Homeownership: Appropriations Made to Finance VA's Housing Program May Be Overestimated
RCED-93-173
Published: Sep 08, 1993. Publicly Released: Sep 20, 1993.
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Highlights
Pursuant to a congressional request, GAO provided information on the Department of Veterans Affairs' (VA) Home Loan Guaranty Program subsidy costs, focusing on the: (1) estimated costs of guaranteeing fiscal year (FY) 1992 and 1993 VA home mortgage loans; and (2) comparison between its estimates and estimates prepared by the administration.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Veterans Affairs | To ensure that estimates of the VA Home Loan Guaranty Program's subsidy costs are based on a model that: (1) incorporates the effects of all important factors that influence these costs; and (2) uses the most relevant data, the Secretary of Veterans Affairs and the Director, OMB, should work together to revise the OMB economic model. Specifically, they should: (1) assess and incorporate into the model factors in addition to equity--such as the rate of unemployment, the age of the borrower, and the size of the loan--that significantly affect subsidy costs; and (2) use data on VA loans to estimate the effects of these factors on the likelihood of foreclosure and prepayment. |
Closed – Implemented
VA revised its economic model by incorporating the effects of other important factors that influence subsidy costs and using VA data developed new estimates for FY 1992 and 1993.
|
| Office of Management and Budget | To ensure that estimates of the VA Home Loan Guaranty Program's subsidy costs are based on a model that: (1) incorporates the effects of all important factors that influence these costs; and (2) uses the most relevant data, the Secretary of Veterans Affairs and the Director, OMB, should work together to revise the OMB economic model. Specifically, they should: (1) assess and incorporate into the model factors in addition to equity--such as the rate of unemployment, the age of the borrower, and the size of the loan--that significantly affect subsidy costs; and (2) use data on VA loans to estimate the effects of these factors on the likelihood of foreclosure and prepayment. |
Closed – Implemented
OMB included in the President's FY 1995 budget a $456-million payment to a Treasury receipt account established to recover the excess subsidy payments in FY 1992 and 1993 due to VA's revised economic model.
|
| Office of Management and Budget | The Secretary of Veterans Affairs and the Director, OMB, should use this revised economic model to develop: (1) reestimates of the FY 1992 and 1993 subsidy costs for inclusion in the President's FY 1995 budget; and (2) estimates of subsidy costs for VA mortgages guaranteed in future years. |
Closed – Implemented
VA used the revised economic model to develop reestimates of the FY 1992 and 1993 subsidy costs and included them in the President's FY 1995 budget. OMB included these reestimates for FY 1992 and 1993 in the President's FY 1995 budget.
|
| Department of Veterans Affairs | The Secretary of Veterans Affairs and the Director, OMB, should use this revised economic model to develop: (1) reestimates of the FY 1992 and 1993 subsidy costs for inclusion in the President's FY 1995 budget; and (2) estimates of subsidy costs for VA mortgages guaranteed in future years. |
Closed – Implemented
VA used the revised economic model to develop reestimates of the FY 1992 and FY 1993 subsidy costs and included them in the President's FY 1995 budget.
|
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Topics
Appropriated fundsComparative analysisCost analysisFederal aid for housingGovernment guaranteed loansHomeowners loansHousing programsMortgage programsSubsidiesVeterans