[Federal Register Volume 63, Number 28 (Wednesday, February 11, 1998)]
[Notices]
[Page 7051]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-3404]


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DEPARTMENT OF VETERANS AFFAIRS


Loan Guaranty: Percentage To Determine Net Value

AGENCY: Veterans Benefits Administration, 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 13.97 
percent.

EFFECTIVE DATE: The new percentage is effective February 11, 1998.

FOR FURTHER INFORMATION CONTACT: Mr. Leonard A. Levy, Assistant 
Director for Loan and Property Management (261), Loan Guaranty Service, 
Veterans Benefits Administration, Department of Veterans Affairs, 
Washington, DC 20420, (202) 273-7344.

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 net 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 1997, the percentage was 13.54 
percent. For Fiscal Year 1998, the revised percentage will be 13.97 
percent, based upon the operating expenses incurred, exclusive of 
estimated property improvement expenses, which are accounted for 
separately in each case, for Fiscal Years 1994, 1995, and 1996, and 
property resale experience for Fiscal Year 1997. Accordingly, VA will 
subtract 13.97 percent from 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 [date of publication], the date the new percentage 
was provided to VA field stations for use in these calculations.

    Approved: February 3, 1998.
Togo D. West, Jr.,
Acting Secretary of Veterans Affairs.
[FR Doc. 98-3404 Filed 2-10-98; 8:45 am]
BILLING CODE 8320-01-P