eligibility for states' low-interest rate loans
by Dan Fauske
September 06, 2004
For U.S. servicemen and women such reminders are unnecessary - they know full well the dangers that await in distant lands. Yet they bravely step into harm's way knowing that by standing up to terrorists they do their part to secure the safety and liberties enjoyed by the citizens of this great nation. Like Americans who have borne the battles of the past, today's generation of soldiers and their families are making tremendous sacrifices.
One way the nation historically has expressed its gratitude to those who served is by providing special benefit programs for veterans - like college tuition assistance and mortgage loan guarantees under the GI Bill.
The state of Alaska, with more than 70,000 veterans, has the highest per capita veteran population in the nation. Since the early 1980s, the state has provided veterans with the additional benefit of low-interest rate mortgage loans. Administered by the Alaska Housing Finance Corporation at no cost to the state treasury, the Alaska Veterans Mortgage Program has helped about 12,000 qualified veterans over the years with low-interest loans.
California, Oregon, Texas and Wisconsin operate similar programs, funded by tax-exempt mortgage revenue bonds guaranteed by each respective state. Since 1983, AHFC has issued more than $2 billion in bonds and used the funds to purchase veterans' home loans. Alaska voters have overwhelmingly approved these bond sales.
Unfortunately, the federal law that made this mortgage bond-financing program possible is now phasing out. The culprit is a provision in the 1986 Federal Tax Reform Act that restricts the use of tax-exempt bonds for veterans' loans. It limits the benefit to only those veterans who were in the service before Jan. 1, 1977, and who applied for financing within 30 years of being discharged.
In recent years, as a result of these restrictions, AHFC has seen a continuous decline in the number of veterans who can qualify for a low-interest rate loan. At the same time, there has been no decline in the interest of vets who want to participate but don't qualify. In the early '80s, on average about 1,000 Alaska veterans a year took advantage of the program. Over the last three years, the average has decreased to about 300. Thus far in 2004, only 70 veterans have met the qualifications.
One result of this decline is that AHFC has issued none of the $500 million bond authorization approved by Alaska voters two years ago - nor will any of that authorization ever be issued unless Congress changes the law. A state's authority to issue tax-exempt veterans bonds soon will be moot unless veterans who served after 1976 can be provided the same benefit that's been available to veterans up through the Vietnam war era. If the program dies, billions of dollars in mortgage investment capital will no longer be available for building new homes and hundreds of thousands of veterans in these five states will no longer be able to receive special, low-interest loans.
Three years ago, Sen. Ted Stevens appointed me to the national, bipartisan Millennial Housing Commission. Our yearlong assignment was to develop recommendations for the President and Congress to generate more affordable housing for America's families.
Among the commission's final recommendations is one I advocated - to repeal the restrictions that limit eligibility of Veterans for states' low-interest rate loans. The recommendation is now part of S. 1349, legislation awaiting action by the U.S. Senate Finance Committee. The bill faces an uphill battle - given that only five states are impacted.
S. 1349 is fair. It extends to today's military personnel a benefit enjoyed by those who served before them. And it's a great way for the nation to say "thank you" to the men and women now fighting the war on global terrorism.
Note: Dan Fauske is the Chief Executive Office and the Executive Director of Alaska Housing Finance Corporation.
and do not necessarily reflect the opinions of Sitnews.