Text: H.R.939 — 102nd Congress (1991-1992)All Information (Except Text)

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--H.R.939--
H.R.939
One Hundred Second Congress of the United States of America
AT THE SECOND SESSION
Begun and held at the City of Washington on Friday, the third day of January,
one thousand nine hundred and ninety-two
An Act
To amend title 38, United States Code, with respect to housing loans for
veterans.
  Be it enacted by the Senate and House of Representatives of the United
  States of America in Congress assembled,
SECTION 1. SHORT TITLE.
  This Act may be cited as the `Veterans Home Loan Program Amendments of 1992'.
SEC. 2. ELIGIBILITY OF SELECTED RESERVE.
  (a) SELECTED RESERVE- Chapter 37 of title 38, United States Code,
  is amended--
  (1) in section 3701(b), by adding at the end the following:
  `(5)(A) The term `veteran' also includes an individual who is not otherwise
  eligible for the benefits of this chapter and who has completed a total
  service of at least 6 years in the Selected Reserve and, following the
  completion of such service, was discharged from service with an honorable
  discharge, was placed on the retired list, was transferred to the Standby
  Reserve or an element of the Ready Reserve other than the Selected Reserve
  after service in the Selected Reserve characterized by the Secretary
  concerned as honorable service, or continues serving in the Selected Reserve.
  `(B) The term `Selected Reserve' means the Selected Reserve of the Ready
  Reserve of any of the reserve components (including the Army National Guard
  of the United States and the Air National Guard of the United States)
  of the Armed Forces, as required to be maintained under section 268(b)
  of title 10.'; and
  (2) in section 3702(a)(2), by adding at the end the following:
  `(E) For the 7-year period beginning on the date of enactment of this
  subparagraph, each veteran described in section 3701(b)(5) of this title.'.
  (b) FEES- (1) Section 3729(a)(2) of such title is amended--
  (A) by striking out `and' at the end of subparagraph (B);
  (B) by striking out the period at the end of subparagraph (C) and inserting
  in lieu thereof a semicolon; and
  (C) by adding after subparagraph (C) the following new subparagraph:
  `(D) in the case of a loan made to, or guaranteed or insured on behalf of,
  a veteran described in section 3701(b)(5) of this title under this chapter,
  the amount of such fee shall be--
  `(i) two percent of the total loan amount;
  `(ii) in the case of a loan for any purpose specified in section 3712 of
  this title, one percent of such amount; or
  `(iii) in the case of a loan for a purchase (other than a purchase referred
  to in section 3712 of this title) or for construction with respect to
  which the veteran has made a downpayment of 5 percent or more of the total
  purchase price or construction cost--
  `(I) 1.50 percent of the total loan amount if such downpayment is less
  than 10 percent of such price or cost; or
  `(II) 1.25 percent of the total loan amount if such downpayment is 10
  percent or more of such price or cost; and'.
  (2) Subparagraphs (A) and (B) of section 3725(c)(2) of such title are
  amended by inserting `(other than loans described in section 3729(a)(2)(D)
  of this title)' after `for each loan'.
  (c) REPORT- The Secretary of Veterans Affairs shall transmit a report to the
  Committees on Veterans' Affairs of the Senate and House of Representatives
  no later than December 31, 1994, and annually thereafter. The report
  shall contain--
  (1) a declaration of the number of veterans (as defined by section 3701(b)(5)
  of title 38, United States Code) who receive mortgage loans guaranteed by
  the Secretary as a result of the amendments made by subsection (a);
  (2) a comparison of the default rate of veterans described in paragraph
  (1) with the default rate for all other veterans who have received loans
  guaranteed or insured by the Secretary; and
  (3) a comparison of the proportion of veterans who receive mortgage loans
  guaranteed by the Secretary as a result of the amendments made by subsection
  (a) who are first time homebuyers with the proportion of all other veterans
  who receive mortgage loans guaranteed or insured by the Secretary and who
  are first time homebuyers.
