Housing Programs: Increased Use of Alternatives to Foreclosure Could Reduce VA's Losses

RCED-90-4 Published: Dec 20, 1989. Publicly Released: Jan 16, 1990.

Highlights

Pursuant to a congressional request, GAO reviewed the Department of Veterans Affairs' (VA) loan termination process for VA-guaranteed mortgages, focusing on how changes in VA practices could reduce the number and cost of foreclosures.

Recommendations

Recommendations for Executive Action

Agency Affected	Recommendation	Status
Department of Veterans Affairs	To reduce the cost of the Home Loan Guaranty Program, the Secretary of Veterans Affairs should use the GAO model or develop a similar cost analysis that, on a case-by-case basis, identifies the costs of loan termination alternatives, including imputed interest costs, debt collection rates, and the discount on cash sales.	Closed – Not Implemented Congress passed H.R. 901 which prohibited VA from holding the veterans responsible for losses on defaulted VA loans. This makes this recommendation no longer applicable.
Department of Veterans Affairs	To reduce the cost of the Home Loan Guaranty Program, the Secretary of Veterans Affairs should require VA loan service representatives to complete and document the loan termination cost analysis and pursue the least costly alternative available.	Closed – Not Implemented Congress passed H.R. 901 which prohibited VA from holding the veterans responsible for losses on defaulted VA loans. This makes this recommendation no longer applicable.

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Topics

Veterans

Cost effectiveness analysisDebt collectionForeclosuresGovernment guaranteed loansLoan defaultsLoan repaymentsMortgage loansMortgage programsMortgage protection insuranceProperty disposal