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Senior Citizen Homes & Communities
Veterans Get Better Access to Larger Homes with
Lifting of Loan Limits
Ginnie May makes VA loans less costly and more
available
 Aug. 31, 2007 - -The Government National Mortgage
Association (Ginnie Mae) is doing its part to help bail out the housing
industry by eliminating the restriction on the size of mortgage loans
guaranteed by the Department of Veterans Affairs (VA) that can be used
as collateral for Ginnie May securities.
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"We expect this change will expand the availability
of low-cost financing and increase homeownership opportunities for
America's veterans, particularly in high-cost areas, by encouraging
lenders to make more VA loans," said Michael J. Frenz, Executive Vice
President of Ginnie Mae.
For example, although 10 percent of the nation's
veterans live in California, less than one percent of the VA loans in
the Ginnie Mae securities portfolio issued during the last two years
were to California veterans, because loan limits were below most house
prices in the state.
Yesterdays announcement says the new rule is
effective on September 1, 2007.
Currently, Ginnie Mae limits the size of
VA-guaranteed loans that can back Ginnie Mae mortgage-backed securities
(MBS) to the conforming loan limit of $417,000.
Approximately 30 percent of the loans that back
Ginnie Mae MBS are guaranteed by the VA.
Unlike the Federal Housing Administration's (FHA)
program, the VA program does not include a limit on the size of the
guaranteed loan.
"Now, more than ever, America's veterans and their
families have a greater chance to make their dreams of homeownership a
reality, thanks to today's action by Ginnie Mae," said Judith Caden,
Director of Loan Guaranty Service at the VA. "This change is another
example of our joint commitment to ensure VA benefits keep pace with the
needs of our veterans in today's housing market."
"This is an outstanding initiative that will
greatly benefit veterans and their families who reside in high-cost
areas, and who continue to make significant contributions to the growth
and prosperity of our nation every day," said George Lisicki, the
national commander of the 2.3 million-member Veterans of Foreign Wars of
the U.S. and its Auxiliaries. "This is what 'Supporting the Troops'' is
all about."
Ginnie Mae will continue to require that the amount
of cash down payment, plus the amount of the VA guaranty, equal at least
25 percent of the value of the home.*
Ginnie Mae is a wholly-owned government corporation
within the U.S. Department of Housing and Urban Development. Ginnie Mae
pioneered the mortgage-backed security (MBS), guaranteeing the very
first security in 1970. A MBS enables a mortgage lender to aggregate
and sell mortgage loans as a security to investors. Ginnie Mae
securities carry the full faith and credit of the United States
Government, which means that, even in difficult times, an investment in
Ginnie Mae is one of the safest an investor can make.
*Ginnie Mae will continue to require that the
amount of cash down payment, plus the amount of the available VA
guaranty, equal to at least 25% of the lesser of the purchase price or
the Notice of Reasonable Value.
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