SEC. 3. ADJUSTABLE RATE MORTGAGE DEMONSTRATION PROGRAM.
  (a) IN GENERAL- (1) Chapter 37 of title 38, United States Code, is amended
  by adding after section 3706 the following new section:
`Sec. 3707. Adjustable rate mortgages
  `(a) The Secretary shall carry out a demonstration project under this section
  during fiscal years 1993, 1994, and 1995 for the purpose of guaranteeing
  loans in a manner similar to the manner in which the Secretary of Housing
  and Urban Development insures adjustable rate mortgages under section 251
  of the National Housing Act.
  `(b) Interest rate adjustment provisions of a mortgage guaranteed under
  this section shall--
  `(1) correspond to a specified national interest rate index approved by
  the Secretary, information on which is readily accessible to mortgagors
  from generally available published sources;
  `(2) be made by adjusting the monthly payment on an annual basis on the
  anniversary of the date on which the loan was closed;
  `(3) be limited, with respect to any single annual interest rate adjustment,
  to a maximum increase or decrease of 1 percentage point; and
  `(4) be limited, over the term of the mortgage, to a maximum increase of
  5 percentage points above the initial contract interest rate.
  `(c) The Secretary shall promulgate underwriting standards for loans
  guaranteed under this section, taking into account--
  `(1) the status of the interest rate index referred to in subsection (b)(1)
  and available at the time an underwriting decision is made, regardless of
  the actual initial rate offered by the lender;
  `(2) the maximum and likely amounts of increases in mortgage payments that
  the loans would require;
  `(3) the underwriting standards applicable to adjustable rate mortgages
  insured under title II of the National Housing Act; and
  `(4) such other factors as the Secretary finds appropriate.
  `(d) The Secretary shall require that the mortgagee make available to the
  mortgagor, at the time of loan application, a written explanation of the
  features of the adjustable rate mortgage, including a hypothetical payment
  schedule that displays the maximum potential increases in monthly payments
  to the mortgagor over the first five years of the mortgage term.'.
  (2) The table of sections for chapter 37, of title 38, United States
  Code, is amended by inserting after the item relating to section 3706 the
  following new item:
`3707. Adjustable rate mortgages.'.
  (b) REPORT- The Secretary shall transmit a report to the Committees on
  Veterans' Affairs of the Senate and House of Representatives no later than
  December 31, 1993, containing a description of the project carried out under
  section 3707 of title 38, United States Code (as added by subsection (a)),
  and shall continue to make annual reports to the Committees with respect
  to the default rate and other information concerning the loans guaranteed
  under such section. Such reports shall--
  (1) compare the number of adjustable rate mortgages guaranteed under such
  section with the number of fixed rate loans guaranteed or insured under
  chapter 37 of such title and contrast this ratio with a corresponding
  ratio for loans for single family housing insured by the Secretary of
  Housing and Urban Development pursuant to the National Housing Act;
  (2) compare the initial interest rate of the adjustable rate mortgages
  guaranteed under such section with the fixed interest rate on loans
  guaranteed or insured under chapter 37 of such title;
  (3) describe the monthly mortgage payment savings to the veteran, if any,
  under an adjustable rate mortgage guaranteed under such section compared
  with the payments that would have been required if the loan bore interest
  at a maximum fixed rate established by the Secretary;
  (4) discuss whether the market share for housing loans guaranteed under
  chapter 37 of such title has increased or decreased since the implementation
  of such section;
  (5) compare the default rate on mortgages guaranteed under such section
  with the default rate of fixed-rate mortgages guaranteed or insured under
  chapter 37 of such title; and
  (6) compare the number of first time homebuyers using adjustable rate
  mortgage loans under such section with the number of first time homebuyers
  using any other loan guaranteed under chapter 37 of such title.
SEC. 4. ENHANCED LOAN ASSET SALE AUTHORITY.
