Veterans Home Loan Program Amendments of 1992
PL 102-547 (H.R.939), enacted 10/28/1992

PUBLIC LAW 102-547—OCT. 28, 1992 
106 STAT. 3633 
Public Law 102-547 
102d Congress 
An Act 
To amend title 38, United States Code, with respect to housing loans for veterans. 
Oct. 28. 1992 
[H.R. 939] 
Be it enacted by the Senate and House of Representatives of 
the United States of 
America in Congress assembled. 
Veterans Home 
Loan Program 
SECTION 1. SHORT TITLE. 
Amendments of 
1992 
This Act may be cited as the "Veterans Home Loan Program 33 use 101 note 
Amendments of 1992". 
SEC. 2. ELIGmiUTY OF SELECTED RESERVE. 
(a) SELECTED RESERVE.—Chapter 37 of title 38, United States 
Code, is amended— 
(1) in section 3701(b), by adding at the end the following: 
"(5XA) The term Veteran' also includes an individual who 
is not otherwise eligible for the benefits of this chapter and 
who has completed a total service of at least 6 years in the 
Selected Reserve and, following the completion of such service, 
was discharged from service with an honorable discharge, was 
placed on the retired list, was transferred to the Stsuidby 
Reserve or an element of the Ready Reserve other than the 
Selected Reserve after service in the Selected Reserve character-
ized by the Secretary concerned as honorable service, or contin-
ues serving in the Selected Reserve. 
"(B) The term 'Selected Reserve' means the Selected 
Reserve of the Ready Reserve of any of the reserve components 
(including the Army National Guard of the United States and 
the Air National (^uard of the United States) of the Armed 
Forces, as required to be maintained under section 268(b) of 
title 10."; and 
(2) in section 3702(aX2), by adding at the end the following: 
"(E) For the 7-year period beginning on the date of enact-
ment of this subparagraph, each veteran described in section 
3701(bX5) of this title.*. 
(b) FEES.—(1) Section 3729(aX2) of such title is amended— 
(A) by striking out "and" at the end of subparagraph (B); 
(B) by striking out the period at the end of subparagraph 
(C) and inserting in lieu thereof a semicolon; and 
(C) by adding after subparagraph (C) the following new 
subparagraph: 
"(D) in the case of a loan made to, or guaranteed or insured 
on behalf of, a veteran described in section 3701(bX5) of this 
title under this chapter, the amount of such fee shall be— 
"(i) two percent of the total loan amount; 
"(ii) in the case of a loan for any purpose specified 
in section 3712 of this title, one percent of such amotmt; 
or 
"(iii) in the case of a loan for a purchase (other than 
V 
a purchase referred to in section 3712 of this title) or 
59-194 O—93 
29:QL3(Pt. 4) 
note. 
106 STAT. 3634 
PUBLIC LAW 102-547—OCT. 28, 1992 
for construction with respect to which the veteran has 
made a downpajonent of 5 percent or more of the total 
purchase price or construction cost— 
"(I) 1.50 percent of the total loan amount if such 
downpajnnent is less than 10 percent of such price 
or cost; or 
"(11) 1.25 percent of the total loan amount if such 
downpayment is 10 percent or more of such price or 
cost; and". 
(2) Subparagraphs (A) and (B) of section 3725(c)(2) of such 
title are amended by inserting "(other than loans described in 
section 3729(a)(2XD) of this title)" after "for each loan". 
38 use 3702 
(c) REPORT.—The Secretary of Veterans Affairs shall transmit 
a report to the Committees on Veterans' Affairs of the Senate 
and House of Representatives no later than December 31, 1994, 
and annually thereafter. The report shall contain— 
(1) a declaration of the number of veterans (as defined 
by section 3701(b)(5) of title 38, United States Code) who receive 
mortgage loans guaranteed by the Secretary as a result of 
the amendments made by subsection (a); 
(2) a comparison of the default rate of veterans described 
in paragraph (1) with the default rate for all other veterans 
who have received loans guaranteed or insured by the Sec-
retary; and 
(3) a comparison of the proportion of veterans who receive 
mortgage loans guaranteed by the Secretary as a result of 
the amendments made by subsection (a) who are first time 
homebuyers with the proportion of all other veterans who 
receive mortgage loans guaranteed or insured by the Secretary 
and who are first time homebuyers. 
