Sen. Murkowski attempts to broaden home loan program

Posted: Sunday, July 06, 2003

FAIRBANKS (AP) Alaska voters approved $500 million worth of bonds last fall to supply low-interest home loans to military veterans, but the loans are only available to veterans who served before 1977.

Sen. Lisa Murkowski would like to change that.

The limitation excludes younger and even many middle-aged men and women the very people that statistics indicate are most likely to be first-time home buyers, said Sherrie Simmonds, spokeswoman for the Alaska Housing Finance Corp. in Anchorage.

Linda Clark of North Pole, who with her husband Raymond is active in veterans groups, said the different treatment doesn't seem right. The low-interest loans should be available to all veterans, she said.

''I think that's when you run into problems, when you do something for a limited population,'' she said.

Rich Rodriguez, with the federal Department of Veterans Affairs in Anchorage, said he occasionally hears complaints from younger veterans who don't qualify.

''Some people miss it by a day, and you might as well miss it by a hundred years,'' he said.

To even the field, Murkowski, R-Alaska, and senators from four other states that have the program have introduced a bill that would allow states to issue bonds to raise money for low-interest loans to any veterans who otherwise qualify.

The original bonds-to-loans program was authorized by Congress in 1982. Initially, it was available to all states, but only Alaska, California, Texas, Oregon and Wisconsin signed up. When Congress later repealed the program, it ''grandfathered'' the five states, said AHFC's Simmonds.

The law allows those states to raise the veterans loan money by selling tax-exempt bonds. Tax-exempt status helps keep loan rates down by encouraging the bonds themselves to be sold at lower interest rates. That's because the bond buyer does not have to pay federal income tax on the difference between the bond's purchase price and its higher payoff value.

Rodriguez, with the federal VA, said he can't recall the difference ever being greater than 0.75 percent. While that may not seem like much, it does matter to people applying for the loan, he said.

The savings will be greater when the now historically low mortgage interest rates rise, Murkowski said.

The effect of the 1976 service cut-off for loan recipients is evident in AHFC statistics. The average age of current veterans home loan recipients is 50; the average for AHFC's first-time home buyers is about 34, Simon's said.

Getting the changes through Congress has been difficult, though, apparently because the subject is of concern to only five states, Simmonds said.

Clark said Congress should extend the benefit to all veterans. ''They do a lot for their country and there are a lot of people who don't come back,'' she said. ''I think they deserve everything that is given to them.''

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