VA Loan Adjustments

Public Law 104-106, approved February 10, 1996, authorized VA and the Department of Defense (DOD) to conduct a pilot program to assist military personnel obtain VA home loans.

Under the pilot program, certain military personnel stationed at bases where the supply of suitable housing is inadequate could qualify for VA home loans with a special interest rate buy-down provision.  The funds for the buy-down are to be provided by DOD, and DOD would be responsible for designating specific housing shortage areas where these special loans would be available.  VA's responsibility under the pilot program is to develop underwriting standards for the loans and to work with mortgage lenders to implement the program. 

Public Law 104-110, approved February 13, 1996, extended and made permanent VA's authority for loans with negotiated interest rates, energy efficient mortgages, and the lender appraisal processing program.  VA's authority to enter into agreements for housing assistance for homeless veterans and for certificate guaranty on loan sales were also extended, for 2 years and 1 year, respectively.  VA's authority for adjustable rate mortgages, which expired on September 30, 1995, was not extended.

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