SEC. 3. ADJUSTABLE RATE MORTGAGE DEMONSTRATION PROGRAM. 
(a) IN GENERAL.—(1) Chapter 37 of title 38, United States 
Code, is amended by adding after section 3706 the following new 
section: 
*
*
§ 3707. A4ju8table rate mortgages 
"(a) The Secretary shall carry out a demonstration project under 
this section during fiscal years 1993, 1994, and 1995 for the purpose 
of guaranteeing loans in a manner similar to the manner in which 
the Secretary of Housing and Urban Development insures adjust-
able rate mortgages under section 251 of the National Housing 
Act. 
"(b) Interest rate adjustment provisions of a mortgage guaran-
teed under this section shall— 
"(1) correspond to a specified national interest rate index 
approved by the Secretary, information on which is readily 
accessible to mortgagors from generally available published 
.
V sources; 
J 
"(2) be made by adjusting the monthly payment on an 
^ 
annual basis on the anniversary of the date on which the 
loan was closed; 
"(3) be limited, with respect to any single annual interest 
rate adjustment, to a maximum increase or decrease of 1 
percentage point; and 
note. 
PUBLIC LAW 102-547—OCT. 28, 1992 
106 STAT. 3635 
"(4) be limited, over the term of the mortgage, to a maxi-
mum increase of 5 percentage points above the initial contract 
interest rate. 
"(c) The Secretary shall promulgate underwriting standards 
for loans guaranteed under this section, taking into account— 
"(1) the status of the interest rate index referred to in 
subsection (b)(1) and available at the time an underwriting 
decision is made, regardless of the actual initial rate ofTered 
by the lender; 
"(2) the maximum and likely amounts of increases in mort-
gage payments that the loans would require; 
"(3) the underwriting standards applicable to adjustable 
rate mortgages insured under title II of the National Housing 
Act; and 
"(4) such other factors as the Secretary finds appropriate. 
"(d) The Secretary shall require that the mortgagee make avail-
able to the mortgagor, at the time of loan application, a written 
explanation of the features of the adjustable rate mortgage, includ-
ing a hypothetical payment schedule that displays the maximum 
potential increases in monthly pajrments to the mortgagor over 
the first five years of the mortgage term.". 
(2) The table of sections for chapter 37, of title 38, United 
States Code, is amended by inserting after the item relating to 
section 3706 the following new item: 
"3707. A(|justable rate mortgages.". 
(b) REPORT.—The Secretary shall transmit a report to the 
38 use 3707 
Committees on Veterans' Affairs of the Senate and House of Rep-
resentatives no later than December 31, 1993, containing a descrip-
tion of the project carried out under section 3707 of title 38, United 
States Code (as added by subsection (a)), and shall continue to 
make annual reports to the Committees with respect to the default 
rate and other information concerning the loans guaranteed under 
such section. Such reports shall— 
(1) compare the number of adjustable rate mortgages 
guaranteed under such section with the number of fixed rate 
loans guaranteed or insured under chapter 37 of such title 
and contrast this ratio with a corresponding ratio for loans 
for single family housing insured by the Secretary of Housing 
and Urban Development pursuant to the National Housing 
Act; 
(2) compare the initial interest rate of the adjustable rate 
mortgages guaranteed under such section with the fixed 
interest rate on loans guaranteed or insured under chapter 
37 of such title; 
(3) describe the monthly mortgage payment savings to the 
veteran, if any, under an adjustable rate mortgage guaranteed 
under such section compared with the pajnnents that would 
have been required if the loan bore interest at a maximum 
fixed rate established by the Secretary; 
(4) discuss whether the market share for housing loans 
guaranteed under chapter 37 of such title has increased or 
decreased since the implementation of such section; 
(5) compare the default rate on mortgages guaranteed 
under such section with the default rate of fixed-rate mortgages 
guaranteed or insured under chapter 37 of such title; and 
(6) compare the number of first time homebuyers using 
adjustable rate mortgage loans under such section with the 
106 STAT. 3636 
PUBLIC LAW 102-547—OCT. 28, 1992 
number of first time homebuyers using any other loan guaran-
teed under chapter 37 of such title. 
SEC. 4. ENHANCED LOAN ASSET SALE AUTHORITY. 
Section 3720(h)(2) of title 38, United States Code, is amended 
by striking out "December 31, 1992" and inserting in lieu thereof 
"December 31,1995". 
