80 FR 73041 - Loan Guaranty: Net Value Percentage Update

DEPARTMENT OF VETERANS AFFAIRS

Federal Register Volume 80, Issue 225 (November 23, 2015)

Page Range		73041-73041
FR Document		2015-29787

This notice provides information to lenders and mortgage holders in the U.S. Department of Veterans Affairs (VA) home 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 15.95 percent.

Federal Register, Volume 80 Issue 225 (Monday, November 23, 2015)

[Federal Register Volume 80, Number 225 (Monday, November 23, 2015)]
[Notices]
[Page 73041]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-29787]


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DEPARTMENT OF VETERANS AFFAIRS


Loan Guaranty: Net Value Percentage Update

AGENCY: Department of Veterans Affairs (VA).

ACTION: Notice.

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SUMMARY: This notice provides information to lenders and mortgage 
holders in the U.S. Department of Veterans Affairs (VA) home 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 15.95 percent.

DATES:  The new percentage is effective December 23, 2015.

FOR FURTHER INFORMATION CONTACT: Andrew Trevayne, Assistant Director 
for Loan and Property Management, Department of Veterans Affairs, 810 
Vermont Ave. NW., Washington, DC 20420, (202) 632-8795 (not a toll-free 
number).

SUPPLEMENTARY INFORMATION: The VA home loan guaranty program, 
authorized by 38 U.S.C. chapter 37, offers a partial guaranty against 
loss to loan holders who are the holders of home loans to veterans. 
When a veteran borrower defaults on a VA-guaranteed loan, VA is 
obligated to pay a guaranty claim to the loan holder. See 38 U.S.C. 
3732. If the requirements of 38 U.S.C. 3732(c) are satisfied, a 
foreclosing loan holder also has the option of conveying a foreclosed 
property to VA. Requirements related to conveyance of properties are 
found at 38 CFR 36.4322 through 36.4326. A key component in the 
conveyance of a property to VA is the net value of the property to the 
Government. Net value is prescribed in 38 U.S.C. 3732(c) and further 
defined at 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. 
See 38 CFR 36.4301. The costs of acquisition and disposition are 
represented by a percentage that VA computes annually. Id. VA refers to 
the computed percentage as the cost factor. Id.
    In computing the cost factor, VA determines the average operating 
expenses incurred for managing properties that were sold during the 
preceding fiscal year, as well as the average administrative cost to VA 
associated with the property management activity. The cost factor 
calculation also includes an amount equal to the gain or loss 
experienced by VA on the resale of those properties. VA annually 
analyzes its property management results and computes a new cost 
factor. The cost factor that is applicable to program participants is 
the cost factor most recently published in the Notices section of the 
Federal Register. See 38 CFR 36.4301.
    The published cost factor remained unchanged at 11.87 percent 
between 1999 and 2012, as VA was concerned that a dramatic increase 
would have caused risk-averse lenders to significantly limit VA 
lending, impose stricter credit overlays, or cease making VA-guaranteed 
loans altogether. The net effect would have diminished the ability of 
veteran borrowers to use their VA home loan guaranty benefit, and the 
no-downpayment option and foreclosure-avoidance protections associated 
with it.
    As market conditions improved, and in an effort to more closely 
reflect the costs of real property disposition, VA began a measured 
approach to increasing the cost factor in FY 2012, by raising it to 
14.95 percent.
    VA is continuing its measured approach to align its published cost 
factor with property disposition costs. In order to more accurately 
reflect the costs of acquiring, managing, and reselling properties in 
the home loan guaranty program, VA is revising the net value cost 
factor to 15.95 percent. Accordingly, the loan holder (or its 
authorized servicing agent) will use a 15.95 percent cost factor 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 cost factor will be used in net value calculations made by 
loan holders and servicers, beginning on December 23, 2015.

    Dated: November 18, 2015.
Jeffrey M. Martin,
Program Manager, Regulation Policy and Management, Office of the 
General Counsel.
[FR Doc. 2015-29787 Filed 11-20-15; 8:45 am]
 BILLING CODE 8320-01-P

