Historical Development

To be eligible to make use of the loan guaranty benefit, the veteran must have served in the active military or naval forces of the United States for a period of 90 days or more any time on or after September 16, 1940 and before official termination of World War II.  In this connection, a veteran could apply for a loan anytime within 2 years after separation from the service or 2 years after the official end of the war, whichever was the later date.  However, no applications were to be received more than 5 years after the termination of the war.

The original version of the loan guaranty program contained various shortcomings which became evident during the first year of operation.  First, real estate prices had risen so much that the $2,000 maximum guaranty was not large enough.  Second, the requirement that the price of the real estate must be "normal" caused difficulties because to many this indicated prewar prices.  Third, the limitation of two years after the war as the period during which loan guaranties could be obtained was feared to be too short because of the great potential number of veteran borrowers and the possible inflationary potential.  And, fourth, the 20-year maturity on loans required by the Act meant that monthly payments were so high that many veterans were precluded from obtaining loans.

These various shortcomings of the program were considered in hearings before committees of the House and Senate and amendments were enacted to Title III in 1945 by Public Law 79-268.

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