[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
