Veterans' Home Loan Program Improvements and Property Rehabilitation Act of 1987
PL 100-198 (H.R.2672), enacted 12/21/1987

PUBLIC LAW 100-198—DEC. 21, 1987 
101 STAT. 1315 
Public Law 100-198 
100th Congress 
An Act 
To amend title 38, United States Code, to modify the amount of the Veterans' 
Administration home loan guaranty and to make other improvements in the loan 
guaranty program, and for other purposes. 
Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; REFERENCE. 
(a) SHORT TITLE.—This Act may be cited as the "Veterans' Home 
Loan ProgTEim Improvements and Property Rehabilitation Act of 
1987". 
(b) REFERENCE.—Whenever in this Act an amendment, repeal, or 
redesignation is expressed in terms of an amendment to, or repeal or 
redesignation of, a section or other provision, the reference shall be 
considered to be made to a section or other provision of title 38, 
United States Code, unless otherwise specified. 
SEC. 2. LOAN FEE. 
(a) EXTENSION.—Section 1829(c) is amended by striking out "1987" 
and inserting in lieu thereof "1989". 
(b) WAIVER.—Section 1829(b) is amended by striking out "de-
scribed in section 1801(bX2) of this title" and inserting in lieu 
thereof "of any veteran (including a person who died in the active 
militaiy, naval, or air service) who died from a service-connected 
disability". 
SEC. 3. GUARANTY AMOUNT. 
(a) PURCHASE OR CONSTRUCTION OF HOMES.—(1) Section 1803(aXl) 
is amended to read as follows: 
"(aXD Any loan to a veteran eligible for benefits under this 
chapter, if made for any of the purposes specified in section 1810 of 
this title and in compliance with the provisions of this chapter, is 
automatically guaranteed by the United States in an amount not to 
exceed— 
"(A) in the case of any loan of not more than $45,000, 50 
percent of the loan; or 
"(B) in the case of any loan of more than $45,000, 40 percent 
of the loan or $36,000, whichever is less, except that the cimount 
of such guaranty for any such loan shall not be less them 
$22,500; 
reduced by the amount of entitlement previously used by the vet-
eran under this chapter and not restored as a result of the exclusion 
in section 18020)) of this title.". 
(2) Section 1810(c) is repealed. 
(b) MANUFACTURED HOMES.—Section 1819(c) is amended— 
(1) in paragraph (3), by striking out the first sentence and 
inserting in lieu thereof the following: "The Administrator's 
guaranty may not exceed 40 percent of the loan, or $20,000, 
whichever is less, reduced by the amount of entitlement pre-
Dec. 21, 1987 
[H.R. 2672] 
Veterans' Home 
Loan Program 
Improvements 
and Property 
Rehabilitation 
Act of 1987. 
Housing. 
38 use 101 note. 
101 STAT. 1316 
PUBLIC LAW 100-198—DEC. 21, 1987 
viously used by the veteran under this chapter and not restored 
as a result of the exclusion in section 1802(b) of this title."; and 
(2) in paragraph (4), by striking out the first sentence and 
inserting in lieu thereof "The amount of any loan guaranteed 
under this section shall not exceed an amount equal to 95 
percent of the purchase price of the property securing such 
,. 
loan.". 
(c) DIRECT LOANS.—Section 1811(dX2XA) is amended by striking 
out "$27,500" each place it appears and inserting in lieu thereof 
"$36,000". 
38 use 1803 
(d) EFFECTIVE DATE.—The amendments made by this section shall 
note. 
apply to loans which are closed on or after February 1, 1988, except 
that they shall not apply to any loan for which a guaranty commit-
ment is made on or before December 31,1987. 
SEC. 4. FINANCIAL INFORMATION AND COUNSELING ASSISTANCE FOR 
VETERANS. 