SEC. S. FEES FOR REFINANCING LOANS. 
Section 3729(aX2) of title 38, United States Code (as amended 
by section 2(b) of this Act), is amended— 
(1) in subparagraph (A), by inserting "(other than section 
3712(aXlXF))" after "section 3712"; and 
(2) by inserting after subparagraph (D) the following new 
subparagraph: 
"(E) in the case of a loan guaranteed under section 
3710(aX8), 3710(aX9XBXi), or 3712(aXlXF) of this title, the 
amount of such fee shall be 0.5 percent of the total loan 
amount.". 
SEC. 6. GUARANTY AMOUNT RELATIVE TO LOAN REFINANCINGS. 
Chapter37oftitle38, United States Code, is amended— 
(1) in section 3710(e), by amending paragraph (IXD) to 
read as follows: 
"(D) notwithstanding section 3703(aXl) of this title, the 
amount of the guaranty of the loan may not exceed the greater 
of (i) the original guaranty amount of the loan being refinanced, 
or (ii) 25 percent of the loan;"; and 
(2) in section 3712(aX4), by amending subparagraph (AXiv) 
to read as follows: 
"(iv) notwithstanding section 3703(aXl) of this title, the 
amount of the guaranty of the loan may not exceed the greater 
of (I) the original guaranty amount of the loan being refinanced, 
or (II) 25 percent of the loan;". 
SEC. 7. EXTENSION OF LENDER APPRAISAL PROGRAM. 
Section 3731(fX3) of title 38, United States Code, is amended 
by striking out "1992" and inserting in lieu thereof "1995". 
SEC. 8. NATIVE AMERICAN VETERANS DIRECT HOUSING LOAN PILOT 
PROGRAM. 
(a) PROGRAM.—Chapter 37 of title 38, United States Code, 
is amended by adding at the end the following new subchapter: 
"SUBCHAPTER V—NATIVE AMERICAN VETERAN HOUSING 
LOAN PILOT PROGRAM 
<
*
§ 3761. Pilot program 
"(a) The Secretary shall establish and implement a pilot pro-
gram under which the Secretaiy may make direct housing loans 
to Native American veterans. The purpose of such loans is to 
permit such veterans to purchase, construct, or improve dwellings 
on trust land. The Secretary shall establish and implement the 
pilot program in accordance with the provisions of this subchapter. 
"(b) In carrying out the pilot program under this subchapter, 
the Secretary shall, to the extent practicable, make direct housing 
loans to Native American veterans who are located in a variety 
PUBLIC LAW 102-547—OCT. 28, 1992 
106 STAT. 3637 
of geographic areas and in areas experiencing a variety of economic 
circumstances. 
"(c) No loans may be made under this subchapter after Septem-
ber 30,1997. 
**§3762. Direct housing* loans to Native American veterans 
"(a) The Secretary may make a direct housing loan to a Native 
American veteran if— 
"(1) the Secretary has entered into a memorandum of 
understanding with respect to such loans with the tribal 
organization that has jurisdiction over the veteran; and 
"(2) the memorandum is in effect when the loan is made. 
"(b)(1) Subject to paragraph (2), the Secretary shall ensure 
that each memorandum of understanding that the Secretary enters 
into with a tribal organization shall provide for the following: 
"(A) That each Native American veteran who is under 
the jurisdiction of the tribal organization and to whom the 
Secretary makes a direct loan under this subchapter— 
"(i) holds, possesses, or purchases using the proceeds 
of the loan a meaningful interest in a lot or dwelling 
(or both) that is located on trust land; and 
"(ii) will purchase, construct, or improve (as the case 
may be) a dwelling on the lot using the proceeds of the 
loan. 
"(B) That each such Native American veteran will convey 
to the Secretary by an appropriate instrument the interest 
referred to in subparagraph (A) as security for a direct housing 
loan under this subchapter. 
"(C) That the tribal organization and each such Native 
American veteran will permit the Secretary to enter upon the 
trust land of that organization or veteran for the purposes 
of carrying out such actions as the Secretary determines are 
necessary— 
"(i) to evaluate the advisability of the loan; and 
"(ii) to monitor any purchase, construction, or improve-
ments carried out using the proceeds of the loan. 
