economic difficulties. Thanks are due to Senator Hirono and other sponsors for making this change happen!”

In 2019, according to the Federal Emergency Management Agency (FEMA), there were over 100 Presidentially-declared disasters across almost every U.S. state and territory.

The VA Home Loan Guaranty program was established through the Servicemen’s Readjustment Act in 1944 and has since been used by generations of our nation’s veterans to purchase homes. Borrowers are required to pay an up-front “funding fee,” which functions similarly to closing costs. The amount of this fee is determined by a number of factors, including whether this is their first time participating in the program. For those who have used this program more than once, the fee is higher, regardless of the circumstances that led to them needing to purchase a home through the program, like a home being destroyed by a natural disaster.

Congressman Joe Cunningham (D-S.C.) introduced the House version of the Veteran Home Loan Disaster Recovery Act.