Summary: S.3108 — 102nd Congress (1991-1992)All Information (Except Text)

Bill summaries are authored by CRS.

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Reported to Senate with amendment(s) (09/16/1992)

Veterans Home Loan Program Revitalization Act of 1992 - Directs the Secretary of Veterans Affairs to carry out a pilot program during FY 1993 through 1997 to demonstrate the feasibility of guaranteeing mortgages that provide for periodic adjustments by the mortgagee in the effective rate of interest charged. Permits a mortgage to be guaranteed under such program only if it meets specified requirements.

Provides that interest rate adjustments on a mortgage guaranteed under such program shall: (1) correspond to a specified national interest rate index approved in regulations 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; and (3) be limited, with respect to any single annual interest rate adjustment, to a maximum increase or decrease of one percentage point, and over the term of the mortgage, to a maximum increase of five percentage points above the initial contract interest rate.

Directs the Secretary to promulgate underwriting standards for such loans, taking into account: (1) the status of the interest rate index 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; and (3) the underwriting standards applicable to adjustable rate mortgages insured under the National Housing Act.

Requires the Secretary to issue regulations requiring 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.

Limits the aggregate number of mortgages and loans guaranteed under such program.

Sets forth reporting requirements.

Directs the Secretary to carry out a pilot program during FY 1993 and 1994 to demonstrate the feasibility of guaranteeing mortgages for the acquisition of an existing dwelling and the cost of making energy efficiency improvements. Permits a mortgage to be guaranteed under such program only if it meets specified requirements.

Provides that the cost of energy efficiency measures that may be financed by such loans may not: (1) exceed the greater of $4,000 or an amount that is equal to five percent of the value of the dwelling before installation of the energy efficiency improvements (not to exceed $8,000); or (2) increase the monthly payment for principal and interest by an amount greater than the likely reduction in monthly utility costs resulting from the energy efficiency improvements.

Directs the Secretary to guarantee a loan under such program in the same proportion as the guarantee that would be provided for the dwelling without the energy efficiency improvements.

Sets forth provisions regarding: (1) program limitations; (2) outreach; (3) program termination; (4) reporting requirements; and (5) the effect of the program on guarantee authority under other law.

Revises provisions with respect to negotiated interest rates. Requires the Secretary, during FY 1993 and 1994, to establish either: (1) a uniform maximum interest rate and a general prohibition on a borrower paying discount points (as required under specified Federal provisions); or (2) procedures for allowing interest on Department of Veterans Affairs (VA) -guaranteed loans at rates negotiated between borrowers and lenders.

Authorizes the Secretary to change between uniform maximum rates and negotiated rates at any time.

Provides that, if the Secretary allows negotiated interest rates, the Secretary shall allow a borrower to pay reasonable discount points on the loan, as negotiated betweeh the borrower, the seller, and the lender, but shall prohibit the discount points from being financed as part of the VA-guaranteed loan.

Requires the Secretary to: (1) notify the House and Senate Committees on Veterans Affairs (veterans' committees) within ten days after exercising the authority to provide for negotiated rates and discount points or returning to a uniform maximum rate and to provide an explanation of the reasons for the change; and (2) report to such committees on whether the Secretary has implemented negotiated interest rates and discount points under the authority of this Act and, if so, the effects of this policy on borrowers' ability to obtain VA-guaranteed loans and on the interest rates at which borrowers were able to obtain the loans.

Extends from December 31, 1992, to December 31, 1995, the expiration date of provisions authorizing VA to provide a full-faith-and-credit Government guaranty on VA securities backed by VA vendee loans.

Extends the eligibility for such VA-guaranteed housing loans, between October 1, 1992, and December 31, 1998, to members of the Selected Reserve who have served for at least six years in the Selected Reserve and who continue to so serve, who were honorably discharged, or who were placed on a retired or standby reserve list. Provides the housing loan fees required to be paid by such eligible Selected Reserve personnel in an amount which is 0.75 percent higher than that required of veterans for such loans. Requires the Secretary to report to the veterans' committees on loans provided to such former and present Selected Reserve members.