(a) ASSISTANCE TO VETERANS.—Section 1816(a) is amended by 
adding at the end the following new paragraph: 
"(4XA) Upon receiving a notice pursuant to paragraph (1) of this 
subsection, the Administrator shall^ 
"(i) provide the veteran with information and, to the extent 
> feasible, counseling regarding— 
"(I) alternatives to foreclosure, as appropriate in light of 
. : 
the veteran's particular circumstances, including possible 
methods of curing the default, conveyance of the property 
to the Administrator by means of a deed in lieu of fore-
closure, and the actions authorized by section 1816(aX2) of 
this title; and 
"(II) what the Veterans' Administration's and the veter-
an's liabilities would be with respect to the loan in the 
event of foreclosure; and 
"(ii) advise the veteran regarding the availability of such 
counseling; 
except with respect to loans made by a lender which the Adminis-
trator has determined has a demonstrated record of consistently 
providing timely and accurate information to veterans with respect 
to such matters. 
"(B) The Administrator shall, to the extent of the availability of 
appropriations, ensure that sufficient personnel are available to 
administer subparagraph (A) of this paragraph effectively and 
efficiently. 
Termination 
"(C) The authority to Carry out this paragraph shall terminate on 
date. 
March 1,1991.". 
38 use 1
8
1
6 
0)) EFFECTIVE DATE.—The amendment made by subsection (a) 
note. 
shall take effect on March 1,1988. 
SEC. 5. ACTIONS WITH RESPECT TO DEFAULTED LOANS. 
(a) DETERMINATION OF TOTAL INDEBTEDNESS.—Section 1816(c) is 
amended— 
(1) in paragraph (1)(D), by striking out "The" and inserting in 
lieu thereof Except as provided in subparagraph (D) of para-
graph (10) of this subsection, the"; 
(2) in clause (ii) of paragraph (1)(D), by striking out "of the 
liquidation sale" and all that follows in such clause and insert-
ing in lieu thereof the following: "applicable under paragraph 
(10) of this subsection, and"; 
PUBLIC LAW 100-198—DEC. 21, 1987 
101 STAT. 1317 
(3) in clause (iii) of paragraph (IXD), by striking out "such 
regulations" and inserting in lieu thereof "regulations pre-
scribed by the Administrator to implement this subsection"; 
and 
(4) by adding at the end the following new paragraphs: 
"(lOXA) Except as provided in subparagraphs (B) and (C) of this 
paragraph, the date referred to in paragraph (IXDXii) of this subsec-
tion shall be the date of the liquidation sale of the property securing 
the loan. 
"(BXi) Subject to division (ii) of this subparagraph, in any case in Regulations. 
which there is a substantial delay in such sale caused by the holder 
of the loan exercising forebearance at the request of tne Adminis-
trator, the date referred to in paragraph (IXDXii) of this subsection 
shall be such date, on or after the date on which forebearance was 
requested and prior to the date of such sale, as the Administrator 
specifies pursuant to regulations which the Administrator shall 
prescribe to implement this paragraph. 
"(ii) The Administrator may specify a date under subdivision (i) of 
this subparagraph only if, based on the use of a date so specified for 
the purposes of such paragraph (IXDXii), the Administrator is au-
thorized, under paragraph (7XA) of this subsection, to accept convey-
ance of the property. 
"(C) In any case in which there is an excessive delay in such 
liquidation sale caused— 
"(i) by the Veterans' Administration (including any delay 
caused by its failure to provide bidding instructions in a timely 
fashion); or 
"(ii) by a voluntary case commenced under title 11, United 
Stetes Code (relating to bankruptey); 
the date referred to in paragraph (IXDXii) of this subsection shall be 
a date, earlier than the date of such liquidation sale, which the 
Administrator specifies pursuant to regulations which the Adminis-
trator shall prescribe to implement this paragraph. 
"(D) For the purpose of determining the liability of the United 
States under a loan guaranty under clause (B) of paragraphs (5), (6), 
(7), and (8) of this subsection, the amount of the total indebtedness 
with respect to such loan guaranty shall include, in any case in 
which there was an excessive delay caused by the Veterans' 
Administration in the liquidation sale of the property securing such 
loan, any interest which had accrued as of the date of such sale and 
which would not be included, except for this subparagraph, in the 
calculation of such total indebtedness as a result of the specification 
of an earlier date under subparagraph (CXi) of this paragraph. 
