Veterans Home Loan Guaranty Restructuring and Solvency Act of 1989

Veterans Home Loan Guaranty Restructuring and Solvency Act of 1989 - Establishes the Home Loan Guaranty Fund. Provides that the Fund shall be available to the Secretary of Veterans Affairs for all operations with respect to: (1) guaranteed or insured Department of Veterans Affairs (VA) housing loans for which fees are collected and which are made after FY 1989; and (2) loans for property which has been disposed of by a veteran to a purchaser who will assume liability for such loan. Provides that the following sums shall be credited to the Fund: (1) all fees collected for housing loans made after FY 1989; (2) .25 percent of the original amount for all loans guaranteed or insured by the VA after FY 1989 for the first three fiscal years beginning with the fiscal year in which such fee is collected; (3) all collections of principal and interest and the proceeds from property held or disposed of with respect to such loans; and (4) all income from investments of the Fund that are required to be made by the Secretary of the Treasury in obligations of the United States.

Increases the fee for a VA housing loan to 1.25 percent of the total loan amount. Provides that the following fees shall be collected: (1) one percent of the total loan amount with respect to housing loans obtained which are in default; (2) .75 percent of the total loan amount with respect to loans for purchase or construction for which a down payment of at least five percent of the total purchase price or construction costs have been made; and (3) .25 percent of the total loan amount with respect to such loans for which a down payment of at least ten percent has been made. Provides for the waiver of such fees for veterans who are receiving veterans' disability compensation or for the surviving spouse of a veteran who died from a service-connected disability. Requires the Secretary, in the case of such a waiver, to deposit into the Fund the amount that the veteran or surviving spouse would have been required to pay without the waiver provision. Allows the Secretary to increase any of such loan fees if the Secretary determines that the Fund would be unable to pay the valid claims of holders of defaulted loans during the first 24 months that such increase would take effect. Limits the amount of any such loan fee increase. Requires the Secretary to notify the veterans' committees before any such fee increase. Requires the Director of the Congressional Budget Office to submit views to such committees regarding the proposed fee increases. Provides that any veteran who pays a fee for such loans, other than loans which are in default or loans for property which has been disposed of, shall have no liability to the Secretary with respect to such loan for any loss resulting from a default of the veteran, except: (1) in the case of fraud, misrepresentation, or bad faith in obtaining loan approval or loan assumption; and (2) in the case of any default or liquidation resulting from circumstances not beyond the individual's control.

Extends until October 1, 1990, the authority of the Secretary to sell notes evidencing such loans with or without recourse. Provides that after such date the Secretary may sell such notes either with recourse or without recourse, but only if the amount received is equal to an amount which is not less than the unpaid balance of such loans. Provides that all amounts received from the sale of such loans shall be credited as offsetting collections of the Fund or of the Loan Guaranty Revolving Fund.

Authorizes the maximum amount of guaranty entitlement available to a veteran for the purchase or construction of a home to be increased by not more than $10,000 in connection with any single loan. Requires the collection of a loan fee for such additional loan amount. Limits the total amount of guaranty entitlement available to any single veteran. Waives such limitation whenever the Secretary determines that the housing is being purchased or constructed in a housing market in which certain conditions exist which make it unlikely for a veteran to obtain such a loan for the purchase or construction of housing.

Provides that when a default of a loan made, guaranteed, or insured by the VA occurs, the holder of the obligation shall notify the Secretary upon refusing an offer by the veteran for partial payment.

Revises the definition of the term "net value" for purposes of the determination of such amount upon default of a loan made, guaranteed, or insured by the VA. Extends through September 30, 1991, the current procedures to be followed by the VA upon the default of such loans.