38 U.S.C. § 3732 — Procedure on default

Page 927 TITLE 38—VETERANS’ BENEFITS § 3732 sertion after ‘‘lender’’ the first place it appears in sub- sec. (d), as the probable intent of Congress, notwith- standing appearance of ‘‘lender’’ in subsec. (d)(3). Subsec. (f). Pub. L. 100–198, § 11(b)(3), added subsec. (f). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2019 AMENDMENT Pub. L. 116–23, § 7(b), June 25, 2019, 133 Stat. 976, pro- vided that: ‘‘The amendments made by this section [amending this section] shall apply with respect to an appraisal under section 3731 of such title [meaning title 38, United States Code], on or after January 1, 2020.’’ IMPROVING ACCESS TO THE VETERANS AFFAIRS HOME LOAN BENEFIT Pub. L. 117–308, Dec. 27, 2022, 136 Stat. 4393, provided that: ‘‘SECTION 1. SHORT TITLE. ‘‘This Act may be cited as the ‘Improving Access to the VA Home Loan Benefit Act of 2022’. ‘‘SEC. 2. RECOMMENDATIONS FOR IMPROVING AP- PRAISAL DELIVERY TIMES. ‘‘Not later than 90 days after the date of the enact- ment of this Act [Dec. 27, 2022], the Secretary of Vet- erans Affairs shall submit to the Committees on Vet- erans’ Affairs of the Senate and House of Representa- tives recommendations for improving the delivery times for appraisals for loans guaranteed by the De- partment of Veterans Affairs. ‘‘SEC. 3. UPDATE OF APPRAISAL REQUIREMENTS FOR CERTAIN LOANS GUARANTEED BY THE DEPARTMENT OF VETERANS AFFAIRS. ‘‘(a) UPDATED REGULATIONS REQUIRED.—Not later than 180 days after the date of the enactment of this Act, the Secretary of Veterans Affairs shall prescribe updated regulations or program requirements to clarify when an appraisal is required, how an appraisal is to be conducted, and who is eligible to conduct an appraisal for a loan guaranteed by the Department of Veterans Affairs under chapter 37 of title 38, United States Code, for any purpose described in section 3710(a) of such title. In prescribing updated regulations or program re- quirements under this section, the Secretary shall take into consideration the recommendations of the Sec- retary submitted under section 2. ‘‘(b) WAIVER OF REQUIREMENT FOR CERTAIN PROP- ERTIES.—In prescribing updated regulations or program requirements under subsection (a), the Secretary shall consider making changes applicable to— ‘‘(1) certification requirements for appraisers; ‘‘(2) minimum property requirements; ‘‘(3) the process for selecting and reviewing com- parable sales; ‘‘(4) quality control processes; ‘‘(5) the Assisted Appraisal Processing Program; and ‘‘(6) the use of waivers or other alternatives to ex- isting appraisal processes. ‘‘(c) DESK TOP APPRAISALS.—In prescribing updated regulations or program guidance under subsection (a), the Secretary shall provide guidance for the use of the authority under section 3731(b)(3) of title 38, United States Code, taking into consideration— ‘‘(1) situations in which the use of such authority would provide for cost savings for the borrower; and ‘‘(2) situations in which a traditional appraisal re- quirement could cause a delay substantial enough to jeopardize the ability of a borrower to complete a transaction. ‘‘SEC. 4. DETERMINATION OF BUDGETARY EF- FECTS. ‘‘The budgetary effects of this Act, for the purpose of complying with the Statutory Pay-As-You-Go Act of 2010 [2 U.S.C. 931 et seq.], shall be determined by ref- erence to the latest statement titled ‘Budgetary Effects of PAYGO Legislation’ for this Act, submitted for printing in the Congressional Record by the Chairman of the House Budget Committee, provided that such statement has been submitted prior to the vote on pas- sage.’’ GUIDANCE TO IMPLEMENT AMENDMENT BY PUB. L. 116–23 Pub. L. 116–23, § 7(c), June 25, 2019, 133 Stat. 976, pro- vided that: ‘‘Notwithstanding section 501 of such title [meaning title 38, United States Code], the Secretary of Veterans Affairs may issue guidance to implement this section [amending this section and enacting provisions set out as a note under this section] before prescribing new regulations under sections [sic] 3731 of such title, as amended by subsection (a).’’ RATIFICATION OF ACTIONS DURING PERIOD OF EXPIRED AUTHORITY Any action taken by Secretary of Veterans Affairs before Feb. 13, 1996, under provision of law amended by title I of Pub. L. 104–110 that was taken during period beginning on date on which authority of Secretary under such provision of law expired and ending on Feb. 13, 1996, considered to have same force and effect as if such amendment had been in effect at time of that ac- tion, see section 103 of Pub. L. 104–110, set out as a note under section 1710 of this title. § 3732. Procedure on default (a)(1) In the event of default in the payment of any loan guaranteed under this chapter, the holder of the obligation shall notify the Sec- retary of such default. Upon receipt of such no- tice, the Secretary may, subject to subsection (c) of this section, pay to such holder the guar- anty not in excess of the pro rata portion of the amount originally guaranteed. Except as pro- vided in section 3703(e) of this title, if the Sec- retary makes such a payment, the Secretary shall be subrogated to the rights of the holder of the obligation to the extent of the amount paid on the guaranty. (2)(A) Before suit or foreclosure the holder of the obligation shall notify the Secretary of the default, and within thirty days thereafter the Secretary may, at the Secretary’s option, pay the holder of the obligation the unpaid balance of the obligation plus accrued interest and re- ceive an assignment of the loan and security. Nothing in this section shall preclude any forebearance for the benefit of the veteran as may be agreed upon by the parties to the loan and approved by the Secretary. (B) In the event that a housing loan guaran- teed under this chapter is modified under the authority provided under section 1322(b) of title 11, the Secretary may pay the holder of the obli- gation the unpaid principal balance of the obli- gation due, plus accrued interest, as of the date of the filing of the petition under title 11, but only upon the assignment, transfer, and delivery to the Secretary (in a form and manner satisfac- tory to the Secretary) of all rights, interest, claims, evidence, and records with respect to the housing loan. (3) The Secretary may establish the date, not later than the date of judgment and decree of foreclosure or sale, upon which accrual of inter- est or charges shall cease. (4)(A) Upon receiving a notice pursuant to paragraph (1) of this subsection, the Secretary shall— (i) provide the veteran with information and, to the extent feasible, counseling regarding— Page 928 TITLE 38—VETERANS’ BENEFITS § 3732 (I) alternatives to foreclosure, as appro- priate in light of the veteran’s particular circumstances, including possible methods of curing the default, conveyance of the property to the Secretary by means of a deed in lieu of foreclosure, and the actions au- thorized by paragraph (2) of this subsection; and (II) what the Department of Veterans Af- fairs’ and the veteran’s liabilities would be with respect to the loan in the event of fore- closure; and (ii) advise the veteran regarding the avail- ability of such counseling; except with respect to loans made by a lender which the Secretary has determined has a dem- onstrated record of consistently providing time- ly and accurate information to veterans with re- spect to such matters. (B) The Secretary shall, to the extent of the availability of appropriations, ensure that suffi- cient personnel are available to administer sub- paragraph (A) of this paragraph effectively and efficiently. (5) In the event of default in the payment of any loan guaranteed or insured under this chap- ter in which a partial payment has been ten- dered