Proposition 12, also known as the Veterans‘ Bond Act of 2008, will appear on the ballot on Nov. 4. Approval of the proposition provides for a bond issue of $900 million to provide loans to California veterans to purchase farms and homes.
Since 1921, the voters have approved a total of about $8.4 billion to finance the veterans‘ farm and home purchase program, also known as Cal-Vet. As of July 2008, there was about $102 million left to support new loans.
“Throughout the history of the program, we had 26 passed bond measures,” said Debra Lehr, the deputy secretary for farm and home purchases.
One reason new money is needed is that there are more veterans, supporters say. On June 17, President Bush signed into law H.R. 6081, which eliminated some of the eligibility restrictions for the veterans‘ mortgage bond.
“In the past, bonds required veterans to serve during wartime prior to 1977 and apply for a loan within 30 years from the day they were discharged,” Lehr said. “Now the recent war veterans get the same benefits their fathers and grandfathers have received in the past.“
In addition to recognizing and honoring the veterans for their service, Prop 12 may benefit the economy by stimulating the real estate industry with no cost, Lehr said.
“The veterans repay the bonds through their mortgage payments,” she said. “Our program is very strong and self-supporting. Because credit is tight in the industry, we’re here with money available to make loans for veterans, which help support the real estate in California. This can be a benefit to the veterans and everyone to California.“
There is a common misconception that the Cal-Vet program will use the government’s money, said Jerry Jones, a representative from the California Department of Veterans Affairs.
“We basically issue the bond to the people who buy it and then they give us the money,” Jones said. “It doesn’t cost any taxpayer any money because veterans pay for it.“
Even though the economy is in bad shape, it still won’t affect the taxpayers, Jones added.
“Some people might be nervous, but they have no reason to be nervous for this bond measure. If people [don’t approve this proposition], we’ll run out of money and the veterans will not be able to get any loans [from us].“
There is no organized campaign against Prop 12, but attorney Gary Wesley authored a ballot argument opposing it.
Wesley’s argument said that there was no requirement for qualifying veterans to have actually served in combat, opening up the loans for veterans who only served at a base in Germany, for example.
Wesley also wrote that the bond measure is not free of costs to the state.
“If anyone who receives a Cal-Vet loan does not make the payments and cannot sell the property at a time of declining housing prices, state taxpayers will be liable for any shortfall,” he said.
Unlike conventional loans, the Cal-Vet program typically offers the lowest interest possible.
“The Cal-Vet program was more flexible with their loans, and they were easier to pay back,” said Robert Shorter, a veteran who served in Iraq from 1987 to 1993. “I had a very low interest rate and [their service] was fast.“
Prop 12 should be approved because it rewards the veterans for their service, Jones said.
“They gave up a lot for their service and this is a good thing for the state of California,” he said.
For more information on Prop 12 and the rest of the statewide measures on the ballot, visit voterguide.sos.ca.gov.
JANET HUNG can be reached at email@example.com.