"(11) This subsection shall cease to have effect on October 1, 
1989.". 
(b) REPEAL.—Paragraph (2) of section 2512(c) of the Deficit Reduc- 
38 use 1
8
1
6 
tion Act of 1984 (Public Law 98-369; 98 Stat. 1117) is repealed, note. 
(c) EFFECTIVE DATE.—The amendments made by subsection (a) 38 use 1816 
shall apply to defaults which occur more than 60 days after the date 
note. 
of the enactment of this Act. 
SEC. 6. CASH SALES OF PROPERTIES ACQUIRED THROUGH FORE-
CLOSURES. 
(a) NUMBER OP VENDEE LOANS.—(1) Section 1816(dXl) is amended 
by striking out "not more than 75 percent, nor less than 60 percent," 
in the first sentence and inserting in lieu thereof "not more than 65 
percent, nor less than 50 percent, . 
101 STAT. 1318 
PUBLIC LAW 100-198—DEC. 21, 1987 
Effective date. 
38 use 1816 
note. 
38 use 1816 
note. 
38 use 1816 
note. 
(2) The amendment made by paragraph (1) shall take effect as of 
October 1,1987. 
(b) MAXIMUM AMOUNT AND REHABILITATION LOANS.—(1) Section 
1816(d) is amended by adding at the end the following new 
paragraphs: 
"(4)(A) Except as provided in subparagraph (B) of this paragraph, 
the amount of a loan made by the Administrator to finance the 
purchase of real property from the Administrator described in 
paragraph (1) of this subsection may not exceed an amount equal to 
95 percent of the purchase price of such real property. 
"(B) The Administrator may waive the provisions of subparagraph 
(A) of this paragraph in the case of any loan described in paragraph 
(5) of this subsection. 
"(5) The Administrator may include, as part of a loan to finance a 
purchase of real property from the Administrator described in 
paragraph (1) of this subsection, an amount to be used only for the 
purpose of rehabilitating such property. Such amount may not 
exceed the amount necessary to rehabilitate the property to a 
habitable state, and payments shall be made available periodically 
as such rehabilitation is completed. 
"(6) This subsection shall cease to have effect on October 1,1990.". 
(2) The amendment made by this subsection shall apply to loans 
made more than 30 days after the date of the enactment of this Act. 
(c) REPORT.—The Administrator of Veterans' Affairs shall, by 
March 1, 1990, transmit to the Congress a report of the activities 
carried out, through December 31,1989, under paragraphs (4) and (5) 
of section 1816(d) of title 38, United States Code, as added by 
subsection (b) of this section. 
SEC. 7. REFINANCING HOME LOANS. 
(a) LOANS GUARANTEED OR INSURED BY THE VETERANS' ADMINIS-
TRATION.—Section 1810(e)(1) is amended— 
(1) in clause (B), by striking out "and such" and all that 
follows through "home"; and 
(2) in clause (D), by striking out "and"; 
(3) in clause (E), by striking out the period and inserting in 
lieu thereof "by more than 10 years; and '; and 
(4) by adding at the end the following new clause: 
"(F) the veteran must own the dwelling or farm residence 
securing the loan and— 
"(i) must occupy sudh dwelling or residence as such 
veteran's home; 
"(ii) must have previously occupied such dwelling or resi-
dence as such veteran's home and must certify, in such 
form as the Administrator shall require, that the veteran 
has previously so occupied such dwelling or residence; or 
"(iii) in any case in which a veteran is in active duty 
status as a member of the Armed Forces and is unable to 
occupy such residence or dwelling as a home because of 
such status, the spouse of the veteran must occupy, or must 
have previously occupied, such dwelling or residence as 
such spouse's home and must certify such occupancy in 
such form as the Administrator shall require.". 