by the veteran concerned and refused by the holder, the holder of the obligation shall no- tify the Secretary as soon as such payment has been refused. The Secretary may require that any such notification include a statement of the circumstances of the default, the amount ten- dered, the amount of the indebtedness on the date of the tender, and the reasons for the hold- er’s refusal. (b) With respect to any loan made under sec- tion 3711 which has not been sold as provided in subsection (g) of such section, if the Secretary finds, after there has been a default in the pay- ment of any installment of principal or interest owing on such loan, that the default was due to the fact that the veteran who is obligated under the loan has become unemployed as the result of the closing (in whole or in part) of a Federal in- stallation, the Secretary shall (1) extend the time for curing the default to such time as the Secretary determines is necessary and desirable to enable such veteran to complete payments on such loan, including an extension of time be- yond the stated maturity thereof, or (2) modify the terms of such loan for the purpose of chang- ing the amortization provisions thereof by re- casting, over the remaining term of the loan, or over such longer period as the Secretary may determine, the total unpaid amount then due with the modification to become effective cur- rently or upon the termination of an agreed- upon extension of the period for curing the de- fault. (c)(1) For purposes of this subsection— (A) The term ‘‘defaulted loan’’ means a loan that is guaranteed under this chapter, that was made for a purpose described in section 3710(a) of this title, and that is in default. (B) The term ‘‘liquidation sale’’ means a ju- dicial sale or other disposition of real property to liquidate a defaulted loan that is secured by such property. (C) The term ‘‘net value’’, with respect to real property, means the amount equal to (i) the fair market value of the property, minus (ii) the total of the amounts which the Sec- retary estimates the Secretary would incur (if the Secretary were to acquire and dispose of the property) for property taxes, assessments, liens, property maintenance, property im- provement, administration, resale (including losses sustained on the resale of the property), and other costs resulting from the acquisition and disposition of the property, excluding any amount attributed to the cost to the Govern- ment of borrowing funds. (D) Except as provided in subparagraph (D) of paragraph (10) of this subsection, the term ‘‘total indebtedness’’, with respect to a de- faulted loan, means the amount equal to the total of (i) the unpaid principal of the loan, (ii) the interest on the loan as of the date applica- ble under paragraph (10) of this subsection, and (iii) such reasonably necessary and proper charges (as specified in the loan instrument and permitted by regulations prescribed by the Secretary to implement this subsection) associated with liquidation of the loan, includ- ing advances for taxes, insurance, and mainte- nance or repair of the real property securing the loan. (2)(A) Except as provided in subparagraph (B) of this paragraph, this subsection applies to any case in which the holder of a defaulted loan un- dertakes to liquidate the loan by means of a liq- uidation sale. (B) This subsection does not apply to a case in which the Secretary proceeds under subsection (a)(2) of this section. (3)(A) Before carrying out a liquidation sale of real property securing a defaulted loan, the holder of the loan shall notify the Secretary of the proposed sale. Such notice shall be provided in accordance with regulations prescribed by the Secretary to implement this subsection. (B) After receiving a notice described in sub- paragraph (A) of this paragraph, the Secretary shall determine the net value of the property se- curing