  Section 3720(h)(2) of title 38, United States Code, is amended by striking
  out `December 31, 1992' and inserting in lieu thereof `December 31, 1995'.
SEC. 5. FEES FOR REFINANCING LOANS.
  Section 3729(a)(2) of title 38, United States Code (as amended by section
  2(b) of this Act), is amended--
  (1) in subparagraph (A), by inserting `(other than section 3712(a)(1)(F))'
  after `section 3712'; and
  (2) by inserting after subparagraph (D) the following new subparagraph:
  `(E) in the case of a loan guaranteed under section 3710(a)(8),
  3710(a)(9)(B)(i), or 3712(a)(1)(F) of this title, the amount of such fee
  shall be 0.5 percent of the total loan amount.'.
SEC. 6. GUARANTY AMOUNT RELATIVE TO LOAN REFINANCINGS.
  Chapter 37 of title 38, United States Code, is amended--
  (1) in section 3710(e), by amending paragraph (1)(D) to read as follows:
  `(D) notwithstanding section 3703(a)(1) of this title, the amount of the
  guaranty of the loan may not exceed the greater of (i) the original guaranty
  amount of the loan being refinanced, or (ii) 25 percent of the loan;'; and
  (2) in section 3712(a)(4), by amending subparagraph (A)(iv) to read
  as follows:
  `(iv) notwithstanding section 3703(a)(1) of this title, the amount of the
  guaranty of the loan may not exceed  the greater of (I) the original guaranty
  amount of the loan being refinanced, or (II) 25 percent of the loan;'.
SEC. 7. EXTENSION OF LENDER APPRAISAL PROGRAM.
  Section 3731(f)(3) of title 38, United States Code, is amended by striking
  out `1992' and inserting in lieu thereof `1995'.
SEC. 8. NATIVE AMERICAN VETERANS DIRECT HOUSING LOAN PILOT PROGRAM.
  (a) PROGRAM- Chapter 37 of title 38, United States Code, is amended by
  adding at the end the following new subchapter:
`SUBCHAPTER V--NATIVE AMERICAN VETERAN HOUSING LOAN PILOT PROGRAM
`Sec. 3761. Pilot program
  `(a) The Secretary shall establish and implement a pilot program under which
  the Secretary may make direct housing loans to Native American veterans. The
  purpose of such loans is to permit such veterans to purchase, construct, or
  improve dwellings on trust land. The Secretary shall establish and implement
  the pilot program in accordance with the provisions of this subchapter.
  `(b) In carrying out the pilot program under this subchapter, the Secretary
  shall, to the extent practicable, make direct housing loans to Native
  American veterans who are located in a variety of geographic areas and in
  areas experiencing a variety of economic circumstances.
  `(c) No loans may be made under this subchapter after September 30, 1997.
`Sec. 3762. Direct housing loans to Native American veterans
  `(a) The Secretary may make a direct housing loan to a Native American
  veteran if--
  `(1) the Secretary has entered into a memorandum of understanding with
  respect to such loans with the tribal organization that has jurisdiction
  over the veteran; and
  `(2) the memorandum is in effect when the loan is made.
  `(b)(1) Subject to paragraph (2), the Secretary shall ensure that each
  memorandum of understanding that the Secretary enters into with a tribal
  organization shall provide for the following:
  `(A) That each Native American veteran who is under the jurisdiction of
  the tribal organization and to whom the Secretary makes a direct loan
  under this subchapter--
  `(i) holds, possesses, or purchases using the proceeds of the loan a
  meaningful interest in a lot or dwelling (or both) that is located on
  trust land; and
  `(ii) will purchase, construct, or improve (as the case may be) a dwelling
  on the lot using the proceeds of the loan.
  `(B) That each such Native American veteran will convey to the Secretary
  by an appropriate instrument the interest referred to in subparagraph (A)
  as security for a direct housing loan under this subchapter.
