Veterans' Home Loan Program Improvements Act of 1987

(Measure indefinitely postponed in Senate, H.R. 2672 passed in lieu)

Veterans' Home Loan Program Improvements Act of 1987 - Amends Federal veterans' benefits provisions to increase to $36,000 the amount entitled to each qualifying veteran as a loan guaranteed by the Veterans Administration (VA) for the purchase or construction of a home for such veteran. Makes similar changes in the denominator of the ratio to be used in determining the amount of a direct loan to a veteran for the purchase or construction of a home. Exempts such veterans' home loan guaranty provisions from sequestration procedures under the Balanced Budget and Emergency Deficit Control Act of 1985 (Gramm-Rudman-Hollings Act), and repeals a Federal provision requiring the President to make certain reports to congressional committees following a cancellation of such loan guarantee commitments.

Removes the requirement that a veteran must own and occupy a dwelling or residence in order for such veteran to qualify for a VA-guaranteed loan on such dwelling. Allows such dwelling or residence to qualify for such loan guarantee if the veteran concerned certifies that he or she has previously so occupied it. Prohibits the amount of any such VA-guaranteed loan from exceeding 90 percent of the appraised value of the dwelling or farm residence which will secure the loan. Makes identical changes to provisions providing VA-guaranteed loans to purchase manufactured homes and lots. Revises provisions relating to the procedures used for ascertaining the monthly income required by the veteran to meet the anticipated loan payment terms.

Directs the Administrator of Veterans Affairs, within a reasonable time after receiving proper notice, to provide veterans with information and counseling regarding: (1) alternatives to foreclosure of a VA-guaranteed loan; (2) the VA's and the veteran's liabilities with respect to the loan in the event of foreclosure; and (3) the availability of counseling concerning such matters. Requires the Administrator to ensure sufficient personnel to provide such counseling.

Revises the definition of "total indebtedness" for purposes of the liquidation of loans in default. Provides that, in any case where there is a substantial delay in the liquidation sale caused by the loan holder's exercising forbearance at the Administrator's request, the date for determining the total indebtedness of the veteran shall be a date specified by the Administrator between the date forebearance is requested and the date of actual liquidation sale (i.e., the veteran, and not the holder of the loan, shall be responsible for any extra charges or interest accrued on the loan because of such delayed liquidation date). Authorizes the Administrator to specify a sale liquidation date only if the Administrator is authorized to accept conveyance of the property on such date. Requires that, in any other case in which there is a delay in such liquidation sale beyond a reasonable period for such sale, the liquidation date (for purposes of determining total indebtedness) shall be the earliest date on which such "reasonable period for sale" expires.

Amends the Deficit Reduction Act of 1984 and other Federal law to extend from October 1, 1987, through FY 1988 provisions which: (1) provide for determining whether the VA may acquire properties at liquidation sales; and (2) determine the proportion of such acquired properties that the VA may sell for cash.

Prohibits the amount of a loan made by the Administrator to finance the purchase of real property from the VA (property acquired through default proceedings) from exceeding 90 percent of the purchase price. Authorizes the payment of a 2.5 percent loan fee to the Administrator by those purchasing real property from the Administrator which was acquired by default.

Increases the authorized percentage of cash sales of properties acquired by the Administrator through foreclosures. Extends until October 1, 1999, the authorized period for such sales.

Provides that, in the event of default of a loan, if the Administrator refuses to accept a voluntary offer by the veteran to accept the property securing the loan, the Administrator may not include in the amount of such veteran's liability in connection with the loan the cost of a foreclosure proceeding. Provides that a veteran's voluntary conveyance of the property securing the loan shall not release the veteran from any other liability to the Administrator.

Prohibits any person from assuming a guaranteed or insured housing loan obtained by a veteran unless, prior to the assumption, the veteran notifies the holder of the loan in writing and the acceptability of the assumption is established under specified procedures. Provides that, if the acceptability of such loan assumption is established, the loan obligor shall be relieved of all further liability to the Administrator, unless the Administrator determines that such release would not be in the best interest of the solvency of the Loan Guaranty Revolving Fund and promptly so notifies the veteran. Provides that, in the case of a sale of the property securing a loan, unless the acceptability of an assumed loan is established, payment in full of all appropriate charges under the terms of the loan shall be immediately due from the loan obligor on the date of transfer of title by the obligor.

Directs the Administrator, upon notification by the veteran of a loan assumption, to provide a written explanation of the veteran's rights and liabilities under such proposed assumption.

Provides that if a veteran disposes of real property securing a VA-guaranteed loan and fails to notify the loan holder before the property is disposed of, payment in full shall be immediately due and payable to the holder by the veteran at any time beginning on the date of the transfer. Provides that if the holder has knowledge of a transfer of title by the loan obligor, the holder shall immediately notify the Administrator of such transfer. Provides that a holder with such knowledge who fails to notify the Administrator shall be liable to the Administrator for any damage sustained as a result of such failure. Requires that any legal papers concerning the VA-guaranteed loan shall include, in conspicuous letters, a statement to the effect that such loan is not assumable without the approval of the VA or its authorized agent.

Defines the term "obligor" as the person owning a guaranteed or insured loan who is either: (1) the veteran who originally obtained the loan; or (2) a person who acquired the loan under the loan assumption acceptability provisions previously outlined in this Act.

Requires that a VA-guaranteed loan include a provision that the loan is immediately due and payable upon transfer of the property to a transferee unless the acceptability of the assumption is established in accordance with earlier provisions of this Act. Authorizes the payment of a fee of one-half percent of the loan balance to be charged to any person assuming a VA-guaranteed loan. Requires the Administrator to promulgate regulations concerning maximum amounts a lender may charge for processing applications for credit worthiness determinations and loan assumptions.

Limits to 95 percent of the purchase price of the property securing the loan the amount of any loan that is to be paid by the veteran purchasing a manufactured home.

Authorizes the Administrator to contract for such supplementary services and equipment as necessary to ensure the long-term stability of the Loan Guaranty Revolving Fund. Outlines the supplemental services involved, including the use of loan-service companies, accounting firms, real estate brokers, and other contractors. Directs the Administrator to use funds obtained through loan fees and loan assumption fees to procure such supplemental services. Adds additional funds to such available amounts for FY 1988 and 1989.

Extends through FY 1989 the authority for the collection of a loan fee.

Directs real estate appraisers appraising property for which a VA-guaranteed loan is being considered to forward an appraisal report to the Administrator for review. Directs the Administrator to then determine the reasonable value of the property, and any construction or alterations necessary, and notify the veteran. Authorizes the Administrator to allow a lender authorized to make loans which are automatically guaranteed by the VA to determine the reasonable value of such property. Requires the appraiser, in such a case, to submit the appraisal report directly to the lender for review, and the lender, as soon as practicable thereafter, to furnish a copy of such report to the veteran who is applying for the loan and to the Administrator. Directs the Administrator, prior to exercising such authority, to establish a random appraisal-review system, to be performed by contract personnel paid from the Loan Guaranty Revolving Fund.

Directs the Administrator, in order to effect the most expeditious sale of property acquired as the result of a guaranteed loan default, and at the best possible price, to list such property with real estate brokers.

Repeals Federal law which generally precludes the VA from selling without recourse any loan it makes to finance the sales of foreclosed properties it has acquired.