SECTION 1. MORTGAGE PAYMENT ASSISTANCE TO AVOID FORECLOSURE OF HOME 
              LOANS GUARANTEED UNDER TITLE 38.

    (a) In General.--(1) Chapter 37 of title 38, United States Code, is 
amended by inserting after section 3714 the following new section:
``Sec. 3715. Loans to refinance delinquent indebtedness
    ``(a)(1) The Secretary may, at the Secretary's option, provide 
assistance to a veteran under this section for the purpose of avoiding 
the foreclosure of a housing loan made to that veteran and guaranteed 
by the Secretary under section 3710 or 3712 of this title (hereinafter 
in this section referred to as a `primary loan').
    ``(2) Assistance under this section shall be in the form of a loan 
to the veteran. Such assistance may be provided only if--
            ``(A) the dwelling that secures the primary loan is the 
        current residence of the veteran and is occupied by the veteran 
        as the veteran's home;
            ``(B) the veteran is at least six months delinquent in 
        payments on that primary loan;
            ``(C) the veteran has lost employment or has had a 
        substantial reduction in household income (as defined in 
        regulations prescribed by the Secretary) through no fault of 
        the veteran; and
            ``(D) the Secretary determines that there is a reasonable 
        prospect that the veteran will be able to resume payment on the 
        primary loan within six months after receiving assistance under 
        this section.
    ``(3) For the purposes of this section, the term `veteran' includes 
the surviving spouse of a veteran if the surviving spouse was a co-
obligor of the primary loan.
    ``(b)(1) A loan under this section shall be advanced to the holder 
of the primary loan. The amount of the loan under this subsection shall 
first be applied to the amount delinquent on the loan guaranteed under 
this chapter including any amount delinquent on taxes, assessments, 
hazard insurance, and late charges required by the holder to be 
included in the veteran's monthly payment on the mortgage.
    ``(2) The Secretary may make more than one loan under this section 
to a veteran. The total amount of loans under this section to any 
veteran may not exceed $10,000.
    ``(c) A loan under this section--
            ``(1) shall bear no interest until the date on which 
        payments on the primary loan (including amounts for taxes, 
        assessments, hazard insurance, and late charges required by the 
        holder to be included in the veteran's monthly payment on the 
        mortgage) are current;
            ``(2) shall be secured by a lien on the property securing 
        the primary loan and by such other security as the Secretary 
        may require; and
            ``(3) shall be subject to such additional terms and 
        conditions as the Secretary may require.
    ``(d) As a condition of receiving a loan under this section the 
veteran shall execute an agreement, in such form as the Secretary may 
prescribe, to repay the loan within a reasonable period of time, as 
determined by the Secretary, not to exceed 15 years from the date on 
which such loan is made. If the Secretary determines that the veteran 
has sufficient income or other resources to do so, the Secretary may 
require the veteran to make partial payments on the primary loan 
guaranteed under this chapter during the period the holder of that loan 
is applying the amount of the loan under this section to payments 
becoming due on the primary loan.
    ``(e) Notwithstanding any other law, the Secretary may employ 
attorneys to bring suit to collect any amount of a loan under this 
section on which the veteran to whom the loan is made is in default.
    ``(f) The Secretary's decisions on any question of law or fact 
regarding assistance under this section, including whether or not to 
grant such assistance and the terms and conditions under which such 
assistance is granted or not granted, shall be final and conclusive, 
and no other official or any court of the United States shall have 
power or jurisdiction to review any such decision by an action in the 
nature of mandamus or otherwise.
    ``(g) A loan under this section shall be made from the fund 
established under section 3724 or 3725 of this title that is available 
with respect to the primary loan in connection with which the loan is 
made under this section.''.
    (2) The table of sections at the beginning of such chapter is 
amended by inserting after the item relating to section 3714 the 
following new item:

``3715. Loans to refinance delinquent indebtedness.''.
    (b) Effective Date.--The amendments made by subsection (a), shall 
take effect at the end of the 60-day period beginning on the date of 
the enactment of this Act.

SEC. 2. FINANCING OF DISCOUNT POINTS.

    Section 3703(c)(4)(B) of title 38, United States Code, is amended 
in the second sentence by striking out ``Discount'' and inserting in 
lieu thereof ``Except in the case of a loan for the purpose specified 
in section 3710(a)(8), 3710(b)(7), or section 3712(a)(1)(F) of this 
title, discount''.

SEC. 3. RATE ADJUSTMENTS FOR ADJUSTABLE RATE MORTGAGES.

    Section 3707(b)(2) of title 38, United States Code, is amended by 
striking out ``on the anniversary of the date on which the loan was 
closed''.
Authorizes the Secretary of Veterans Affairs to provide assistance to a veteran to avoid foreclosure of a housing loan made and guaranteed by the Secretary through the Department of Veterans Affairs.  Requires such assistance to be in the form of a loan.  Outlines loan conditions, including that:  (1) the dwelling that secures the primary loan is the current residence of the veteran; (2) the veteran is at least six months delinquent in mortgage payments; (3) the veteran has lost employment or suffered a substantial reduction in household income; and (4) there is a reasonable prospect that the veteran will be able to resume payment on the mortgage loan within six months after receiving such assistance. 
Authorizes the Secretary to make more than one loan to a veteran, with a per-veteran loan limitation of $10,000.  Requires the veteran to execute an agreement with the Secretary to repay the loan within a reasonable period not to exceed 15 years. 
Frees the veteran from the payment of discount points for such loan. 
Revises the method of interest rate adjustment on mortgage loans guaranteed by the Secretary in a FY 1993 through 1995 demonstration project for guaranteeing loans in a manner similar to the manner in which the Secretary of Housing and Urban Development insures adjustable rate mortgages under the National Housing Act.
To amend title 38, United States Code, to provide mortgage payment assistance to avoid foreclosure of home loans guaranteed under title 38, and for other purposes.