  `(C) That the tribal organization and each such Native American veteran
  will permit the Secretary to enter upon the trust land of that organization
  or veteran for the purposes of carrying out such actions as the Secretary
  determines are necessary--
  `(i) to evaluate the advisability of the loan; and
  `(ii) to monitor any purchase, construction, or improvements carried out
  using the proceeds of the loan.
  `(D) That the tribal organization has established standards and procedures
  that apply to the foreclosure of the interest conveyed by a Native American
  veteran pursuant to subparagraph (B), including--
  `(i) procedures for foreclosing the interest; and
  `(ii) procedures for the resale of the lot or the dwelling (or both)
  purchased, constructed, or improved using the proceeds of the loan.
  `(E) That the tribal organization agrees to such other terms and conditions
  with respect to the making of direct loans to Native American veterans
  under the jurisdiction of the tribal organization as the Secretary may
  require in order to ensure that the pilot program established under this
  subchapter is implemented in a responsible and prudent manner.
  `(2) The Secretary may not enter into a memorandum of understanding with a
  tribal organization under this subsection unless the Secretary determines
  that the memorandum provides for such standards and procedures as are
  necessary for the reasonable protection of the financial interests of the
  United States.
  `(c)(1)(A) Except as provided in subparagraph (B), the principal amount
  of any direct housing loan made to a Native American under this section
  may not exceed $80,000.
  `(B) The Secretary may make loans exceeding the amount specified in
  subparagraph (A) in a geographic area if the Secretary determines that
  housing costs in the area are significantly higher than average housing
  costs nationwide. The amount of such increase shall be the amount that the
  Secretary determines is necessary in order to carry out the pilot program
  under this subchapter in a manner that demonstrates the advisability of
  making direct housing loans to Native American veterans who are located
  in a variety of geographic areas and in geographic areas experiencing a
  variety of economic conditions.
  `(2) Loans made under this section shall bear interest at a rate determined
  by the Secretary, which rate may not exceed the appropriate rate authorized
  for guaranteed loans under section 3703(c)(1) or section 3712(f) of this
  title, and shall be subject to such requirements or limitations prescribed
  for loans guaranteed under this title as the Secretary may prescribe.
  `(3) Notwithstanding section 3704(a) of this title, the Secretary shall
  establish minimum requirements for planning, construction, improvement, and
  general acceptability relating to any direct loan made under this section.
  `(d)(1) The Secretary shall establish credit underwriting standards to be
  used in evaluating loans made under this subchapter. In establishing such
  standards, the Secretary shall take into account the purpose of this program
  to make available housing to Native American veterans living on trust lands.
  `(2) The Secretary shall determine the reasonable value of the interest in
  property that will serve as security for a loan made under this section and
  shall establish procedures for appraisals upon which the Secretary may base
  such determinations. The procedures shall incorporate generally the relevant
  requirements of section 3731 of this title, unless the Secretary determines
  that such requirements are impracticable to implement in a geographic area,
  on particular trust lands, or under circumstances specified by the Secretary.
  `(e) Loans made under this section shall be repaid in monthly installments.
  `(f) In connection with any loan under this section, the Secretary may make
  advances in cash to provide for repairs, alterations, and improvements
  and to meet incidental expenses of the loan transaction. The Secretary
  shall determine the amount of any expenses incident to the origination
  of loans made under this section, which expenses, or a reasonable flat
  allowance in lieu thereof, shall be paid by the veteran in addition to
  the loan closing costs.
  `(g) Without regard to any provision of this chapter (other than a provision
  of this section), the Secretary may--
  `(1) take any action that the Secretary determines to be necessary with
  respect to the custody, management, protection, and realization or sale
  of investments under this section;
  `(2) determine any necessary expenses and expenditures and the manner in
  which such expenses and expenditures shall be incurred, allowed, and paid;
  `(3) make such rules, regulations, and orders as the Secretary considers
  necessary for carrying out the Secretary's functions under this section; and
  `(4) in a manner consistent with the provisions of this chapter and
  with the Secretary's functions under this subchapter, employ, utilize,
  and compensate any persons, organizations, or departments or agencies
  (including departments and agencies of the United States) designated by
  the Secretary to carry out such functions.