"(D) That the tribal organization has established standards 
and procedures that apply to the foreclosure of the interest 
conveyed by a Native American veteran pursuant to subpara-
graph (B), including— 
"(i) procedures for foreclosing the interest; and 
"(ii) procedures for the resale of the lot or the dwelling 
(or both) purchased, constructed, or improved using the 
proceeds of the loan. 
"(E) That the tribal organization agrees to such other terms 
and conditions with respect to the making of direct loans to 
Native American veterans under the jurisdiction of the tribal 
organization as the Secretary may require in order to ensure 
that the pilot program established under this subchapter is 
implemented in a responsible and prudent manner. 
"(2) The Secretary may not enter into a memorandum of under-
standing with a tribal organization under this subsection unless 
the Secretary determines that the memorandum provides for such 
standards and procedures as are necessary for the reasonable 
protection of the financial interests of the United States. 
106 STAT. 3638 
PUBLIC LAW 102-547—OCT. 28, 1992 
"(cXlXA) Except as provided in subparagraph (B), the principal 
amount of any direct housing loan made to a Native American 
imder this section may not exceed $80,000. 
"(B) The Secretary may make loans exceeding the amount 
specified in subparagraph (A) in a geographic area if the Secretary 
determines that housing costs in the area are significantly higher 
than average housing costs nationwide. The amount of such increase 
shall be the amount that the Secretary determines is necessary 
in order to carry out the pilot program under this subchapter 
in a manner that demonstrates the advisability of making direct 
housing loans to Native American veterans who are located in 
a variety of geographic areas and in geographic areas experiencing 
a variety of economic conditions. 
''(2) Loans made under this section shall bear interest at a 
rate determined by the Secretary, which rate may not exceed the 
appropriate rate authorized for guaranteed loans under section 
3703(cXl) or section 3712(f) of this title, and shall be subject to 
such requirements or limitations prescribed for loans guaranteed 
under this title as the Secretary may prescribe. 
"(3) Notwithstanding section 3704(a) of this title, the Secretary 
shall establish minimum requirements for planning, construction, 
improvement, and general acceptability relating to any direct loan 
made under this section. 
"(dXD The Secretary shall establish credit underwriting stand-
ards to be used in evaluating loans made under this subchapter. 
^ 
In establishing such standards, the Secretary shall take into account 
the purpose of this program to make available housing to Native 
American veterans living on trust lands. 
"(2) The Secretary shall determine the reasonable value of 
the interest in property that will serve as security for a loan 
/ 
made under this section and shall establish procedures for apprais-
als upon which the Secretary may base such determinations. The 
procedures shall incorporate generally the relevant requirements 
of section 3731 of this title, imless the Secretary determines that 
such reqmrements are impracticable to implement in a geographic 
area, on particular trust lands, or imder circumstances specified 
by the Secretary. 
"(e) Loans made under this section shall be repaid in monthly 
installments. 
"(f) In connection with any loan under this section, the Sec-
retary may make advances in cash to provide for repairs, alter-
ations, and improvements and to meet incidental expenses of the 
loan transaction. The Secretary shall determine the amoimt of 
any expenses incident to the origination of loans made under this 
section, which expenses, or a reasonable flat allowance in lieu 
thereof, shall be paid by the veteran in addition to the loan closing 
costs. 
"(g) Without regard to any provision of this chapter (other 
than a provision of this section), the Secretary may— 
"(1) take any action that the Secretary determines to be 
necessary with respect to the custody, management, protection, 
and realization or sale of investments under this section; 
''(2) determine any necessary expenses and expenditures 
and the manner in which such expenses and expenditures 
shall be incurred, allowed, and paid; 
PUBLIC LAW 102-547—OCT. 28, 1992 
106 STAT. 3639 
"(3) make such rules, regulations, and orders as the Sec-
retary considers necessary for carrying out the Secretary's func-
tions under this section; and 
''(4) in a manner consistent with the provisions of this 
chapter and with the Secretary's functions under this sub-
chapter, employ, utilize, and compensate any persons, organiza-
tions, or departments or agencies (including departments and 
agencies of the United States) designated by the Secretary 
to cany out such functions. 
"(h) The Secretary shall carry out an outreach program to 
inform and educate tribed organizations and Native American veter-
ans of the pilot program provided for imder this subchapter and 
the availability of direct housing loans for Native American veterans 
who live on trust lands. 
