[Federal Register Volume 59, Number 89 (Tuesday, May 10, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-11146]


[[Page Unknown]]

[Federal Register: May 10, 1994]


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DEPARTMENT OF VETERANS AFFAIRS

 

Loan Guaranty: Percentage To Determine Net Value

AGENCY: Department of Veterans Affairs.

ACTION: Notice.

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SUMMARY: This notice provides information to participants in the 
Department of Veterans Affairs (VA) loan guaranty program concerning 
the percentage to be used in determining whether the Secretary will 
accept conveyance of a foreclosed property. The new percentage is 11.19 
percent.

EFFECTIVE DATE: The new percentage is effective December 10, 1993.

FOR FURTHER INFORMATION CONTACT:
Mr. Leonard A. Levy, Assistant Director for Loan Management (261), Loan 
Guaranty Service, Veterans Benefits Administration, Department of 
Veterans Affairs, 810 Vermont Avenue, NW, Washington, DC 20420. (202) 
233-3668.

SUPPLEMENTARY INFORMATION: VA regulations concerning the payment of 
loan guaranty claims are set forth at 38 CFR 36.4300, et seq. The 
formulas for determining whether VA will offer the lender an election 
to convey the property to VA are set forth at 38 CFR 36.4320. A key 
component of this is the ``net value'' of the property to the 
Government, as defined in 38 CFR 36.4301. Essentially, ``net value'' is 
the fair market value of the property, minus the total of the costs the 
Secretary estimates would be incurred by VA resulting from the 
acquisition and disposition of the property for property taxes, 
assessments, liens, property maintenance, administration and resale. 
Each year VA reviews the average operating expenses incurred for 
properties acquired under 38 CFR 36.4320 which were sold during the 
preceding three fiscal years and the average administrative cost to the 
government associated with the property management activity. 
Administrative cost is based on the average holding time for properties 
sold during the preceding fiscal year. Property improvement expenses 
are estimated on an individual case basis at the time the net value is 
estimated. VA also includes in the new value calculation an amount 
equal to the gain or loss experienced by VA on the resale of acquired 
properties during the prior fiscal year.
    VA annually updates the ``net value'' percentage and publishes a 
notice of the new percentage in the Federal Register. For Fiscal Year 
1993, the percentage was 14.16 percent. For Fiscal Year 1994, the 
percentage will be 11.19 percent, based upon the operating expenses 
incurred, exclusive of estimated property improvement expenses which 
are accounted for separately in each case, for Fiscal Years 1991, 1992, 
and 1993, and property resale experience for Fiscal Year 1993. 
Accordingly, VA will subtract 11.19 percent for the fair market value 
of the property to be foreclosed in order to arrive at the `'net 
value'' of the property to VA. This new percentage will be used in 
``net value'' calculations made by VA on and after December 10, 1993.

    Approved: April 28, 1994.
Jesse Brown,
Secretary of Veterans Affairs.
[FR Doc. 94-11146 Filed 5-9-94; 8:45 am]
BILLING CODE 8320-01-M