Veterans Affairs Loan

The Omnibus Budget Reconciliation Act of 1990, Public Law 101-508 provided for a temporary increase in the funding fee for VA-guaranteed home loans.  For the period beginning November 1, 1990 and ending October 1, 1991, the funding fee amounts are 1.875 percent for loans with no downpayment or a downpayment of less than 5 percent; 1.375 percent for loans with a downpayment of at least 5 percent but less than 10 percent; and 1.125 percent for loans with a downpayment of at least 10 percent.

Public Law 101-508 also authorized a new optional procedure for manufactured home loan claims.  Under the new procedures, holders may file their claims immediately upon receipt of VA's resale price or liquidation appraisal.  They would then bear the risk of any future loss in value of the property due to depreciation or other factors.  Under prior law, VA could not pay the claim until after the loan security was liquidated.

Public Law 102-23 extended benefits to veterans of the Persian Gulf War and established August 2, 1990 as the beginning date for purposes of determining VA benefits eligibility.  The ending date of the war period will be established by Presidential proclamation or by Congress.  VA home loan eligibility based on Persian Gulf War service requires at least 90 days of service, any part of which was during the Persian Gulf War.  The veteran must also satisfy the minimum service requirements of 38 U.S.C. 3103A, i.e., 2 years active duty or the full period for which ordered to active duty, unless discharged early by reason of hardship or service connected disability or pursuant to 10 USC 1171.  There should be no instances of an activated reservist who completes at least 90 days of active duty being ineligible for home loan benefits for failure to complete the full period for which called to active duty.  The activation orders for the Persian Gulf War were written in such a way that the deactivation of an individual prior to completion of the maximum period specified in his/her orders would not be seen as failure to complete the full period for which called to active duty.

Public Law 102-54, approved June 13, 1991, extended the maximum guaranty of $46,000 to VA rate reduction loans.  It extended the no-bid formula and the lender appraisal processing program (LAPP) to December 31, 1992.  It added a new section 1835  (since renumbered 3735) to title 38, U.S. Code to provide housing assistance to homeless veterans, similar to the provisions originally set forth in Public Law 100-198.  The new homeless authority was extended through September 30, 1993.  Public Law 102-54 required VA to sell all loans with recourse, unless the loans are sold at par or better.  It also established a one year time limit to request waiver of a home loan debt.  The time runs from the date VA notifies the veteran of the debt and VA must advise the veteran on how to apply for a waiver.

Public Law 102-291, approved May 20, 1992, authorized VA to guarantee the timely payment of principal and interest on REMIC pass-through certificates backed by vendee loans issued or approved before December 31, 1992.  Prior to the enactment of Public Law 102-291, VA guaranteed the vendee loans themselves and not the certificates.  The lack of a guaranty promise running directly from VA to the investor meant that VA did not get the best price when it securitized its loans.

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