Federal Register / Vol. 80, No. 225 / Monday, November 23, 2015 / Notices 73041

and other animals, except seeing-eye Veterans Affairs (VA) home loan management activity. The cost factor
dogs, shall not be brought upon guaranty program concerning the calculation also includes an amount
property except as authorized by the percentage to be used in calculating the equal to the gain or loss experienced by
head of the facility or designee. Our purchase price of a property that VA on the resale of those properties. VA
current regulation can be interpreted to secured a terminated loan. The new annually analyzes its property
allow the head of a VA facility or percentage is 15.95 percent. management results and computes a
designee to bar access to all animals DATES: The new percentage is effective new cost factor. The cost factor that is
other than seeing-eye dogs, which is December 23, 2015. applicable to program participants is the
inconsistent with both section 3103(a) FOR FURTHER INFORMATION CONTACT: cost factor most recently published in
and section 109. We therefore revise our Andrew Trevayne, Assistant Director for the Notices section of the Federal
regulation to be consistent with the Loan and Property Management, Register. See 38 CFR 36.4301.
requirements in section 3103(a) and Department of Veterans Affairs, 810 The published cost factor remained
section 109. The collection associated unchanged at 11.87 percent between
Vermont Ave. NW., Washington, DC
with this regulation revision only 1999 and 2012, as VA was concerned
20420, (202) 632–8795 (not a toll-free
applies to those service dogs that would
number). that a dramatic increase would have
be staying on VA property with a
SUPPLEMENTARY INFORMATION: The VA caused risk-averse lenders to
Veteran for extended periods of time
home loan guaranty program, significantly limit VA lending, impose
while that Veteran is being treated in a
authorized by 38 U.S.C. chapter 37, stricter credit overlays, or cease making
residential treatment setting. This
offers a partial guaranty against loss to VA-guaranteed loans altogether. The net
collection is not associated with the
loan holders who are the holders of effect would have diminished the ability
basic entry of a service dog generally on
home loans to veterans. When a veteran of veteran borrowers to use their VA
VA property. This collection is also
borrower defaults on a VA-guaranteed home loan guaranty benefit, and the no-
associated with the entry of Animal
loan, VA is obligated to pay a guaranty downpayment option and foreclosure-
Assisted Therapy and Animal Assisted
claim to the loan holder. See 38 U.S.C. avoidance protections associated with
Activity animals on VA property, and
3732. If the requirements of 38 U.S.C. it.
residential animals on VA residential
units. 3732(c) are satisfied, a foreclosing loan As market conditions improved, and
Affected Public: Individuals or holder also has the option of conveying in an effort to more closely reflect the
Households. a foreclosed property to VA. costs of real property disposition, VA
Estimated Annual Burden: 125 Requirements related to conveyance of began a measured approach to
burden hours. properties are found at 38 CFR 36.4322 increasing the cost factor in FY 2012, by
Estimated Average Burden per through 36.4326. A key component in raising it to 14.95 percent.
Respondent: 5 minutes. the conveyance of a property to VA is VA is continuing its measured
Frequency of Response: Annually. the net value of the property to the
Estimated Number of Respondents: approach to align its published cost
Government. Net value is prescribed in factor with property disposition costs.
1,500. 38 U.S.C. 3732(c) and further defined at In order to more accurately reflect the
By direction of the Secretary. 38 CFR 36.4301. costs of acquiring, managing, and
Kathleen M. Manwell, Essentially, net value is the fair reselling properties in the home loan
VA Privacy Service, Office of Privacy and market value of the property, minus the guaranty program, VA is revising the net
Records Management, Department of total costs the Secretary estimates would value cost factor to 15.95 percent.
Veterans Affairs. be incurred by VA resulting from the Accordingly, the loan holder (or its
[FR Doc. 2015–29694 Filed 11–20–15; 8:45 am] acquisition and disposition of the authorized servicing agent) will use a
BILLING CODE 8320–01–P property for property operating 15.95 percent cost factor to calculate the
expenses, selling expenses, and subtraction from the fair market value to
administrative cost. See 38 CFR arrive at the net value of the property
DEPARTMENT OF VETERANS 36.4301. The costs of acquisition and under the provisions of 38 CFR
AFFAIRS disposition are represented by a 36.4322(c). This revised cost factor will
percentage that VA computes annually. be used in net value calculations made
Loan Guaranty: Net Value Percentage Id. VA refers to the computed by loan holders and servicers, beginning
Update percentage as the cost factor. Id. on December 23, 2015.
AGENCY: Department of Veterans Affairs In computing the cost factor, VA
determines the average operating Dated: November 18, 2015.
(VA).
expenses incurred for managing Jeffrey M. Martin,
ACTION: Notice.
properties that were sold during the Program Manager, Regulation Policy and
SUMMARY: This notice provides preceding fiscal year, as well as the Management, Office of the General Counsel.
information to lenders and mortgage average administrative cost to VA [FR Doc. 2015–29787 Filed 11–20–15; 8:45 am]
holders in the U.S. Department of associated with the property BILLING CODE 8320–01–P
wgreen on DSK2VPTVN1PROD with NOTICES

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Document Created: 2018-03-01 11:18:10
Document Modified: 2018-03-01 11:18:10

Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
Action		Notice.
Dates		The new percentage is effective December 23, 2015.
Contact		Andrew Trevayne, Assistant Director for Loan and Property Management, Department of Veterans Affairs, 810 Vermont Ave. NW., Washington, DC 20420, (202) 632-8795 (not a toll-free number).
FR Citation		80 FR 73041