[Federal Register Volume 78, Number 154 (Friday, August 9, 2013)]
[Notices]
[Page 48789]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-19315]


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DEPARTMENT OF VETERANS AFFAIRS


Loan Guaranty: Percentage to Determine Net Value

AGENCY: Department of Veterans Affairs (VA).

ACTION: Notice.

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SUMMARY: This notice provides information to lenders and mortgage 
holders in the Department of Veterans Affairs (VA) loan guaranty 
program concerning the percentage to be used in calculating the 
purchase price of a property that secured a terminated loan. The new 
percentage is 14.95 percent.

DATES: The new percentage is effective October 8, 2013.

FOR FURTHER INFORMATION CONTACT: Mr. Andrew Trevayne, Assistant 
Director for Loan and Property Management (261), Loan Guaranty Service, 
Department of Veterans Affairs, Washington, DC 20420, (202) 632-8795. 
(This is not a toll-free number.)

SUPPLEMENTARY INFORMATION: The VA home loan program authorized by Title 
38, United States Code (U.S.C.), Chapter 37, offers a partial guaranty 
against loss to lenders who make home loans to veterans. VA regulations 
concerning the payment of loan guaranty claims are set forth at 38 CFR 
36.4300, et seq. Conveyance of properties to VA is addressed in 38 CFR 
36.4323, which refers to the formulas in 38 U.S.C. 3732(c) for 
determining whether a loan holder has the option to convey a property 
to VA following termination. 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 costs the Secretary estimates would be 
incurred by VA resulting from the acquisition and disposition of the 
property for property operating expenses, selling expenses, and 
administrative cost. Each year, for all properties VA acquired under 38 
CFR 36.3423, VA reviews the average operating expenses incurred for 
managing those properties which were sold during the preceding year, as 
well as the average administrative cost to VA associated with the 
property management activity. VA also includes in the calculation an 
amount equal to the gain or loss experienced by VA on the resale of 
acquired properties sold during the previous fiscal year. VA annually 
analyzes its property management results and, when appropriate, 
publishes a new net value percentage in the Federal Register. For the 
past 12 years, the percentage has been 11.87 percent; during that 
period, VA elected not to change the figure for a multitude of 
extenuating circumstances. Initially, VA experienced data difficulties 
arising from implementation of a new computer system, followed by: a 
transition to the private sector of the property management function; 
issues arising from that privatization; and the beginning of a serious 
and prolonged recession which greatly impacted the housing market and 
led VA to avoid significant changes which could adversely affect the 
ability of veterans to obtain housing loans. At this time, VA believes 
that the market is showing signs of stability that can sustain a change 
in the net value to less than the historical high of 15.11 percent, 
without being a detriment to veterans. Therefore, in order to more 
accurately reflect the costs of acquiring, managing, and reselling 
properties in the home loan program, based on the recent fiscal year's 
data, VA is revising the net value percentage to 14.95 percent. 
Accordingly, the loan holder (or its authorized servicing agent) will 
use 14.95 percent to calculate the subtraction from the fair market 
value to arrive at the ``net value'' of the property under the 
provisions of 38 CFR 36.4322(c). This revised percentage will be used 
in ``net value'' calculations made by holders and servicers on and 
after October 8, 2013.

    Approved: July 31, 2013.
Jose D. Riojas,
Interim Chief of Staff, Department of Veterans Affairs.
[FR Doc. 2013-19315 Filed 8-8-13; 8:45 am]
BILLING CODE 8320-01-P