*
*
§ 3763. Housing loan program account 
"(a) There is hereby established in the Treasury of the United 
States an account known as the 'Native American Veteran Housing 
Loan Program Account' (hereafter in this subchapter referred to 
as the 'Account'). 
"(b) The Accoimt shall be available to the Secretary to carry 
out all operations relating to the making of direct housing loans 
to Native American veterans imder this subchapter, including any 
administrative expenses relating to the making of such loans. 
Amounts in the Account shall be available without fiscal year 
limitation. 
*"§ 3764. Definitions 
"For the purposes of this subchapter— 
"(1) The term 'trust land' means any land that— 
"(A) is held in trust by the United States for Native 
Americans; 
"(B) is subject to restrictions on alienation imposed 
by the United States on Indian lands (including native 
Hawaiian homelands); 
"(C) is owned by a Regional Corporation or a Village 
Corporation, as such terms are defined in section 3(g) and 
3(j) of the Alaska Native Clcdms Settlement Act, respec-
tively (43 U.S.C. 1602(g), (j)); or 
(D) is on any island in the Pacific Ocean if such 
land is, by cultural tradition, communally-owned land, as 
determined by the Secretary. 
"(2) The term 'Native American veteran* means any veteran 
who is a Native American. 
"(3) The term 'Native American' means— 
"(A) an Indian, as defined in section 4(d) of the Indian 
Self-Determination and Education Assistance Act (25 
U.S.C. 450b(d)); 
"(B) a native Hawaiian, as that term is defined in 
section 201(aX7) of the Hawaiian Homes Commission Act, 
1920 (Public Law 67-34; 42 Stat. 108); 
"(C) an Alaska Native, within the meaning provided 
for the term 'Native' in section 3(b) of the Alaska Native 
Claims Settlement Act (43 U.S.C. 1602(b)); and 
"(D) a Pacific Islander, within the meaning of the 
Native American Programs Act of 1974 (42 U.S.C. 2991 
etseq.). 
note. 
note. 
106 STAT. 3640 
PUBLIC LAW 102-547—OCT. 28, 1992 
"(4) The term 'tribal organization' shall have the meaning 
given such term in section 4(1) of the Indian Self-Determination 
' and Education Assistance Act (25 U.S.C. 450b(l)) and shall 
include the Department of Hawaiian Homelands, in the case 
of native Hawaiians, and such other organizations as the Sec-
retary may prescribe.". 
?LY^^^^^ 
(b) CONSULTATION.—^In carrjdng out the direct housing loan 
pilot program authorized under subchapter V of chapter 37 of 
title 38, United States Code (as added by subsection (a)), the Sec-
retary of Veterans Affairs shall consider tne views and recommenda-
tions, if any, of the Advisory Committee on Native-American 
Veterans established under section 19032 of the Veterans' Health-
Care Amendments of 1986 (title X
D
C of Public Law 99-272; 100 
Stat. 388). 
(c) CONFORMING AMENDMENT.—^The table of sections of such 
chapter is amended by adding at the end the following new matter: 
"SUBCHAPTER V—NATIVE AMERICAN VETERAN HOUSING LOAN PILOT 
PROGRAM 
"3761. Pilot program. 
i 
"3762. Direct housing loans to Native American veterans. 
"3763. Housing loan program account. 
"3764. Definitions.". 
38 ^sc 3761 
(d) ANNUAL REPORTS.—Not later than February 1 of each of 
1994 through 1998, the Secretary of Veterans AfTairs shall transmit 
to the Committees on Veterans' Affairs of the Senate and House 
of Representatives a report relating to— 
(1) the implementation of the Native American veterans 
direct housing loan pilot program established imder subchapter 
V of chapter 37 of title 38, United States Code (as added 
by subsection (a)), during the period ending on September 30 
of the year preceding the date oi the report; 
(2) the Secretai^s exercise of the authority provided under 
section 3762(cXlXB) of such title (as so added) to make loans 
exceeding the maximum loan amount; 
(3) the appraisals performed for the Secretary during that 
period under the authority of section 3732(dX2) of such title 
(as so added), including a description o
f
— 
(A) the manner in which such appraisals were 
performed; 
(B) the qualifications of the appraisers who performed 
such appraisals; and 
(C) the actions taken by the Secretary with respect 
to such appraisals to protect the interests of veterans and 
the United States; and 
(4) the Secretary's recommendations, if any, for legislation 
regarding the pilot program. 