the loan and the amount of the total in- debtedness under the loan and shall notify the holder of the loan of the determination of such net value. (4) A case referred to in paragraphs (5), (6), and (7) of this subsection as being described in this paragraph is a case in which the net value of the property securing a defaulted loan exceeds the amount of the total indebtedness under the loan minus the amount guaranteed under this chap- ter. (5) In a case described in paragraph (4) of this subsection, if the holder of the defaulted loan acquires the property securing the loan at a liq- uidation sale for an amount that does not ex- ceed the lesser of the net value of the property or the total indebtedness under the loan— (A) the holder shall have the option to con- vey the property to the United States in re- turn for payment by the Secretary of an amount equal to the lesser of such net value or total indebtedness; and (B) the liability of the United States under the loan guaranty under this chapter shall be limited to the amount of such total indebted- ness minus the net value of the property. Page 929 TITLE 38—VETERANS’ BENEFITS § 3732 (6) In a case described in paragraph (4) of this subsection, if the holder of the defaulted loan does not acquire the property securing the loan at the liquidation sale, the liability of the United States under the loan guaranty under this chapter shall be limited to the amount equal to (A) the amount of such total indebted- ness, minus (B) the amount realized by the hold- er incident to the sale or the net value of the property, whichever is greater. (7) In a case described in paragraph (4) of this subsection, if the holder of the defaulted loan acquires the property securing the loan at the liquidation sale for an amount that exceeds the lesser of the total indebtedness under the loan or the net value and— (A)(i) the amount was the minimum amount for which, under applicable State law, the property was permitted to be sold at the liq- uidation sale, the holder shall have the option to convey the property to the United States in return for payment by the Secretary of an amount equal to the lesser of the amount for which the holder acquired the property or the total indebtedness under the loan; or (ii) there was no minimum amount for which the property had to be sold at the liquidation sale under applicable State law, the holder shall have the option to convey the property to the United States in return for payment by the Secretary of an amount equal to the lesser of such net value or total indebtedness; and (B) the liability of the United States under the loan guaranty under this chapter is as pro- vided in paragraph (6) of this subsection. (8) If the net value of the property securing a defaulted loan is not greater than the amount of the total indebtedness under the loan minus the amount guaranteed under this chapter— (A) the Secretary may not accept convey- ance of the property from the holder of the loan; and (B) the liability of the United States under the loan guaranty shall be limited to the amount of the total indebtedness under the loan minus the amount realized by the holder of the loan incident to the sale at a liquida- tion sale of the property. (9) In no event may the liability of the United States under a guaranteed loan exceed the amount guaranteed with respect to that loan under section 3703(b) of this title. All determina- tions under this subsection of net value and total indebtedness shall be made by the Sec- retary. (10)(A) Except as provided in subparagraphs (B) and (C) of this paragraph, the date referred to in paragraph (1)(D)(ii) of this subsection shall be the date of the liquidation sale of the prop- erty securing the loan (or such earlier date fol- lowing the expiration of a reasonable period of time for such sale to occur as the Secretary may specify pursuant to regulations