VetsFirst Asks Congress To Fix Serious VA Benefits Problem

VetsFirst has identified serious shortcomings regarding inadequate coverage currently available under the VA’s Veterans Mortgage Life Insurance (VMLI) program.

Since the maximum amount of VMLI coverage falls well below the national average home sales price, veterans’ and service members’ families are at risk of losing their homes when an insured veteran or service member dies.

However, Congress can fix this problem with legislation. Accordingly, VetsFirst has appealed directly to Congressional leadership to require the VA to annually adjust the maximum amount of VMLI coverage according to the median national average home sales price.

In letters addressed to The Honorable Daniel K. Akaka, Chairman, U.S. Senate Committee on Veterans Affairs, The Honorable Richard Burr, Ranking Member, U.S. Senate Committee on Veterans Affairs, The Honorable Bob Filner, Chairman, U.S. House Committee on Veterans Affairs, and The Honorable Steven Buyer, Ranking Member, U.S. House Committee on Veterans Affairs, VetsFirst stated:

As a national veterans service organization, United Spinal Association and its veterans service program, VetsFirst, are deeply concerned about inadequate coverage currently available under the VA’s Veterans Mortgage Life Insurance (VMLI) program.

As you are aware, the VMLI program provides mortgage life insurance coverage to severely disabled veterans and active duty service members. This program is designed to pay off home mortgages of such veterans and service members in the event of their death. VMLI is, in essence, a guarantee that the insured’s family members will not become homeless if they cannot afford their mortgage payments following the insured veteran’s or service member’s demise.

VMLI is decreasing term insurance that reduces as the mortgage balance is reduced through regular mortgage payments. Coverage is available for a new mortgage, an existing mortgage, a refinanced mortgage or a second mortgage. Eligibility for VMLI is limited to those who have received a VA Specially-Adapted Housing (SAH) grant, and service members and veterans who have sustained severe burn injuries. The amount of coverage is equal to the amount of the outstanding mortgage balance still owed by the veteran or service member at the time of his or her death, or $90,000, whichever is the lesser amount.

The maximum amount of VMLI coverage has not been adjusted in approximately 16 years. In 1992, that amount more than doubled, from $40,000 to $90,000. We believe that given the current state of the economy, the job market, the mortgage/foreclosure crisis and the rising number of veterans and service members who will apply for home mortgages in the near future, the time has come to increase the maximum amount of VMLI coverage to more realistically protect veterans, service members and their families.

The National Association of Realtors (NAR) has published its 2008 median sales price report for existing single-family home sales (which can be found at http://www.realtor.org/ (PDF). According to the NAR, in 2008, the national median sales price for a single-family home was $197,100, which varied geographically from $150,500 in the mid-west to $271,500 in the northeast. Clearly, the current $90,000 maximum VMLI coverage amount is woefully inadequate to keep insured veterans’ and service members’ families off the streets if they pass on with unpaid mortgage balances.

We therefore propose that the VA should be required to annually adjust the maximum amount of VMLI coverage according to the median national sales price for single-family homes as established by a recognized housing authority, such as the U.S. Department of Housing and Urban Development or the NAR. While we are cognizant of regional variances in median sales prices and would welcome geographic adjustments to the VMLI maximum coverage amount, we are aware of the administrative burden that these adjustments would place on the VA. Consequently, we strongly urge Congress to pass legislation that would, at minimum, set the VMLI coverage limit according to the national average sales price for a single-family home.

We thank you both for your outstanding leadership on behalf of our nation’s veterans. United Spinal Association and VetsFirst stands ready to assist the Committee and Congress in any way in furtherance of our shared mission.