SIFMA Supports VA Rules; Suggests Changes to Better Protect Veteran Borrowers

Washington, D.C., February 15, 2019 – In a comment letter to the Department of Veterans Affairs, SIFMA expressed its support of the interim final rules which address issues that have been raised by market participants and members of Congress with respect to refinancing of Veterans Affairs (VA) loans.  SIFMA also makes suggestions which it believes will create a safer program for VA borrowers and a safer environment for investors to buy Ginnie Mae MBS backed by VA loans, since the interests of VA borrowers and MBS investors are aligned.

SIFMA also notes that the interim-final rules, while well intended, provide avenues to evasion of the net tangible benefit test.  If unchanged, further harm to borrowers could occur and would beget further harm to MBS investors, which will place downward pressure on the value of a VA loan in secondary markets and upward pressure on mortgage rates. As with past abuses of the program, this harm would not be limited to VA borrowers – it would also impact FHA and other mortgage programs securitized by Ginnie Mae.

“We appreciate the issuance of the interim rules, as they respond to our concerns that refinancing activities have negatively impacted VA borrowers as well as the mutual funds, 401k plans, and other savers invested in Ginnie Mae MBS,” said Kenneth E. Bentsen, Jr., President and CEO of SIFMA.  “We strongly supported the creation in 2017 of the VA/Ginnie Mae task force and are grateful for actions taken by Ginnie Mae and VA since that time that support access to credit for VA borrowers while protecting them from refinancings that provide little benefit at potentially great expense.  At the same time, we strongly encourage the VA to heed our suggested modifications to ensure the rules cannot be evaded, thus protecting our veterans, the VA borrowers, as well as the investors for whom Ginnie Mae MBS comprise part of their retirement savings.”

SIFMA’s specific suggestions cover modifications to the net tangible benefit criteria related to loan-to-value ratios, term and rate reductions, reduced payments and residual income increases, elimination of mortgage insurance, and recoupment for type II refinancings.


SIFMA is the leading trade association for broker-dealers, investment banks and asset managers operating in the U.S. and global capital markets. On behalf of our industry’s nearly 1 million employees, we advocate for legislation, regulation and business policy, affecting retail and institutional investors, equity and fixed income markets and related products and services. We serve as an industry coordinating body to promote fair and orderly markets, informed regulatory compliance, and efficient market operations and resiliency. We also provide a forum for industry policy and professional development. SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets Association (GFMA). For more information, visit