prescribed by the Secretary to implement this subsection). (B)(i) Subject to division (ii) of this subpara- graph, in any case in which there is a substan- tial delay in such sale caused by the holder of the loan exercising forebearance at the request of the Secretary, the date referred to in para- graph (1)(D)(ii) 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 Secretary specifies pursuant to regula- tions which the Secretary shall prescribe to im- plement this paragraph. (ii) The Secretary 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 (1)(D)(ii), the Sec- retary is authorized, under paragraph (5)(A) or (7)(A) of this subsection, to accept conveyance of the property. (C) In any case in which there is an excessive delay in such liquidation sale caused— (i) by the Department of Veterans Affairs (including any delay caused by its failure to provide bidding instructions in a timely fash- ion); or (ii) by a voluntary case commenced under title 11, United States Code (relating to bank- ruptcy); the date referred to in paragraph (1)(D)(ii) of this subsection shall be a date, earlier than the date of such liquidation sale, which the Sec- retary specifies pursuant to regulations which the Secretary shall prescribe to implement this paragraph. (D) For the purpose of determining the liabil- ity of the United States under a loan guaranty under paragraphs (5)(B), (6), (7)(B), and (8)(B), the amount of the total indebtedness with re- spect to such loan guaranty shall include, in any case in which there was an excessive delay caused by the Department of Veterans Affairs 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 in- cluded, except for this subparagraph, in the cal- culation of such total indebtedness as a result of the specification of an earlier date under sub- paragraph (C)(i) of this paragraph. (Pub. L. 85–857, Sept. 2, 1958, 72 Stat. 1212, § 1816(a)–(c); Pub. L. 89–117, title I, § 107(f), Aug. 10, 1965, 79 Stat. 460; Pub. L. 94–324, § 7(17), June 30, 1976, 90 Stat. 722; Pub. L. 98–369, div. B, title V, § 2512(a), July 18, 1984, 98 Stat. 1117; Pub. L. 100–198, §§ 4(a), 5(a), Dec. 21, 1987, 101 Stat. 1316; renumbered § 1832 and amended Pub. L. 100–322, title IV, § 415(b)(1)(A)–(C), (5), May 20, 1988, 102 Stat. 550, 551; Pub. L. 101–237, title III, §§ 304(b), 307–308(b)(1), 313(b)(1), (2), Dec. 18, 1989, 103 Stat. 2073–2075, 2077; Pub. L. 102–54, §§ 1, 3(a), 14(g)(1), June 13, 1991, 105 Stat. 267, 288; renumbered § 3732 and amended Pub. L. 102–83, § 5(a), (c)(1), Aug. 6, 1991, 105 Stat. 406; Pub. L. 103–66, title XII, § 12006(a), Aug. 10, 1993, 107 Stat. 414; Pub. L. 103–446, title IX, § 907, Nov. 2, 1994, 108 Stat. 4677; Pub. L. 105–33, title VIII, § 8013, Aug. 5, 1997, 111 Stat. 664; Pub. L. 106–419, title IV, § 402(c), Nov. 1, 2000, 114 Stat. 1863; Pub. L. 107–103, title IV, § 405(d), Dec. 27, 2001, 115 Stat. 994; Pub. L. 108–183, title IV, § 406, Dec. 16, 2003, 117 Stat. 2666; Pub. L. 109–233, title V, § 503(9), June 15, 2006, 120 Stat. 416; Pub. L. 111–275, title VIII, § 802(a), Oct. 13, 2010, 124 Stat. 2888; Pub. L. 112–191, title II, § 201, Oct. 5, 2012, 126 Stat. 1439; Pub. L. 113–37, § 2(h), Sept. 30, 2013, 127 Stat. 525; Pub. L. 113–175, title III, § 302, Sept. 26, 2014, 128 Stat. 1904; Pub. L. 114–58, title II, § 202, Sept. 30, 2015, 129 Stat. 533; Pub. L. 114–228, title II, § 202, Sept. 29, 2016, Page 930 TITLE 38—VETERANS’ BENEFITS § 3732 130 Stat. 938; Pub. L. 115–62, title II, § 201, Sept. 29, 2017, 131 Stat. 1162; Pub. L. 115–251, title I, § 124, Sept. 29, 2018, 132 Stat. 3169.) Editorial Notes AMENDMENTS 2018—Subsec. (c)(11). Pub. L. 115–251 struck out par. (11) which read as follows: ‘‘This subsection shall apply to loans closed before September 30, 2018.’’ 2017—Subsec. (c)(11). Pub. L. 115–62 substituted ‘‘Sep- tember 30, 2018’’ for ‘‘October 1, 2017’’. 