  `(h) The Secretary shall carry out an outreach program to inform and
  educate tribal organizations and Native American veterans of the pilot
  program provided for under this subchapter and the availability of direct
  housing loans for Native American veterans who live on trust lands.
`Sec. 3763. Housing loan program account
  `(a) There is hereby established in the Treasury of the United States an
  account known as the `Native American Veteran Housing Loan Program Account'
  (hereafter in this subchapter referred to as the `Account').
  `(b) The Account shall be available to the Secretary to carry out all
  operations relating to the making of direct housing loans to Native
  American veterans under this subchapter, including any administrative
  expenses relating to the making of such loans. Amounts in the Account
  shall be available without fiscal year limitation.
`Sec. 3764. Definitions
  `For the purposes of this subchapter--
  `(1) The term `trust land' means any land that--
  `(A) is held in trust by the United States for Native Americans;
  `(B) is subject to restrictions on alienation imposed by the United States
  on Indian lands (including native Hawaiian homelands);
  `(C) is owned by a Regional Corporation or a Village Corporation, as such
  terms are defined in section 3(g) and 3(j) of the Alaska Native Claims
  Settlement Act, respectively (43 U.S.C. 1602(g), (j)); or
  `(D) is on any island in the Pacific Ocean if such land is, by cultural
  tradition, communally-owned land, as determined by the Secretary.
  `(2) The term `Native American veteran' means any veteran who is a Native
  American.
  `(3) The term `Native American' means--
  `(A) an Indian, as defined in section 4(d) of the Indian Self-Determination
  and Education Assistance Act (25 U.S.C. 450b(d));
  `(B) a native Hawaiian, as that term is defined in section 201(a)(7)
  of the Hawaiian Homes Commission Act, 1920 (Public Law 67-34; 42 Stat. 108);
  `(C) an Alaska Native, within the meaning provided for the term `Native' in
  section 3(b) of the Alaska Native Claims Settlement Act (43 U.S.C. 1602(b));
  and
  `(D) a Pacific Islander, within the meaning of the Native American Programs
  Act of 1974 (42 U.S.C. 2991 et seq.).
  `(4) The term `tribal organization' shall have the meaning given such term
  in section 4(l) of the Indian Self-Determination and Education Assistance
  Act (25 U.S.C. 450b(l)) and shall include the Department of Hawaiian
  Homelands, in the case of native Hawaiians, and such other organizations
  as the Secretary may prescribe.'.
  (b) CONSULTATION- In carrying out the direct housing loan pilot program
  authorized under subchapter V of chapter 37 of title 38, United States
  Code (as added by subsection (a)), the Secretary of Veterans Affairs shall
  consider the views and recommendations, if any, of the Advisory Committee on
  Native-American Veterans established under section 19032 of the Veterans'
  Health-Care Amendments of 1986 (title XIX of Public Law 99-272; 100
  Stat. 388).
  (c) CONFORMING AMENDMENT- The table of sections of such chapter is amended
  by adding at the end the following new matter:
`SUBCHAPTER V--NATIVE AMERICAN VETERAN HOUSING LOAN PILOT PROGRAM
`3761. Pilot program.
`3762. Direct housing loans to Native American veterans.
`3763. Housing loan program account.
`3764. Definitions.'.
