PRIA, Government Policy, Made Personal

Summary

The Secretary can run a pilot program to help veterans buy homes when base housing is scarce by making periodic or one-time payments to lower the interest rate on certain VA‑guaranteed loans for the purposes listed in section 3710(a)(1), (6), or (10). Loans in the program can have a buy‑down period of up to three years, must say how much mortgage payments might rise, follow underwriting rules based on the loan’s second‑year interest rate, and meet other rules the Secretary sets. A veteran is eligible only if they meet five rules: they are a veteran; they apply within one year of being assigned to a U.S. military installation the Secretary of Defense calls a housing shortage area; they are enlisted, a warrant officer, or an officer at pay grade O–3 or below when the loan is made; they have not used their housing loan entitlement before; and they get required prepurchase counseling that includes a five‑year hypothetical payment schedule. Congress authorized $3,000,000 a year for the program. The Secretary cannot guarantee a loan after September 30, 1998, that requires these 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