A new battle on Capitol Hill is pitting Vietnam veterans against more recent service members.
The Senate is currently considering the Blue Water Navy Vietnam Veterans Act of 2018, a bill that would extend benefits to 90,000 vets who served in the Navy off the coast of Vietnam and say they were exposed to Agent Orange. The House of Representatives in June approved the bill 382-0.
But one of the ways it would pay for the bill, which the Veterans Administration estimates will cost $3.4 billion over the next five years, is by increasing fees on home loans guaranteed by the Veterans Administration – a benefit far more likely to be accessed by younger vets.
The home loan program is a point of pride among the VA. It is available to anyone who has served, and offers generous terms including no down payment requirements, and the ability to fold closing costs into the overall loan amount.
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Veterans often don’t have much of a credit profile, since many spend their entire early adult life in service. Yet delinquency rates for the VA loans are much lower than any other category of mortgage. That’s not just because vets are more disciplined, but because VA underwriting considers how much money homeowners will have after paying the mortgage and other expenses, a more holistic approach than many other lenders take.
The VA declined to comment for this story, as did other Washington players, even as they privately expressed dismay over the inter-generational feud and Congress’ inability to take care of American service members. At least one senator, North Carolina Republican Thom Tillis, in a Wednesday hearing also said he was uncomfortable with that idea.
But as the National Association of Realtors said in a letter to two senators, “as a benefit, NAR believes that VA loan guarantee fees should be based on the risk of the loan made, and not the costs of other VA programs or benefits.”
The Mortgage Bankers Association put it this way in their own letter: “we firmly believe that mortgage borrowing costs should not be increased to pay for non-housing-related expenditures. The loan fees charged to veterans should reflect the credit risk associated with the VA guaranty, and any fee increases that are unrelated to this risk unnecessarily raise the cost of mortgage credit for veterans.”
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For its part, the VA told Congress that it “does not support paying for the provisions of this bill by increasing the costs that some Veterans must bear to access their benefits.”
More broadly, however, the VA doesn’t support much of the bill because, as it said, “there is insufficient scientific evidence at this time showing Blue Water Navy Veterans were exposed to Agent Orange.”
The VA’s undersecretary for benefits, Paul Lawrence, who addressed a Senate hearing on Wednesday, said, “We oppose this bill because the science is not there, and we depend on science.” Lawrence also said that if the VA were to authorize benefit payments for illnesses that vets can’t prove were caused by their service, it would “erode confidence in the soundness and fairness of the veterans benefit system.”
The Vietnam Veterans of America testified that there is evidence that ships in the South China Sea were exposed to Agent Orange. “We believe such exposure has also led to birth defects, learning disabilities, and other health issues in the progeny of Vietnam veterans,” the group said in a release.
Vietnam Veterans and others have been pushing for years for legislation on this topic after the VA in 2002 made Navy veterans ineligible for benefits unless they could prove they were on the ground in Vietnam. Legislation has been introduced several times, but the question of how to pay for it has been a sticking point.