  (d) ANNUAL REPORTS- Not later than February 1 of each of 1994 through
  1998, the Secretary of Veterans Affairs shall transmit to the Committees
  on Veterans' Affairs of the Senate and House of Representatives a report
  relating to--
  (1) the implementation of the Native American veterans direct housing loan
  pilot program established under subchapter V of chapter 37 of title 38,
  United States Code (as added by subsection (a)), during the period ending
  on September 30 of the year preceding the date of the report;
  (2) the Secretary's exercise of the authority provided under section
  3762(c)(1)(B) of such title (as so added) to make loans exceeding the
  maximum loan amount;
  (3) the appraisals performed for the Secretary during that period under
  the authority of section 3732(d)(2) of such title (as so added), including
  a description of--
  (A) the manner in which such appraisals were performed;
  (B) the qualifications of the appraisers who performed such appraisals; and
  (C) the actions taken by the Secretary with respect to such appraisals to
  protect the interests of veterans and the United States; and
  (4) the Secretary's recommendations, if any, for legislation regarding
  the pilot program.
  (e) AUTHORIZATION OF APPROPRIATIONS- New direct loan obligations for Native
  American veteran housing loans under subchapter V of chapter 37 of title 38,
  United States Code (as added by subsection (a)), may be incurred only to
  the extent that appropriations of budget authority to cover the anticipated
  cost, as defined in section 502 of the Congressional Budget Act of 1974,
  for such loans are made in advance. There is authorized to be appropriated
  for such purpose $5,000,000 for fiscal year 1993, which amount shall remain
  available without fiscal year limitation.
  (f) CONFORMING FUNDING AMENDMENT- Title I of the Departments of Veterans
  Affairs and Housing and Urban Development, and Independent Agencies
  Appropriations Act, 1993 is amended by striking out `direct loans authorized
  by' and all that follows through `Veterans' Affairs)' under the heading
  `NATIVE AMERICAN VETERAN HOUSING LOAN PROGRAM ACCOUNT' and inserting in
  lieu thereof `direct loans authorized by subchapter V of chapter 37 of
  title 38, United States Code'.
SEC. 9. ENERGY EFFICIENT MORTGAGES.
  (a) IN GENERAL- Subsection (d) of section 3710 of title 38, United States
  Code, is amended to read as follows:
  `(d)(1) The Secretary shall carry out a program to demonstrate the
  feasibility of guaranteeing loans for the acquisition of an existing
  dwelling and the cost of making energy efficiency improvements to the
  dwelling or for energy efficiency improvements to a dwelling owned and
  occupied by a veteran. A loan may be guaranteed under this subsection only
  if it meets the requirements of this chapter, except as those requirements
  are modified by this subsection.
  `(2) The cost of energy efficiency measures that may be financed by a loan
  guaranteed under this section may not exceed the greater of--
  `(A) the cost of the energy efficiency improvements, up to $3,000; or
  `(B) $6,000, if the increase in the monthly payment for principal and
  interest does not exceed the likely reduction in monthly utility costs
  resulting from the energy efficiency improvements.
  `(3) Notwithstanding the provisions of section 3703(a)(1)(A) of this title,
  any loan guaranteed under this subsection shall be guaranteed in an amount
  equal to the sum of--
  `(A) the guaranty that would be provided under those provisions for the
  dwelling without the energy efficiency improvements; and
  `(B) an amount that bears the same relation to the cost of the energy
  efficiency improvements as the guaranty referred to in subparagraph (A)
  bears to the amount of the loan minus the cost of such improvements.
  `(4) The amount of the veteran's entitlement, calculated in accordance
  with section 3703(a)(1)(B) of this title, shall not be affected by the
  amount of the guaranty referred to in paragraph (3)(B).
  `(5) The Secretary shall take appropriate actions to notify eligible
  veterans, participating lenders, and interested realtors of the availability
  of loan guarantees under this subsection and the procedures and requirements
  that apply to the obtaining of such guarantees.
  `(6) For the purposes of this subsection:
  `(A) The term `energy efficiency improvement' includes a solar heating
  system, a solar heating and cooling system, or a combined solar heating and
  cooling system, and the application of a residential energy conservation
  measure.
  `(B) The term `solar heating' has the meaning given such term in section
  3(1) of the Solar Heating and Cooling Demonstration Act of 1974 (42
  U.S.C. 5502(1)) and, in addition, includes a passive system based on
  conductive, convective, or radiant energy transfer.
