VA home loans and running
The US Department of Veterans Affairs, known as the “VA,” offers home loan programs to help qualified individuals and families buy, build or improve a home or refinance an existing home loan. While federal law now requires VA lenders to comply with fair housing laws, this has not always been the case. Black veterans were routinely denied mortgages and other benefits granted to veterans under the GI Bill.
Key points to remember
- The GI bill provided for benefits, including scholarships, unemployment insuranceand low-interest mortgages for WWII veterans.
- Black veterans received a disproportionate share of dishonorable dismissals and “blue dumps,” which made them ineligible for GI Bill benefits.
- Redlining and openly racist alliances prevented many blacks from obtaining mortgages and moving to the suburbs.
- Decades of racism in housing and loans have widened racial gaps in education and wealth in the United States
What is the GI Bill?
The Military Readjustment Act – commonly known as the “GI Bill of Rights” or simply “GI Bill” – was enacted by President Franklin D. Roosevelt in 1944.The law provided various benefits to returning WWII veterans, including:
- Tuition scholarships (for vocational schools and colleges)
- Low Interest Mortgage Loans
- Small business loans
- Professional training
- Privileges in the recruitment process
- Unemployment insurance
The amendments added full disability coverage and the construction of more VA hospitals. Subsequent legislation extended benefits to all eligible veterans, not just those who had served in World War II.
Benefits of Bill GI Denied to Many Black WWII Veterans
While the GI Bill promised prosperity to returning WWII veterans, many black veterans fell short. One of the problems was that the GI bill was only available to veterans who had been honorably released. Black veterans received a disproportionate share of dishonorable dismissals and so-called “blue dumps,” which were neither honorable nor dishonorable.
Almost 75 years after receiving a blue discharge, the release of WWII veteran Nelson Henry, Jr. has been upgraded to “honorable.” He died from the new coronavirus less than a year later. He was 96 years old.
Black veterans who qualified for the GI Bill faced other obstacles. Those who applied for unemployment insurance, for example, were denied benefits if some type of job was available, even if those jobs provided less than living wages.
It was also difficult to find facilities for black veterans to take advantage of GI Bill education programs. In Indianapolis, for example, black veterans enrolled in a vocational training program at a separate high school were unable to study plumbing, electrical, and printing because only white students were allowed to use the ‘equipment.
The GI Bill Shaped by Racism
While the implementation of the GI Bill inherently favored white veterans, fear of black advancement shaped the bill from the start. Some lawmakers feared that black veterans, bolstered by public sympathy for veterans, would argue against the Jim Crow laws. In response, these lawmakers did what they could to prevent black veterans from using the GI Bill and advancing in society.
Former Mississippi Rep. John Rankin, who was chairman of the House Veterans Committee and a known racist, insisted that individual states – not the federal government – lead the program.He also tried to completely exclude black people from unemployment insurance.
Although he ultimately lost this fight, unemployment benefits were still distributed unfairly. Southern postmasters have even been accused of preventing the delivery of unemployment forms to black veterans, presumably to prevent them from claiming benefits.
Mortgage Loans Secured By Bill GI
Another program under the GI Bill made low-interest mortgages and small business loans available to veterans. These GI Bill guaranteed loans were intended to help veterans own homeowners and build wealth.
However, due to housing and loan discrimination, black veterans were often denied a mortgage. The legal and discriminatory practice known as “redliningWas often to blame, as were the overtly racist alliances that prevented blacks from buying homes in the white suburbs.
Less than 100 of the 67,000 GI Bill mortgages in New York and suburban New Jersey helped finance home purchases made by non-whites.
VA home loans
The GI Bill guaranteed low interest loans, but the VA did not administer the program. This made it easy for white-run banks to deny blacks mortgages.
Keep in mind that a few years earlier, the Home Owners’ Loan Corporation (HOLC) – a federal agency – deployed reviewers to rate neighborhoods across the country on their “perceived level of loan risk.” This was based on feedback gathered from local appraisers, bank loan officers, city officials and real estate agents.
The HOLC created color-coded maps, each color representing the neighborhood lending risk. They were rated as follows:
- Green – “Best”
- Blue – “Always desirable”
- Yellow – “Definitely in decline”
- Red – “Dangerous”
Neighborhoods whose residents were predominantly black or belonging to other minority groups were always colored red – hence a “red line”. According to Mapping Inequality, “Conservative and responsible lenders, according to the HOLC ruling, would refuse to grant loans in these areas. [or] only on a conservative basis. “
Fair Housing Act
For decades, banks have denied mortgages and loans to black and minority families who lived in areas marked in red – and it was legal for them to do so. the Fair Housing Act 1968 end the practice.
The Fair Housing Act prohibits discrimination based on race, color, religion, sex, national origin, disability or family status during any part of a residential real estate transaction. It applies whether you rent or buy a house, get a mortgage, seek housing assistance or participate in other housing-related activities.
Housing Laws and Fair Housing in VA
A VA loan is a mortgage offered by the US Department of Veterans Affairs. The program is available to serving and veteran military personnel and their families, including surviving spouses. The loans are guaranteed by the VA, but issued by private lenders. The VA offers several types of mortgage loans:
Federal law requires VA lenders to obey fair housing laws. According to the Veteran Loan Center, “No one can refuse to finance a mortgage, provide different loan information, discriminate in valuation, and offer different terms or conditions” depending on the classes protected in the Fair Housing Act. .
The original GI Bill expired in 1956. By that time, nearly half of World War II veterans had attended some education or training program.
The GI Bill Today
Today, the AV offers programs through the GI Bill that help serving military personnel and veterans – and, in some cases, their families – pay for education, training and housing. .The two main programs are:
The post 9/11 GI bill
If you have served at least 90 days of active duty since September 10, 2001 and received an honorable discharge, you can use the Post 9/11 GI bill. The program covers up to 100% of tuition fees and provides up to $ 1,000 in monthly rent. If you have unused education benefits, you may be able to transfer them to your spouse or children.
Montgomery GI Bill
If you have served at least two years of active duty and have a high school diploma or GED, you can use the Montgomery GI Bill. Education Benefit provides up to $ 61,000 to cover programs such as college or technical courses, flight training, apprenticeship and vocational training.
The bottom line
While the GI Bill was arguably a big hit for white Americans in the postwar years, it was another story for veterans of the color. For them, the bill – and its unfair implementation – only deepened the education, wealth, and civil rights gaps between black and white Americans. Today, however, VA lenders are required by law to adhere to fair housing laws, which prevent discrimination against protected classes, including race, color, religion, sex, origin. national, disability and family status.
Despite fair housing laws, discrimination still exists in housing and loans. If you think you have been discriminated against by a builder, broker, lender, owner, seller, or appraiser, report the activity to your local VA office. After completing Form VA 26-8827, your local office will investigate the complaint.