(b) MANUFACTURED HOUSING LOANS.—Section 1819(a)(4)(A) is 
amended— 
(1) in clause (ii), by striking out "and such" and all that 
follows through "veteran's home"; 
PUBLIC LAW 100-198—DEC. 21, 1987 
101 STAT. 1319 
(2) in clause (iv), by striking out "and"; 
(3) in clause (v), by striking out the period at the end and 
inserting in lieu thereof a semicolon; and 
(4) by adding at the end the following new clause: 
"(vi) the veteran must own the manufactured home, or 
the manufactured-home lot, or the manufactured home and 
the manufactured-home lot, securing the loan and— 
"(I) must occupy the home, a manufactured home on 
the lot, or the home and the lot, securing the loan; 
"(II) must have previously occupied the home, a 
manufactured home on the lot, or the home and the lot, 
securing the loan as the veteran's home and must 
certify, in such form as the Administrator shall re-
quire, that the veteran has previously so occupied the 
home (or such a home on the lot); or 
"(III) in any case in which a veteran is in active duty 
status as a member of the Armed Forces and is unable 
' 
to occupy the home, a manufactured home on the lot, 
or the home and the lot, as a home because of such 
status, the spouse of the veteran must occupy, or must 
have previously occupied, the manufactured home on 
the lot, or the home and the lot, as such spouse's home 
and must certify such occupancy in such form as the 
Administrator shall require.". 
(c) AMOUNTS OF OTHER REFINANCING LOANS.—Section 1810 
is 
amended by adding at the end the following new subsection: 
"(h) The amount of a loan guaranteed for the purpose specified in 
subsection (aX5) of this section may not exceed the amount equal to 
90 percent of the appraised value of the dwelling or farm residence 
which will secure the loan, as determined by the Administrator.". 
(d) EFFECTIVE DATE.—(1) 'The amendments made by subsections (a) 38 use 1810 
and (b) of this section shall apply to loans made more than 30 days note. 
after the date of the enactment of this Act. 
(2) The amendment made by subsection (c) of this section shall 
apply to loans for which commitments are made more than 60 days 
after the date of the enactment of this Act. 
SEC. 8. OCCUPANCY REQUIREMENTS. 
(a) ORIGINAL LOANS.—(1) Section 1804(c) is amended— 
(A) by striking out "(c) No" and inserting in lieu thereof "(cXD 
Except as provided in paragraph (2) of this subsection, no"; 
(B) by striking out "No loan" in the second sentence and 
inserting in lieu thereof "Except as provided in paragraph (2) of 
this subsection, no loan"; and 
(C) by adding at the end the following new paragraph: 
"(2) In any case in which a veteran is in active duty status as a 
member of the Armed Forces and is unable to occupy a property 
because of such status, the occupancy requirements of— 
"(A) paragraph (1) of this subsection; 
"(B) paragraphs (1) through (5) and paragraph (7) of section 
1810(a) of this title; 
"(C) section 1819(aX5XAXi) of this title; and 
"(D) section 1819(eX5) of this title; 
shall be considered to be satisfied if the spouse of the veteran 
occupies the property as the spouse's home and the spouse makes 
the certification required by paragraph (1) of this subsection.". 
101 STAT. 1320 
PUBLIC LAW 100-198—DEC. 21, 1987 
(2) Section 1810(a) is amended by striking out "(a) Any" and 
inserting in lieu thereof "(a) Except as provideid in section 1804(cX2) 
of this title, any". 
0)) MANUFACTURED HOUSING LOANS.—(1) Section 1819(aX5XAXi) is 
amended by inserting "(except as provided in section 1804(cX2) of 
this title)" after "by the veteran". 
(2) Section 1819(eX5) is amended by inserting before the semicolon 
the following: "; except that the requirement of this clause shall not 
apply (A) in the case of a guaranteed loan that is for the purpose 
described in paragraph dXF) of subsection (a), or (B) in the case 
described in section 1804(c)(2)". 
38 use 1804 
(c) EFFECTIVE DATE.—^The amendments made by this section shall 
note- 
apply with respect to loans made more than 30 days after the date of 
the enactment of this Act. 
SEC. 9. PROPERTY MANAGEMENT. 