  `(C) The terms `solar heating and cooling' and `combined solar heating and
  cooling' have the meaning given such terms in section 3(2) of the Solar
  Heating and Cooling Demonstration Act of 1974 (42 U.S.C. 5502(2)) and,
  in addition, include a passive system based on conductive, convective,
  or radiant energy transfer.
  `(D) The term `passive system' includes window and skylight glazing,
  thermal floors, walls, and roofs, movable insulation panels (when in
  conjunction with glazing), portions of a residential structure that serve
  as solar furnaces so as to add heat to the structure, double-pane window
  insulation, and such other energy-related components as are determined by
  the Secretary to enhance the natural transfer of energy for the purpose
  of heating or heating and cooling a residence.
  `(E) The term `residential energy conservation measure' means--
  `(i) caulking and weatherstripping of all exterior doors and windows;
  `(ii) furnace efficiency modifications limited to--
  `(I) replacement burners, boilers, or furnaces designed to reduce the
  firing rate or to achieve a reduction in the amount of fuel consumed as
  a result of increased combustion efficiency,
  `(II) devices for modifying flue openings which will increase the efficiency
  of the heating system, and
  `(III) electrical or mechanical furnace ignition systems which replace
  standing gas pilot lights;
  `(iii) clock thermostats;
  `(iv) ceiling, attic, wall, and floor insulation;
  `(v) water heater insulation;
  `(vi) storm windows and doors;
  `(vii) heat pumps; and
  `(viii) such other energy conservation measures as the Secretary may
  identify for the purposes of this subparagraph.
  `(7) A loan may not be guaranteed under this subsection after December
  31, 1995.'.
  (b) PURCHASE OR CONSTRUCTION WITH ENERGY EFFICIENCY IMPROVEMENTS- (1)
  Section 3710(a)(7) of such title is amended to read as follows:
  `(7) To improve a dwelling or farm residence owned by the veteran and
  occupied by the veteran as the veteran's home through energy efficiency
  improvements, as provided in subsection (d).'.
  (2) Section 3710(a) of such title is further amended by adding after
  paragraph (9) the following:
  `(10) To purchase a dwelling to be owned and occupied by the veteran as
  a home and make energy efficiency improvements, as provided in subsection
  (d).'.
  (c) REPORTS- Not later than 1 year after the date on which the Secretary
  of Veterans Affairs first exercises the authority to guarantee loans under
  section 3710(d) of title 38, United States Code (as added by subsection (a)
  of this section), and for each of the 3 years thereafter, the Secretary
  shall transmit to the Committees on Veterans' Affairs of the Senate and
  House of Representatives a report on the program under such section. Each
  such report shall contain information pertaining to--
  (1) the number of mortgages guaranteed under such section;
  (2) the average amount of money added to the mortgage to finance energy
  efficiency features;
  (3) the types of energy efficiency features obtained with mortgages under
  such section; and
  (4) the default rates on the mortgages guaranteed under such section
  compared with the default rates on all other types of mortgages guaranteed
  by the Secretary.
SEC. 10. NEGOTIATED INTEREST RATES.
  (a) IN GENERAL- Section 3703(c) of title 38, United States Code, is amended--
  (1) in the first sentence of paragraph (1)--
  (A) by striking `the Secretary of Housing and Urban Development considers
  necessary to meet the mortgage market for' and inserting `applicable to'; and
  (B) by striking all that follows `(12 U.S.C. 1709(b))' and inserting a
  period; and
  (2) by adding at the end the following:
  `(4)(A) In guaranteeing or insuring loans under this chapter, the Secretary
  may elect whether to require that such loans bear interest at a rate
  that is--
  `(i) agreed upon by the veteran and the mortgagee; or
  `(ii) established under paragraph (1).
The Secretary may, from time to time, change the election under this
subparagraph.