38 use 3761 
(e) AUTHORIZATION OF APPROPRIATIONS.—^New direct loan 
obligations for Native American veteran housing loans under sub-
chapter V of chapter 37 of title 38, United States Code (as added 
by subsection (a)), mav be incurred only to the extent that appro-
priations of budget authority to cover the anticipated cost, as defined 
m section 502 of the Congressional Budget Act of 1974, for such 
loans are made in advance. There is authorized to be appropriated 
for such purpose $5,000,000 for fiscal year 1993, which amoimt 
shall remain available without fiscal year limitation. 
(D CONFORMING FUNDING AMENDMENT.—Title I of the Depart-
ments of Veterans Affairs and Housing and Urban Development, 
note. 
PUBLIC LAW 102-547—OCT. 28, 1992 
106 STAT. 3641 
and Independent Agencies Appropriations Act, 1993 is amended 
by striking out "direct loans authorized by^ and all that follows 
through ''Veterans' Affairs)" under the heading "NATIVE AMERICAN 
VETERAN HOUSING LOAN PROGRAM ACCOUNT" and inserting in lieu 
thereof "direct loans authorized by subchapter V of chapter 37 
of title 38, United States Code". 
SEC. 9. ENERGY EFFICIENT MORTGAGES. 
(a) IN GENERAL.—Subsection (d) of section 3710 of title 38, 
United States Code, is amended to read as follows: 
"(dXD The Secretary shall carry out a program to demonstrate 
the feasibility of guaranteeing loans for the acquisition of an existing 
dwelling and the cost of making energy efficiency improvements 
to the dwelling or for energy efficiency improvements to a dwelling 
owned and occupied by a veteran. A loan may be guaranteed under 
this subsection only if it meets the requirements of this chapter, 
except as those requirements are modified by this subsection. 
"(2) The cost of energy efficiency measures that may be financed 
by a loan guaranteed imaer this section may not exceed the greater 
of— 
"(A) the cost of the energy efficiency improvements, up 
to $3,000; or 
"(B) $6,000, if the increase in the monthly payment for 
principal and interest does not exceed the likely reduction 
in monthly utility costs resulting from the energy efficiency 
improvements, 
"(3) Notwithstanding the provisions of section 3703(aXlXA) of 
this title, any loan guaranteed under this subsection shall be 
guaranteed in an amount equal to the sum of— 
"(A) the guaranty that would be provided under those 
provisions for the dwelling without the energy 
efficiency 
improvements; and 
"(B) an amount that bears the same relation to the cost 
of the energy efficiency improvements as the guaranty referred 
to in subparagraph (A) bears to the amount of the loan minus 
the cost of such improvements. 
"(4) The amount of the veteran's entitlement, calculated in 
accordance with section 3703(a)(1)(B) of this title, shall not be 
affected by the amount of the guaranty referred to in paragraph 
(3XB). 
"(5) The Secretary shall take appropriate actions to notify 
eligible veterans, participating lenders, and interested realtors of 
the availability of loan guarantees under this subsection and the 
procedures and requirements that apply to the obtaining of such 
guarantees. 
"(6) For the purposes of this subsection: 
"(A) The term 'energy efficiency improvement' includes a 
solar heating system, a solar heating and cooling system, or 
a combined solar heating and cooling system, and the applica-
tion of a residential energy conservation measure. 
"(B) The term 'solar heating' has the meaning given such 
term in section 3(1) of the Solar Heating and Cooling Dem-
onstration Act of 1974 (42 U.S.C. 5502(1)) and, in addition, 
includes a passive system based on conductive, convective, or 
radiant energy transfer. 
"(C) The terms 'solar heating and cooling' and 'combined 
solar heating and cooling* have the meaning given such terms 
106 STAT. 3642 
PUBLIC LAW 102-547—CXTT. 28, 1992 
in section 3(2) of the Solar Heating and Cooling Demonstration 
Act of 1974 (42 U.S.C. 5502(2)) and, in addition, include a 
passive system based on conductive, convective, or radiant 
energy transfer. 
"(D) The term 'passive system' includes window and sky-
light glazing, thermal floors, walls, and roofs, movable insula-
tion panels (when in coi\junction with glazing), portions of 
a residential structure that serve as solar furnaces so as to 
add heat to the structure, double-pane window insulation, and 
such other energy-related components as are determined by 
the Secretary to enhance the natiiral transfer of energy for 
the purpose of heating or heating and cooling a residence. 
