Evening star., 1946-04-28
VA Refuses G|s
Loans on High
FILA Ceilings
ApproisoIs 10 Pct.
Above Reasonable
VoIue,' Agency Says
By Miriom Ottenbero

The Veterans Administration
last night charged that. the Fed
eral Housing Administration is
setting ceiling prices for homes
"at least 10 per cent above the
reasonable value" and warned
that veterans are not being
granted CT loans to buy homes
at those prices.
The VA criticism, voiced by Fran
els x. Pavesich, chief of the loan
guarantee section, directly affects
the Governments veterans emer-
gency housing program. VA esti-
mates that rs per cent of the vet
Grams who plan to buy the 2,700,00o
homes projected under this program
have counted on using their GI loan
guarantees.
On the other hand, VA fears that
the Government will lose billions of
dollars if veterans use their CT loans
to buy makeshift homes at high
prices and then walk out of them
a few years from now when better
constructed homes come on the mar
ket at lower prices-leaving VA in
the real estate business with homes
Of little resale value.
Bradley Appealed to Wyatt.
Veterans Administrator Bradley,
it was disclosed, appealed to Hous-
ing Expediter Wyatt six weeks ago
to get ceiling prices that bear some.
reasonable relationship" to the &C.
tual cost of construction. VA off,
cials said FILA acknowledges that
something should be done and has
promised to take steps"
Mr.. Pavesich said VA is willing
to acknowledge that construction
costs have gone up sharply and to
follow proper, sensible practices
In making appraisals for CT loans,
but would not guarantee loans on
houses selling for more than "rea-
sonable value"
Mr.. PaVesich, backed by top VA
officials, charged that the FHA is
setting ceilings substantially higher
than they would with any field in
vestigatlon." The price ceilings are
set by FILA as agent for the Ci-
william Production Administration as
basis for the issuance of priorities.
FHA Ceilings Ignored.
VA is telling its appraisers to
ignore the ceiling prices set by
FHA in deciding what veterans
should pay for property on which
VA guarantees part of the loan,
Mr. Pavesich said.
He added, however. that a great
many veterans, anxious to get
home, are approaching appraisers
who, they have heard, are willing
to make high appraisals. He said
VA is now investigating a case
where an appraiser was collecting
IS a head for signing appraisal
papers without ever leaving his
Office.
"As it stands now" Mr.. Pavesich
declared, many veterans can't buy
home with GI loan unless they
enter into some such deal because
honest appraisers won't appraise
homes as high as the ceiling
prices
VA is removing appraisers guilty
of sharp practices as fast as
complaints reach here, he added,
but the agency is put in a difficult
position because appraisers can al
ways point out that their estimate
was no higher than that fixed by
another Federal agency-the FHA.
Cases Cited BY Pavesich.
Mr.. Pavesich said one contractor
had shown him blueprints for a
home he said he could build with a
reasonable profit for S6,400. Building
priorities were granted him by FHA
to build the same house at a ceiling
price OF $4,000, Mr.. Pavesich re-
ported.
He gave an example to illustrate
that two activities of FHA are in
direct conflict. A veteran, he said.
seeks an FHA-insured loan. FHA
appraisers set the value of the home
at $4,000. VA appraisers can Justify
a s6,500 appraisal for the second
mortgage, but FILA, acting for CPA,
has set the ceiling price at $500
on the same property.
Recently, Mr.. Pavesich reported,
a group of 80 homes were built for
veterans in South Carolina. The
ceiling price was S6,15O and the
builders were asking $3.50. Afte.
a VA appraiser agreed on that fig
ure, 10 veterans bought homes,
When the 10 loans came to VA for
automatic approval, the loan guar
antee officer raised a question and
VA sent group of appraisers to
lock over the homes.
Mr.. Pavesich said the appraisers
reported the homes might be worth
S5,450 If number of structural de-
fects were corrected. VA removed
the original appraiser from its
panel and notified the builders that
none OF the 81 remaining houses