  `(B) Any veteran, under a loan described in subparagraph (A)(i), may pay
  reasonable discount points in connection with the loan. Discount points
  may not be financed as part of the principal amount of a loan guaranteed
  or insured under this chapter.
  `(C) Not later than 10 days after an election under subparagraph (A),
  the Secretary shall transmit to the Committees on Veterans' Affairs of
  the Senate and House of Representatives a notification of the election,
  together with an explanation of the reasons therefor.
  `(D) This paragraph shall expire on December 31, 1995.'.
  (b) REPORT- Not later than December 31, 1993, and annually thereafter, the
  Secretary of Veterans Affairs shall transmit to the Committees on Veterans'
  Affairs of the Senate and House of Representatives a report on whether the
  Secretary has implemented the authority to guarantee and insure loans that
  bear negotiated interest rates and points under section 3703(c)(4) of title
  38, United States Code (as added by subsection (a)). If the Secretary has
  implemented that authority, the Secretary shall include in the report--
  (1) a comparison of the interest rates paid by veterans for loans that
  bear interest rates negotiated under section 3703(c)(4) of such title with
  interest rates allowable under mortgages for single family housing insured
  by the Secretary of Housing and Urban Development pursuant to the National
  Housing Act and interest rates charged under conventional mortgage loan
  programs for single family housing;
  (2) a comparison of the negotiated interest rates being charged under
  paragraph 4 of section 3703(c) of such title with the interest rate that
  the Secretary would have established under paragraph (1) of such section
  during the same time period;
  (3) a comparison of the number of discount points charged by the lender
  for mortgage loans that bear interest rates negotiated under section
  3703(c)(4) of such title with the number of discount points charged for
  mortgages for single family housing insured by the Secretary of Housing
  and Urban Development pursuant to the National Housing Act and the number
  of discount points charged under conventional mortgage loan programs for
  single family housing;
  (4) a discussion of the extent to which borrowers or sellers are paying the
  discount points on negotiated interest rate loans under section 3703(c)(4)
  of such title;
  (5) a discussion of whether the market share for housing loans guaranteed
  under such title has increased or decreased since the implementation of
  the authority to guarantee and insure loans that bear negotiated interest
  rates under section 3703(c)(4) of such title, and a discussion of the
  extent to which any change in market share was the result of that authority;
  (6) in claims paid following foreclosure, a discussion of the difference
  in the interest portion paid on loans guaranteed under section 3703(c)(4)
  of such title to what the interest portion would have been under the
  interest rate established under section 3703(c)(1) of such title; and
  (7) the number of first time homebuyers using loans that bear negotiated
  interest rates under section 3703(c)(4) of such title.
SEC. 11. ELIGIBILITY FOR FLAGS AND GRAVE MARKERS.
  (a) FLAGS- Section 2301(a) of title 38, United States Code, is amended to
  read as follows:
  `(a) The Secretary shall furnish a flag to drape the casket of each--
  `(1) deceased veteran who--
  `(A) was a veteran of any war, or of service after January 31, 1955;
  `(B) had served at least one enlistment; or
  `(C) had been discharged or released from the active military, naval,
  or air service for a disability incurred or aggravated in line of duty; and
  `(2) deceased individual who at the time of death was entitled to retired pay
  under chapter 67 of title 10 or would have been entitled to retired pay under
  that chapter but for the fact that the person was under 60 years of age.'.
  (b) HEADSTONES OR MARKERS- Section 2306(a) of title 38, United States Code,
  is amended by adding at the end thereof the following:
  `(5) Any individual who at the time of death was entitled to retired pay
  under chapter 67 of title 10 or would have been entitled to retired pay under
  that chapter but for the fact that the person was under 60 years of age.'.
SEC. 12. TECHNICAL AMENDMENT.
  Section 5 of Public Law 102-54 (105 Stat. 268) is amended by striking out
  `3102' and inserting in lieu thereof `5302'.
Speaker of the House of Representatives.
Vice President of the United States and
President of the Senate.