(£) The term 'residential energy conservation measure' 
means— 
"(i) caulking and weatherstripping of all exterior doors 
and windows; 
"(ii) furnace efficiency modifications limited t o ^ 
"(1) replacement burners, boilers, or furnaces 
• - I 
. designed to reduce the firing rate or to achieve a reduc-
tion in the amount of fuel consumed as a result of 
r increased combustion efficiency, 
"(11) devices for modifjring flue openings which will 
increase the efficiency of the heating system, and 
"(III) electrical or mechanical mmace ignition sys-
tems which replace standing gas pilot lights; 
"(iii) clock thermostats; 
"(iv) ceiling, attic, wall, and floor insulation; 
"(v) water heater insulation; 
"(vi) storm windows and doors; 
"(vii) heat pumps; and 
"(viii) such other energy conservation measures as the 
Secretary 
may 
identify 
for 
the 
purposes 
of 
this 
subparagraph. 
"(7) A loan may not be guaranteed under this subsection after 
December 31,1995.*. 
(b) PURCHASE OR CONSTRUCTION WITH ENERGY EFFICIENCY 
IMPROVEMENTS.—(1) Section 3710(aX7) of such title is amended 
to read as follows: 
"(7) To improve a dwelling or farm residence owned by 
the veteran ana occupied by the veteran as the veteran's home 
' through energy efficiency improvements, as provided in sub-
section (d).". 
(2) Section 371(Xa) of such title is further amended by adding 
after paragraph (9) the following: 
"(10) To purchase a dwelling to be owned and occupied 
by the veteran £is a home and make energy efficiency improve-
ments, as provided in subsection (d).". 
38 use 3710 
(c) REPORTS.—Not later than 1 year after the date on which 
note. 
^Q Secretary of Veterans Affairs first exercises the authority to 
giarantee loans under section 3710(d) of title 38, United States 
ode (as added by subsection (a) of this section), and for each 
of the 3 years thereafter, the Secretary shall transmit to the 
Committees on Veterans' Affairs of the Senate and House of Rep-
resentatives a report on the program under such section. Each 
such report shall contain information pertaining to— 
(1) the number of mortgages guaranteed under such 
section; 
PUBLIC LAW 102-547—OCT. 28, 1992 
106 STAT. 3643 
(2) the average amount of money added to the mortgage 
to finance energy efficiency features; 
(3) the tjrpes of energy efficiency features obtained with 
mortgages under such section; and 
(4) the default rates on the mortgages guaranteed under 
such section compared with the default rates on all other tjrpes 
of mortgages guaranteed by the Secretary. 
SEC. 10. NEGOTIATED INTEREST RATES. 
(a) IN GENERAL.—Section 3703(c) of title 38, United States 
Code, is amended— 
(1) in the first sentence of paragraph (1)— 
(A) by striking "the Secretary of Housing and Urban 
Development considers necessary to meet the mortgage 
market for" and inserting "applicable to"; and 
(B) by striking all that follows "(12 U.S.C. 1709(b))'' 
and inserting a period; and 
(2) by adding at the end the following: 
"(4XA) In guaranteeing or insuring loans under this chapter, 
the Secretary may elect whether to require that such loans bear 
interest at a rate that is— 
"(i) agreed upon by the veteran and the mortgagee; or 
"(ii) established under paragraph (1). 
The Secretary may, from time to time, change the election under 
this subparagraph. 
"(B) Any veteran, under a loan described in subparagraph 
(A)(i), may pay reasonable discount points in connection with the 
loan. Discount points ma}'^ not be financed as part of the principal 
amoimt of a loan guaranteed or insured under this chapter. 
"(C) Not later than 10 days after an election under subpara-
graph (A), the Secretary shall transmit to the Committees on 
Veterans' Affairs of the Senate and House of Representatives a 
notification of the election, together with an explanation of the 
reasons therefor. 
"(D) This paragraph shall expire on December 31,1995.". 