2016—Subsec. (c)(11). Pub. L. 114–228 substituted ‘‘Oc- tober 1, 2017’’ for ‘‘October 1, 2016’’. 2015—Subsec. (c)(11). Pub. L. 114–58 substituted ‘‘Octo- ber 1, 2016’’ for ‘‘October 1, 2015’’. 2014—Subsec. (c)(11). Pub. L. 113–175 substituted ‘‘Oc- tober 1, 2015’’ for ‘‘October 1, 2014’’. 2013—Subsec. (c)(11). Pub. L. 113–37 substituted ‘‘Octo- ber 1, 2014’’ for ‘‘October 1, 2013’’. 2012—Subsec. (c)(11). Pub. L. 112–191 substituted ‘‘Oc- tober 1, 2013’’ for ‘‘October 1, 2012’’. 2010—Subsec. (a)(2). Pub. L. 111–275 designated exist- ing provisions as subpar. (A) and added subpar. (B). 2006—Subsec. (c)(10)(D). Pub. L. 109–233 substituted ‘‘paragraphs (5)(B), (6), (7)(B), and (8)(B)’’ for ‘‘clause (B) of paragraphs (5), (6), (7), and (8) of this subsection’’. 2003—Subsec. (c)(11). Pub. L. 108–183 substituted ‘‘Oc- tober 1, 2012’’ for ‘‘October 1, 2011’’. 2001—Subsec. (c)(11). Pub. L. 107–103 substituted ‘‘Oc- tober 1, 2011’’ for ‘‘October 1, 2008’’. 2000—Subsec. (c)(11). Pub. L. 106–419 substituted ‘‘Oc- tober 1, 2008’’ for ‘‘October 1, 2002’’. 1997—Subsec. (c)(11). Pub. L. 105–33 substituted ‘‘Octo- ber 1, 2002’’ for ‘‘October 1, 1998’’. 1994—Subsec. (c)(6). Pub. L. 103–446, § 907(b), struck out ‘‘either’’ after ‘‘defaulted loan’’, substituted ‘‘sale,’’ for ‘‘sale or acquires the property at such sale for an amount that exceeds the lesser of the net value of the property or the total indebtedness under the loan—’’, struck out text of subpar. (A) and subpar. (B) designa- tion before ‘‘the liability’’, and redesignated cls. (i) and (ii) as cls. (A) and (B), respectively. Prior to amend- ment, subpar. (A) read as follows: ‘‘the Secretary may not accept conveyance of the property except as pro- vided in paragraph (7) of this subsection; and’’. Subsec. (c)(7). Pub. L. 103–446, § 907(a)(1), struck out ‘‘that was the minimum amount for which, under appli- cable State law, the property was permitted to be sold at the liquidation sale—’’ after ‘‘net value and’’ in in- troductory provisions. Subsec. (c)(7)(A). Pub. L. 103–446, § 907(a)(2), sub- stituted ‘‘(i) the amount was the minimum amount for which, under applicable State law, the property was permitted to be sold at the liquidation sale, the holder shall have the option to convey the property to the United States in return for payment by the Secretary of an amount equal to’’ for ‘‘the Secretary may accept conveyance of the property to the United States for a price not exceeding’’ and ‘‘loan; or’’ for ‘‘loan; and’’ and added cl. (ii). Subsec. (c)(7)(B). Pub. L. 103–446, § 907(a)(3), sub- stituted ‘‘paragraph (6)’’ for ‘‘paragraph (6)(B)’’. 1993—Subsec. (c)(1)(C). Pub. L. 103–66, § 12006(a)(1), in- serted ‘‘(including losses sustained on the resale of the property)’’ after ‘‘resale’’. Subsec. (c)(11). Pub. L. 103–66, § 12006(a)(2), substituted ‘‘shall apply to loans closed before October 1, 1998’’ for ‘‘shall cease to have effect on December 31, 1992’’. 1991—Pub. L. 102–83, § 5(a), renumbered section 1832 of this title as this section. Subsec. (a)(1). Pub. L. 102–83, § 5(c)(1), substituted ‘‘3703(e)’’ for ‘‘1803(e)’’. Subsec. (a)(4)(C). Pub. L. 102–54, § 1, struck out subpar. (C) which read as follows: ‘‘The authority to carry out this paragraph shall terminate on March 1, 1991.’’ Subsec. (b). Pub. L. 102–83, § 5(c)(1), substituted ‘‘3711’’ for ‘‘1811’’. Subsec. (c)(1)(A). Pub. L. 102–83, § 5(c)(1), substituted ‘‘3710(a)’’ for ‘‘1810(a)’’. Subsec. (c)(9). Pub. L. 102–83, § 5(c)(1), substituted ‘‘3703(b)’’ for ‘‘1803(b)’’. Subsec. (c)(11). Pub. L. 102–54, § 3(a), substituted ‘‘De- cember 31, 1992’’ for ‘‘October 1, 1991’’. 