Veterans Benefits Act

The law also authorized the Administrator to adjust the VA home loan interest rate ceiling according to the demands of the loan market.  In addition, it increased the direct loan amount from $15,000 to $17,500.  The law also had a provision requiring the consent of an individual before there is any offsetting or withholding of VA benefit payments on account of an indebtedness arising out of a defaulted loan.  In approving the Act in 1966, Congress believed that post-Korean veterans were beset with problems almost identical with those to which the two previous GI bills were addressed.  In the Senate Committee Print which accompanied S. 9, the proposed Veterans' Readjustment Benefits Act, it was stated: "Like their fathers and elder brothers, post-Korean veterans lost time from their competitive civil lives directly because of military service."  The cold war and the compulsory draft law, according to the Committee Print, brought about a compelling need for the GI Cold War Bill.

Public Law 90-301, approved May 7, 1968, made some additional changes to the VA home loan programs all designed to improve their operations and to adjust to credit problems.  First, the maximum guaranty amount was increased from $7,500 to $12,500.  Second, the law also empowered the VA to extend aid to distressed veteran homeowners who, after relying on VA or FHA construction standards and inspections during construction, found major structural defects in their properties which were purchased with VA mortgage loans.  Third, the law also authorized the VA to guarantee a loan even though the purchase price exceeds the reasonable value of the property.

Public Law 90-301 also established the Commission on Mortgage Interest Rates.  The statutory charge to the Commission grew out of a general background of rapidly rising interest rates and increasing shortages of mortgage credit and the specific congressional action of temporarily suspending the statutory ceiling of 6 percent on the interest rate of FHA-insured and VA-guaranteed mortgages.  In broad terms, the Commission's assignment was to study and recommend ways of dealing with VA-FHA ceilings and of increasing the availability of mortgage credit at reasonable rates of interest to help assure that the nation's housing goal is met.  On October 23, 1970, the President signed into law the Veteran's Housing Act of 1970, Public Law 91-506.  The new Act was a milestone for the VA home loan program, making important changes which greatly enhanced the viability of the loan guaranty and direct loan programs.

The law made seven major changes in these programs.  It removed the delimiting dates on veterans' entitlement.  It authorized a manufactured home loan program.  It authorized direct loans for veterans qualified for Specially Adapted Housing Grants irrespective of location.  The law also eliminated the terminal date of the direct loan program.  In addition, the law eliminated the funding fee for post-Korean veterans and authorized loans on condominium units and refinancing loans.

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