38 use 1820 
(a) HOMELESS PROGRAM.—(1) To assist homeless veterans and their 
note. 
families acquire shelter, the Administrator of Veterans' Affgiirs may 
enter into agreements described in paragraph (2) of this subsection 
with— 
(A) nonprofit organizations, with preference being given to 
any organization named in, or approved by the Administrator 
under, section 3402 of title 38, United States (Dode; or 
(B) any State, as defined in section 101(20) of such title, or any 
I)olitical subdivision thereof. 
(2) To carry out paragraph (1) of this subsection, the Adminis-
trator may enter into agreements to sell real property, and improve-
ments thereon, acquired by the Administrator £is the result of a 
default on a loan made or guaranteed under chapter 37 of title 38, 
United States (Dode. Such sale shall be for such consideration as the 
Administrator determines is in the best interests of homeless veter-
ans and tjie Federal Government. 
(3) Thej Administrator may enter into an agreement under para-
graph (1) only i
f
— 
(A) the Administrator determines that such an action will not 
' V ^
'
^ adversely affect the Veterans' Administration's ability— 
' (i) to fulfill its statutory missions with respect to the 
Veterans* Administration loan guaranty program and the 
short- and long-term solvency of the Loan Guaranty Revolv-
ing Fund under such chapter 37; or 
^ ' 
(ii) to carry out other functions and administer other 
programs authorized by law; 
(B) the entity to which the property is sold agrees to (i) utilize 
the property solely as a shelter primarily for homeless veterans 
and their families, (ii) comply with all zoning laws relating to 
the property, (iii) make no use of the property that is not 
* 
compatible with the area where the property is located, and (iv) 
take such other actions as the Administrator determines are 
necessary or appropriate in the best interests of homeless veter-
ans and the Federal Government; and 
' t J 
(C) the Administrator determines that there is no significant 
likelihood of the property being sold for a price sufficient to 
reduce the liability of the Veterans' Administration or the 
veteran who had defaulted on the loan guaranteed under such 
chapter 37. 
(4) Any agreement, deed, or other instrument executed by the 
Administrator under this subsection shall be on such terms and 
PUBLIC LAW 100-198—DEC. 21, 1987 
101 STAT. 1321 
conditions as the Administrator determines to be appropriate and 
necessary to carry out the purpose of such agreement. 
(b) JOB TRAINING PROGRAM.^1) TO assist veterans to obtain 
training pursuant to the Veterans' Job Training Act (29 U.S.C. 1721 
note), the Administrator of Veterans' Affairs may convey to persons 
described in paragraph (2) of this subsection real property and 
improvements described in subsection (aX2) of this section for an 
amount not less than 75 percent of the fair market value of such 
real property and improvements. 
(2) The Administrator may convey such property to persons who 
enter into an agreement with the Administrator to— 
(A) use veterans in a program of job training under the 
Veterans' Job Training Act in the rehabilitation of residences 
on such real property; and 
(B) provide a priority to veterans in the sale of such rehabili-
tated residences. 
(3) The Administrator may include appropriate enforcement 
provisions in any agreement aescribed in paragraph (2), including 
provision for reasonable liquidated damages. 
(4) The Administrator shall reduce the amount of any liability 
that a veteran has with respect to any property conveyed under this 
section by an amount equal to the reduction in the sale price of the 
property below the fair market value of the property. 
(c) TERMINATION.—The authority provided in subsections (a) and 
(b) shall terminate on October 1,1990. 
(d) REPORT.—The Administrator of Veterans' Affairs shall, by 
March 1, 1990, transmit to the Congress a report of the activities 
carried out, through December 31,1989, under this section. 
SEC. 10. L
O
A
N ASSUMPTIONS. 
(a) IN GENERAL.—(1) Chapter 37 is amended by inserting after 
section 1817 the following new section: 
"§ 1817A. Assumptions; release from liability 
38 use 1817A. 
