What is the Vow to Hire Heroes Act? Does it affect VA Loans?

The Vow to Hire Heroes Act was signed into law in November 2011. Its primary focus (as the name would imply), is to end or significantly reduce veteran unemployment. There are millions of job openings in the United States right now, but one of the biggest reasons that those jobs aren’t being filled is because of the specialized training they require. Many open jobs require training or certification in a certain field of technology, and many unemployed veterans do not have the education and training in those fields to take those jobs. As of November 2013, two years after the Vow to Hire Heroes Act was signed, veteran unemployment has dropped a full percentage point to 6.7%, now just .3% above unemployment among the civilian population.

The first thing that the Vow to Hire Heroes Act does is expand education and training assistance to unemployed and disabled veterans. For unemployed veterans, it can provide up to a full year of additional Montgomery GI Bill benefits to assist veterans in getting into high-demand sectors like trucking and technology. For disabled veterans, it provides an additional year of VA Vocational Rehabilitation and Employment benefits if their unemployment benefits have been exhausted. With funding and assistance targeted directly at enabling veterans to find better work, the Vow to Hire Heroes Act seems to have done very well.

The next thing the Vow to Hire Heroes Act does is improve on the Transition Assistance Program (TAP). TAP is a program that helps educate servicemembers as they leave the military about civilian life. It explains many of the basics of job searching and working in the private sector. TAP helps a servicemember know how to translate their job and work experience in the military into civilian terms to help a potential employer know how valuable they are. The Vow makes TAP mandatory for nearly every servicemember leaving the military. The Vow also refreshes the program to make it applicable and relevant in the current job market.

For those veterans who would seek a civil service job as they leave the military, the Vow also allows them to acquire their veterans preference status prior to separation. Since getting a civil service job can sometimes take months, allowing the veteran to begin the process before separating reduces the likelihood that the veteran will need to use unemployment benefits after leaving the military. The Vow also brings the Department of Labor into the mix by requiring them to analyze the training that military members receive and compare them to licenses and certifications in the civilian world.

In regards to VA loans, the Vow to Hire Heroes Act merely changes the structure of the VA Loan funding fee. In actuality, the Vow to Hire Heroes Act just reverses some of the previous changes to the funding fee structure, so it changes it back to what it was before. The change to the funding fee structure is found in Section 265 of the Vow. The Vow, in effect as of November 22, 2011, brings the funding fee amounts back up to the levels that changed on November 18, 2011, just four days earlier. So for loans closed in between the 18th and 22nd of November 2011, the lower funding fees apply. But for loans closed on or after 11/22/2011, the higher funding fees apply.

Here are the funding fee rates for first-time use of a VA loan after 11/22/2011: If the down payment is less than 5%, active duty pays a 2.15% funding fee, and Guard/Reserve pays 2.4%. If the down payment is between 5% and 10% the funding fee is 1.5% for active duty, and 1.75% for Guard/Reserve. If the down payment is higher than 10%, the funding fee for active duty is 1.25% and for Guard/Reserve is 1.5%.

Here are the funding fee rates for subsequent uses of VA loans closes on or after 11/22/2011: If the down payment is less than 5%, active duty pays a 3.3% funding fee, and Guard/Reserve also pays a 3.3% funding fee. If the down payment is between 5% and 10%, the funding fee is 1.5% for active duty, and 1.75% for Guard/Reserve. For down payments over 10%, the funding fee is 1.25% for active duty and 1.5% for Guard/Reserve. As you can see, for down payments over 5%, the funding fees for subsequent uses are the same as they are for first-time use.

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