(b) REPORT.—^Not later than December 31, 1993, and annually 
thereafter, the Secretary of Veterans Affairs shall transmit to the 
Committees on Veterans' Affairs of the Senate and House of Rep-
resentatives a report on whether the Secretary has implemented 
the authority to guarantee and insure loans that bear negotiated 
interest rates and points under section 3703(cX4) of title 38, United 
States Code (as added by subsection (a)). If the Secretary has 
implemented that authority, the Secretary shall include in the 
report— 
(1) a comparison of the interest rates paid by veterans 
for loans that bear interest rates negotiated under section 
3703(cX4) of such title with interest rates allowable under 
mortgages for single family housing insured by the Secretary 
of Housing and Urban Development pursuant to the National 
Housing Act and interest rates charged under conventional 
mortgage loan programs for single family housing; 
(2) a comparison of the negotiated interest rates being 
charged under paragraph 4 of section 3703(c) of such title 
with the interest rate that the Secretary would have established 
under paragraph (1) of such section during the same time 
period; 
Termination 
date. 
38 use 3703 
note. 
106 STAT. 3644 
PUBLIC LAW 102-547—OCT. 28, 1992 
(3) a comparison of the number of discount points charged 
by the lender for mortgage loans that bear interest rates nego-
tiated under section 3703(cX4) of such title with the number 
of discount points charged for mortgages for single family hous-
ing insured by the Secretary of Housing and Urban Develop-
ment pursuant to the National Housing Act and the number 
of discount points charged under conventional mortgage loan 
programs for single family housing; 
(4) a discussion of the extent to which borrowers or sellers 
are paying the discount points on negotiated interest rate loans 
under section 3703(cX4) of such title; 
(5) a discussion of whether the market share for housing 
loans guaranteed under such title has increased or decreased 
since the implementation of the authority to guarantee and 
insure loans that bear negotiated interest rates imder section 
3703(cX4) of such title, and a discussion of the extent to which 
any change in market share was the result of that authority; 
(6) in claims paid following foreclosure, a discussion of 
the difference in the interest portion paid on loans guaranteed 
under section 3703(cX4) of such title to what the interest portion 
would have been under the interest rate established under 
section 3703(cXl) of such title; and 
(7) the number of first time homebuyers using loans that 
bear negotiated interest rates under section 3703(cX4) of such 
title. 
SEC. 11. EUGmiLITY FOR FLAGS AND GRAVE MARKERS. 
(a) FLAGS.—Section 2301(a) of title 38, United States Code, 
is amended to read as follows: 
"(a) The Secretary shall furnish a flag to drape the casket 
of each— 
"(1) deceased veteran who— 
"(A) was a veteran of any war, or of service after 
January 31,1955; 
''(B) had served at least one enlistment; or 
"(C) had been discharged or released from the active 
military, naval, or air service for a disability incurred or 
aggravated in line of duty; and 
"(2) deceased individual who at the time of death was 
entitled to retired pay under chapter 67 of title 10 or would 
have been entitled to retired pay under that chapter but for 
the fact that the person was under 60 years of age.". 
(b) HEADSTONES OR MARKERS.—Section 2306(a) of title 38, 
United States Code, is amended by adding at the end thereof 
tiie following: 
PUBLIC LAW 102-547—OCT. 28, 1992 
106 STAT. 3645 
"(5) Any individual who at the time of death was entitled 
to retired pay under chapter 67 of title 10 or would have 
been entitled to retired pay under that chapter but for the 
fact that the person was under 60 years of age. . 
SEC. 12. TECHNICAL AMENDMENT. 
Section 5 of Public Law 102-^4 (105 Stat. 268) is amended 38 use 5302. 
by striking out "3102" and inserting in lieu thereof "5302". 
Approved October 28, 1992. 
LEGISLATIVE HISTORY—H.R. 939 (S. 3108): 
HOUSE REPORTS: No. 102-292, Pt. 1 (Ctomm. on Veterans' Affairs) and Ft. 2 (C!omm. 
on Ways and Means). 
SENATE REPORTS: No. 102-405 accompanying S. 3108 (Comm. on Veterans' Affairs). 
CONGRESSIONAL RECORD, Vol. 138 (1992): 
Mar. 3, considered and passed House. 
Oct. 1, considered and passed Senate, amended, in lieu of S. 3108. 
Oct. 5, House concurred in Senate amendments with an amendment. 
Oct. 7, Senate concurred in House amendment. 
WEEKLY OOMPILA-nON OF PRESIDENTIAL DOCUMENTS, Vol. 28 (1992): 
Oct. 28, Presidential statement.