[Congressional Record Volume 149, Number 65 (Monday, May 5, 2003)]
[Extensions of Remarks]
[Page E864]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




   INTRODUCTORY STATEMENT FOR H.R. 1949, VENDEE LOAN RESTORATION ACT

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                       HON. CHRISTOPHER H. SMITH

                             of new jersey

                    in the house of representatives

                          Monday, May 5, 2003

  Mr. SMITH of New Jersey. Mr. Speaker, today I am introducing H.R. 
1949, the Vendee Loan Restoration Act. This legislation, which is 
cosponsored by my friend Lane Evans of Illinois, the Ranking Member of 
the Committee on Veterans' Affairs, will re-establish the Department of 
Veterans Affairs' highly effective loan program, which VA terminated 
administratively on January 23, 2003.
  When a purchaser agrees to buy a foreclosed VA home, VA may offer to 
finance it through a ``vendee'' loan to encourage the prompt sale of 
the property. Vendee loans are made at market interest rates and often 
require a down payment. Borrowers are assessed a 2.25 percent funding 
fee that is paid in cash.
  I view vendee loans as an important tool to obtain a higher return on 
property sales, which reduces the overall cost of program operations. 
In the past, VA made, and subsequently sold, $800 million to $1.2 
billion in such loans each fiscal year. There is an ample body of 
empirical data indicating that offering vendee financing is cost 
effective. In March 2002, Booz, Allen, and Hamilton, Inc., 
independently analyzed the cost effectiveness of vendee loan financing. 
Their report indicated a savings to the Government of $16 million in 
fiscal year 1999 due to vendee financing. We believe the vendee loan 
program is based on sound business principals and should be re-
established.
  I urge all of my colleagues to support this legislation.

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