"(aXD If a veteran or any other person disposes of residential 
propjBrty securing a guaranteed, insured, or direct housing loan 
obtained by a veteran under this chapter and the veteran or other 
person notifies the holder of the loan in writing before the property 
IS disposed of, the veteran or other person, as the case may be, shall 
be relieved of all further liability to the Administrator with respect 
to the loan (including liability for any loss resulting from any 
default of the purchaser or any subsequent owner of the property) 
and the application for assumption shall be approved if the holder 
determines that— 
"(A) the loan is current; and 
"(B) the purchaser of the property from such veteran or other 
Contracts. 
person— 
"(i) is obligated by contract to purchase such property and 
to assume full liability for the repayment of the balance of 
the loan remaining unpaid and has assumed by contract all 
of the obligations of the veteran under the terms of the 
instruments creating and securing the loan; and 
"(ii) qualifies from a credit standpoint, to the same extent 
as if the purchaser were a veteran eligible under section 
1810 of this title, for a guaranteed or insured or direct loan 
in an amount equal to the unpaid balance of the obligation 
for which the purchaser is to assume liability. 
101 STAT. 1322 
PUBLIC LAW 100-198—DEC. 21, 1987 
"(2) For the purposes of paragraph (1), paragraph (3), and para-
graph (4XCXii) of this subsection, the Administrator shall be consid-
ered to be the holder of the loan if the actual holder is not an 
approved lender described in section 1802. 
"(3) If the holder of the loan determines that the loan is not 
current or that the purchaser of the property does not meet the 
requirements of paragraph (IXB) of this subsection, the holder 
shall— 
"(A) notify the transferor and the Administrator of such 
determination; and 
"(B) notify the transferor that the transferor may appeal the 
determination to the Administrator. 
"(4XA) Upon the appeal of the trsmsferor after a determination 
described in paragraph (3) is made, the Administrator shall, in a 
timely manner, review and make a determination (or a redetermina-
tion in any case in which the Administrator made the determination 
described in such paragraph) with respect to whether the loan is 
current and whether the purchaser of the property meets the 
requirements of paragraph (IXB) of this subsection. The Adminis-
trator shall transmit, in writing, a notice of the nature of such 
determination to the transferor and the holder and shall inform 
them of the action that shall or may be taken under subparagraph 
(B) of this paragraph as a result of the determination of the 
Administrator. 
"(BXi) If the Administrator determines under subparagraph (A) of 
this paragraph that the loan is current and that the purchaser 
meets the requirements of paragraph (IXB) of this subsection, the 
holder shall approve the assumption of the loan, and the transferor 
shall be relieved of all liability to the Administrator with respect to 
such loan. 
"(ii) If the Administrator determines under subparagraph (A) of 
this paragraph that the purchaser does not meet the requirements 
A ' 
of paragraph (IXB) of this subsection, the Administrator may direct 
the holder to approve the assumption of the loan i
f
— 
"(I) the Administrator determines that the transferor of the 
property is unable to make pa3rments on the loan and has made 
reasonable efforts to find a buyer who meets the requirements 
of paragraph (IXB) of this subsection and that, as a result, the 
proposed transfer is in the best interests of the Veterans' 
Administration and the transferor; 
"(II) the transferor has requested, within 15 days after receiv-
ing the notice referred to in subparagraph (A) of this paragraph, 
that the Administrator approve the assumption; and 
"(III) the transferor will, upon assumption of the loan by the 
purchaser, be secondarily liable on the loan. 
"(C) I
f
— 
"(i) the loan is not approved for assumption under subpara-
graph (B) of this paragraph or paragraph (1) of this subsection; 
or 
"(ii) no appeal is made by the transferor under subparagraph 
(A) of this paragraph within 30 days after the holder informs 
the transferor of its determination under paragraph (3) of this 
subsection, 
the holder may demand immediate, full pajrment of the principal, 
and all interest earned thereon, of such loan if the transferor 
disposes of the property. 
s 
PUBLIC LAW 100-198—DEC. 21, 1987 
101 STAT. 1323 
"(b) If a person disposes of residential property described in 
subsection (aXl) of this section and the person fails to notify the 
holder of the loan before the property is disposed of, the holder, 
upon learning of such action by the person, may demand immediate 
and full pa3rment of the principal, interest, and all other amounts 
owing under the terms of the loan. 
"(cXD In any case in which the holder of a loan described in 
subsection (aXl) of this section has knowledge of a person's disposing 
of residential property securing the loan, the holder shall notify the 
Administrator of such action. 
