§3708 — Title 38 Veterans' Benefits | U.S. Code

Summary

Allows the Secretary to run a pilot program that helps eligible veterans buy homes where military housing is short. The Secretary can make periodic or one-time payments to lower the interest rate on certain VA‑guaranteed home loans. Eligible veteran — a veteran who applies for a VA‑guaranteed loan within one year of being assigned to a base that the Secretary of Defense calls a housing shortage area; who at loan time is enlisted, a warrant officer, or an officer at pay grade O–3 or below; who has not used their VA home‑loan entitlement before; and who gets required prepurchase counseling. Loans in the program can have an interest buy‑down for up to three years. Loans must show the likely maximum payment increases. The Secretary will set underwriting rules based on the loan’s second‑year interest rate. Counseling must include a five‑year sample payment schedule and can be offered on the bases. Up to $3,000,000 may be appropriated each year for the program. The Secretary may not guarantee any loan after September 30, 1998, that would require these buy‑down payments.

Title 38, §3708

Veterans' Benefits — Source: USLM XML via OLRC

(a)In order to enable the purchase of housing in areas where the supply of suitable military housing is inadequate, the Secretary may conduct a pilot program under which the Secretary may make periodic or lump sum assistance payments on behalf of an eligible veteran for the purpose of buying down the interest rate on a loan to that veteran that is guaranteed under this chapter for a purpose described in paragraph (1), (6), or (10) of section 3710(a) of this title.

(b)An individual is an eligible veteran for the purposes of this section if—

(1)the individual is a veteran, as defined in section 3701(b)(4) of this title;

(2)the individual submits an application for a loan guaranteed under this chapter within one year of an assignment of the individual to duty at a military installation in the United States designated by the Secretary of Defense as a housing shortage area;

(3)at the time the loan referred to in subsection (a) is made, the individual is an enlisted member, warrant officer, or an officer (other than a warrant officer) at a pay grade of O–3 or below;

(4)the individual has not previously used any of the individual’s entitlement to housing loan benefits under this chapter; and

(5)the individual receives comprehensive prepurchase counseling from the Secretary (or the designee of the Secretary) before making application for a loan guaranteed under this chapter.

(c)Loans with respect to which the Secretary may exercise the buy down authority under subsection (a) shall—

(1)provide for a buy down period of not more than three years in duration;

(2)specify the maximum and likely amounts of increases in mortgage payments that the loans would require; and

(3)be subject to such other terms and conditions as the Secretary may prescribe by regulation.

(d)The Secretary shall promulgate underwriting standards for loans for which the interest rate assistance payments may be made under subsection (a). Such standards shall be based on the interest rate for the second year of the loan.

(e)The Secretary or lender shall provide comprehensive prepurchase counseling to eligible veterans explaining the features of interest rate buy downs under subsection (a), including a hypothetical payment schedule that displays the increases in monthly payments to the mortgagor over the first five years of the mortgage term. For the purposes of this subsection, the Secretary may assign personnel to military installations referred to in subsection (b)(2).

(f)There is authorized to be appropriated $3,000,000 annually to carry out this section.

(g)The Secretary may not guarantee a loan under this chapter after September 30, 1998, on which the Secretary is obligated to make payments under this section.

Notes & Related Subsidiaries

Statutory Notes and Related Subsidiaries

Authority of Secretary of Defense Pub. L. 104–106, div. B, title XXVIII, § 2822(c), Feb. 10, 1996, 110 Stat. 557, directed the Secretary of Defense to reimburse the Secretary of Veterans Affairs for interest rate buy down costs paid to mortgagees under this section and authorized the Secretary of Defense to designate housing shortage areas with respect to housing loans guaranteed on or before Sept. 30, 1998.

§3708 Authority to buy down interest rates: pilot program

Summary

Title 38, §3708

Notes & Related Subsidiaries

Statutory Notes and Related Subsidiaries

Citations & Metadata