Sections of the VA Program

          Section 4 required the VA to provide information, and to the extent possible, counseling, to veterans in default as to the alternatives available to foreclosure, what VA's and the veteran's liabilities would be in the event of foreclosure, and the availability of counseling.

          Section 5 provided additional instructions for computing interest on foreclosed loans.  The provisions apply to defaults which occur on or after February 20, 1988.  Under the new formulas, VA will exclude from the guaranty claim payment and from the no-bid calculation interest which accrues during periods of forbearance granted at VA's request and when the veteran files for bankruptcy.  This adjustment will only be made if doing so would result in VA offering to acquire the property when the case would otherwise be a no-bid.  In cases where VA is at fault for the delay in foreclosure, for example, a failure to provide bidding instructions in a timely manner, VA will also exclude from the no-bid calculation interest which accrues during the period of delay, but will allow such interest in the computation of the guaranty claim.

          Section 6 of Public Law 100-198 changed the percentage of properties that can be sold with VA financing.  The law required that "not more than 65 percent, nor less than 50 percent" may be sold with VA financing.  This provision was effective October 1, 1987.  VA loans made to finance the purchase of an acquired property were limited to 95 percent of the purchase price, except for newly authorized loans which include additional funds for rehabilitation of the property and in cases where it was determined that market conditions required an exception.  The cash sale provisions applied to loans made on or after January 21, 1988, and ceased to have effect on October 1, 1990.

          Section 7 provided that on interest rate reduction refinancing loans, either present or previous occupancy of the home by the veteran would be sufficient to satisfy the occupancy requirement.  If the veteran is in active duty status, present or previous occupancy by the veteran's spouse would satisfy the requirement.  On rate reduction loans, the term of the loan may now exceed that of the original loan by up to 10 years, subject to the maximum of 30 years and 32 days.  This section limits the amount of all other refinancing loans, i.e., those under section 3710(a)(5) (formerly 1810), to 90 percent of the appraised value of the dwelling.

          Section 8 provided that occupancy of the spouse of a veteran on active duty, in certain circumstances, is sufficient to meet the requirements of the law for loans made on or after January 21, 1988.

          Section 9 of Public Law 100-198 authorized, under specific conditions, the sale of acquired properties to certain entities to assist homeless veterans and also authorized the sale of such properties to individuals or groups that will rehabilitate the property using veterans enrolled in a job training program.  Such properties are to be then offered for sale with priority given to veteran-purchasers.

          Section 10 of Public Law 100-198 provided detailed and specific limitations concerning the assumption of guaranteed loans.  These include a requirement for underwriting of the assumer, automatic release of liability of the veteran in certain cases, a one-half of one percent funding fee applied to the transaction and the possibility of accelerating the loan if the requirements are not met.  These provisions applied to loans for which commitments were made on or after March 1, 1988.  They do not apply to loans made prior to that date.

          Section 11 of Public Law 100-198 provided minimum qualifications requirements for appraisers and provided authorization for the appraisal report to be forwarded to and reviewed by certain lenders.  Policies and procedures were to be published in regulations.

          Section 12 exempted VA guaranteed loans from sequestration under the Gramm-Rudman Act, effective November 19, 1987.

          Section 13 required the Secretary to use State statistics, if available and reliable, in determining minimum residual income requirements.

          Section 14 of Public Law 100-198 required the listing of VA acquired properties with real estate brokers to facilitate sales.

Public Law 100-253 signed February 29, 1988, corrected a technical drafting error in Pub. L. 100-198.  This law reinstated the veteran's bank of guaranty entitlement and raised it from $27,500 to $36,000.

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