"(2) If the holder fails to notify the Administrator in such a case, 
the holder shall be liable to the Administrator for any damage 
sustained by the Administrator as a result of the holder's failure, as 
determined at the time the Administrator is required to make 
payments in accordance with any insurance or guaranty provided by 
the Administrator with respect to the loan concerned. 
"(d) The Administrator shall provide that the mortgage or deed of 
trust and any other instrument evidencing the loan entered into by 
a person with respect to a loan guaranteed, insured, or made under 
this chapter shall contain provisions, in such form as the Adminis-
trator shall specify, implementing the requirements of this section, 
and shall bear in conspicuous position in capital letters on the first 
page of the document in type at least 2 and Vz times larger than the 
regular type on such page the following: 'This loan is not assumable 
without the approval of the Veterans' Administration or its au-
thorized agent.'. 
"(e) The Administrator shall establish in regulations a reasonable 
Regulations. 
amount as the maximum amount that a lender may charge for 
processing an application for a creditworthiness determination and 
assumption of a loan pursuant to this section. Such regulations shall 
establish requirements for the timely processing of applications for 
acceptance of assumptions. 
"(f) This section shall apply only to loans for which commitments 
are made on or after March 1,1988.". 
(2) Section 1817 is amended by adding at the end the following 
new subsection: 
"(c) This section shall apply only to loans for which commitments 
are made before March 1,1988,". 
(3) The table of sections for chapter 37 is amended by inserting 
after the item for section 1817 the following new item: 
"1817A. Assumptions; release from liability.". 
(b) PROTECTION AGAINST TRANSFERS TO PERSONS NOT CREDIT-
WORTHY.—Section 1804 is amended by adding at the end the follow-
ing new subsection: 
"(f) Any housing loan which is financed through the assistance of 
this chapter and to which section 1817A of this chapter applies shall 
include a provision that the loan is immediately due and payable 
upon transfer of the property securing such loan to any transferee 
unless the acceptability of the assumption of the loan is established 
pursuant to such section 1817A.". 
(c) LOAN FEE.—Section 1829 is amended by adding at the end the 
following new subsection: 
"(d) Except as provided in subsection (b) of this section, a fee shall 
be collected from a person assuming a loan to which section 1817A 
of this chapter applies. The amount of the fee shsdl be equal to one-
101 STAT. 1324 
PUBLIC LAW 100-198—DEC. 21, 1987 
Reports. 
Reports. 
Termination 
date. 
half of one percent of the balance of such loan on the date of the 
transfer of the property.". 
SEC. 11. APPRAISALS. 
(a) QuAUFiCATiONS OF APPRAISERS.—(1) Section 1831(a)(1) is 
amended— 
(A) by striking out "(1)" and inserting in lieu thereof "(1) 
subject to subsection (b)(2) and"; and 
(B) by inserting before the semicolon at the end the following: 
", including the successful completion of a written test, submis-
sion of a sample appraisal, certification of an appropriate 
number of years of experience as an appraiser, and submission 
of recommendations from other appraisers". 
(2) Section 1831(b) is amended— 
(A) by striking out "(b)" and inserting in lieu thereof "(b)(1)"; 
and 
(B) by adding at the end the following new paragraph: 
"(2) If uniform qualifications become applicable for appraisers 
who perform appraisals for or in connection with the Federal 
Government, the qualifications required by subsection (aXD of this 
section may be more stringent than such uniform qualifications, but 
the Administrator may use no written test in determining the 
qualifications of appraisers other than the test prescribed to imple-
ment such uniform qualifications.". 
