Housing Programs: VA Can Reduce Its Guaranteed Home Loan Foreclosure Costs
RCED-89-58
Published: Jul 12, 1989. Publicly Released: Aug 15, 1989.
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Highlights
Pursuant to a congressional request, GAO reviewed the Department of Veterans Affairs (VA) Home Loan Guaranty Program, focusing on: (1) program effects of Deficit Reduction Act requirements that limited estimated VA losses per foreclosed property to the amount of guaranty on each property, and increased the percentage of foreclosed properties that VA sold for cash; and (2) whether VA could improve the property acquisition and disposition process to reduce program costs.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Veterans Affairs | To ensure that VA property acquisition and disposition procedures result in the best financial interests of the government, the Secretary of Veterans Affairs should consider the interest costs associated with acquiring and disposing of properties in deciding whether to leave properties with lenders. |
VA was implementing a regulation to consider interest costs; however, Congress prohibited the consideration of interest costs.
|
| Department of Veterans Affairs | To ensure that VA property acquisition and disposition procedures result in the best financial interests of the government, the Secretary of Veterans Affairs should determine the cost-effectiveness of the VA policy of always giving preference to qualified cash offers over offers requiring VA financing as part of the VA study on cash-sale incentives. |
VA developed a procedure to determine the most cost-effective way of selling properties. Although testing of the new procedure was over 2 years ago, VA has not implemented the new procedures.
|
| Department of Veterans Affairs | To reduce the costs of the loan guaranty program, the Secretary of Veterans Affairs should, to improve the property acquisition and disposition process, encourage more successful third-party bidding at foreclosure sales by establishing a minimum amount for lenders to bid that reflects VA acquisition and disposition costs, including cash discounts. |
VA does not concur that action would be beneficial to the program.
|
| Department of Veterans Affairs | To reduce the costs of the loan guaranty program, the Secretary of Veterans Affairs should, to improve the property acquisition and disposition process, encourage VA offices to obtain from lenders assurance of good and marketable title through the least expensive means available. If VA offices continue to obtain title insurance policies, they should purchase the least expensive policies. |
While VA has informed its field offices of the availability of less costly means of obtaining property titles, it has not required its offices to obtain titles through such means.
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Topics
Budget cutsDeficit reductionFair market valueForeclosuresGovernment guaranteed loansMortgage loansMortgage programsProperty disposalReal estate salesVeterans benefits