(b) REVIEW OF APPRAISALS.—Section 1831 is amended— 
(1) in subsection (c), by striking out "The Administrator shall, 
upon request," and inserting in lieu thereof "Except as pro-
vided in subsection (f) of this section, the appraiser shall for-
ward an appraisal report to the Administrator for review. Upon 
receipt of such report, the Administrator shall determine the 
reasonable value of the property, construction, repairs, or alter-
ations for purposes of this chapter, and notify the veteran of 
such determination. Upon request, the Administrator shall"; 
(2) in subsection (d), by inserting "(other than a lender au-
thorized under subsection (0 of this section to determine reason-
able value)" after "lender"; and 
(3) by adding at the end the following new subsection: 
"(fXD Subject to the provisions of paragraphs (2) and (3) of this 
subsection, the Administrator may, in accordance with standards 
and procedures established in regulations prescribed by the 
Administrator, authorize a lender to determine the reasonable value 
of property for the purposes of this chapter if the lender is au-
thorized to make loans which are automatically guaranteed under 
section 1802(d) of this title. In such a case, the appraiser selected by 
the Administrator pursuant to subsection (b) of this section shall 
submit the appraisal report directly to the lender for review, and 
the lender shall, as soon as possible thereafter, furnish a copy of the 
appraisal to the veteran who is applying for the loan concerned and 
to the Administrator. 
"(2) In exercising the authority provided in paragraph (1) of this 
subsection, the Administrator snail assign a sufficient number of 
personnel to carry out an appraisal-review system to monitor, on at 
least a random-sampling basis, the making of appraisals by apprais-
ers and the effectiveness and the efficiency of the determination of 
reasonable value of property by lenders. 
"(3) The authority provided in this subsection shall terminate on 
October 1,1990.". 
PUBLIC LAW 100-198—DEC. 21, 1987 
101 STAT. 1325 
(b) CONFORMING AMENDMENT.—Section 18100)) is amended— 
(1) in paragraph (5), by striking out "by the Administrator" 
and inserting in lieu thereof "pursuant to section 1831 of this 
title"; and 
(2) by striking out the final sentence. 
SEC. 12. SEQUESTRATION EXEMPTION. 
(a) IN GENERAL.—Section 113 is amended— 
(1) in subsection (a), by adding at the end the following new 
clause: 
"(6) Benefits under subchapters I, II, and III of chapter 37 of 
this title, relating to housing loans for certain veterans and for 
the spouses and surviving spouses of certain veterans."; 
(2)(A) by striking out subsection (e); and 
(B) by redesignating subsections (f) and (g) as (e) and (f), 
respectively; and 
(3) in subsection (c)(2), by striking out "34, or 36" and insert-
ing in lieu thereof "31, 34, 35, or 36". 
(b) EFFECTIVE DATE.—The amendments made by subsection (a) 38 use 113 note. 
shall take effect on November 19,1987. 
SEC. 13. DETERMINATION OF MINIMUM RESIDUAL INCOME. 
Paragraph (3) of section 1810(g) is amended by adding at the end 
the following new sentence: "If the procedures described in clause (C) 
of this paragraph include standards for evaluating residual income, 
the Administrator shall, in establishing such standards, give appro-
priate consideration to State statistics (in States as to which the 
Administrator determines that such statistics are reliable) pertinent 
to residual income and the cost of living in the State in question 
rather than in a larger region.". 
SEC. 14 MARKETING 
VETERANS' 
ADMINISTRATION-ACQUIRED 
PROP-
ERTIES. 
Section 1832 is amended— 
(1) by inserting "(a)" before "The"; and 
(2) by adding at the end the following new subsection: 
"(b) For the purpose of facilitating the most expeditious sale, at 
the highest possible price, of real property acquired by the Adminis-
trator as the result of a default on a loan guaranteed, insured, or 
made under this chapter, the Administrator shall list all such 
property with real estate brokers under such arrangements £is the 
Administrator 
determines to be most appropriate and cost 
effective.". 
Approved December 21, 1987. 
LEGISLATIVE HISTORY—H.R. 2672 (S. 1801): 
HOUSE REPORT: No. 100-257 (Comm. on Veterans' Affairs). 
SENATE REPORT: No. 100-204 accompanying S. 1801 (Comm. on Veterans' Affairs). 
CONGRESSIONAL RECORD, Vol. 133 (1987): 
Aug. 3, considered and passed House. 
Oct. 30, considered and passed Senate, amended, in lieu of S. 1801. 
Nov. 17, House concurred in Senate amendments with amendments. 
Dec. 4, Senate concurred in House amendments.