1989—Subsec. (a). Pub. L. 101–237, § 313(b)(1), (2), sub- stituted ‘‘Secretary’’, ‘‘Secretary’s’’, and ‘‘Department of Veterans Affairs’ ’’ for ‘‘Administrator’’, ‘‘Adminis- trator’s’’, and ‘‘Veterans’ Administration’s’’, respec- tively, wherever appearing. Pub. L. 101–237, § 304(b), substituted ‘‘Except as pro- vided in section 1803(e) of this title, if’’ for ‘‘If’’ in last sentence of par. (1). Subsec. (a)(5). Pub. L. 101–237, § 307, added par. (5). Subsecs. (b), (c). Pub. L. 101–237, § 313(b)(1), (2), sub- stituted ‘‘Secretary’’ and ‘‘Department of Veterans Af- fairs’’ for ‘‘Administrator’’ and ‘‘Veterans’ Administra- tion’’, respectively, wherever appearing. Subsec. (c)(1)(C)(ii). Pub. L. 101–237, § 308(a), inserted ‘‘, excluding any amount attributed to the cost to the Government of borrowing funds’’ before period at end. Subsec. (c)(11). Pub. L. 101–237, § 308(b)(1), substituted ‘‘October 1, 1991’’ for ‘‘October 1, 1989’’. 1988—Pub. L. 100–322, § 415(b)(1)(C), (5)(A), redesig- nated section catchline of section 1816 of this title as section catchline of this section and struck out former catchline which read as follows: ‘‘Furnishing informa- tion to real estate professionals to facilitate the dis- position of properties’’. Subsec. (a). Pub. L. 100–322, § 415(b)(1)(A), (C), redesig- nated subsec. (a) of section 1816 of this title as subsec. (a) of this section, and in par. (4)(A)(i)(I) substituted ‘‘paragraph (2) of this subsection’’ for ‘‘section 1816(a)(2) of this title’’. Subsec. (b). Pub. L. 100–322, § 415(b)(1)(C), redesignated subsec. (b) of section 1816 of this title as subsec. (b) of this section. Subsec. (c). Pub. L. 100–322, § 415(b)(1)(B), (C), redesig- nated subsec. (c) of section 1816 of this title as subsec. (c) of this section, in par. (10)(A) inserted ‘‘(or such ear- lier date following the expiration of a reasonable period of time for such sale to occur as the Administrator may specify pursuant to regulations prescribed by the Ad- ministrator to implement this subsection)’’ before pe- riod at end, and in par. (10)(B)(ii) inserted ‘‘(5)(A) or’’ after ‘‘under paragraph’’. 1987—Subsec. (a)(4). Pub. L. 100–198, § 4(a), added par. (4). Subsec. (c)(1)(D). Pub. L. 100–198, § 5(a)(1)–(3), sub- stituted ‘‘Except as provided in subparagraph (D) of paragraph (10) of this subsection, the’’ for ‘‘The’’ at be- ginning, ‘‘applicable under paragraph (10) of this sub- section, and’’ for ‘‘of the liquidation sale of the prop- erty securing the loan (or such earlier date following the expiration of a reasonable period of time for such sale to occur as the Administrator may specify pursu- ant to regulations prescribed by the Administrator to implement this subsection), and’’ in cl. (ii), and ‘‘regu- lations prescribed by the Administrator to implement this subsection’’ for ‘‘such regulations’’ in cl. (iii). Subsec. (c)(10), (11). Pub. L. 100–198, § 5(a)(4), added pars. (10) and (11). 1984—Subsec. (a)(1). Pub. L. 98–369, § 2512(a)(1)(A)–(C), designated existing first sentence as par. (1), sub- stituted ‘‘Administrator of such default. Upon receipt of such notice, the Administrator may, subject to sub- section (c) of this section,’’ for ‘‘Administrator who shall thereupon’’, and substituted ‘‘guaranteed. If the Administrator makes a payment, the Administrator shall’’ for ‘‘guaranteed, and shall’’. Subsec. (a)(2). Pub. L. 98–369, § 2512(a)(1)(A), des- ignated existing second and third sentences as par. (2). Subsec. (a)(3). Pub. L. 98–369, § 2512(a)(1)(A), des- ignated existing fourth sentence as par. (3). Subsec. (c). Pub. L. 98–369, § 2512(a)(2), added subsec. (c). 1976—Subsec. (a). Pub. L. 94–324 substituted ‘‘the Ad- ministrator’s’’ for ‘‘his’’. Subsec. (b). Pub. L. 94–324 substituted ‘‘the Adminis- trator’’ for ‘‘he’’ wherever appearing. 1965—Pub. L. 89–117 designated existing provisions as subsec. (a) and added subsec. (b). Page 931 TITLE 38—VETERANS’ BENEFITS § 3733 Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2013 AMENDMENT Amendment by Pub. L. 113–37 effective Oct. 1, 2013, see section 4(a) of Pub. L. 113–37, set out as a note under section 322 of this title. EFFECTIVE DATE OF 2010 AMENDMENT Pub. L. 111–275, title VIII, § 802(b), Oct. 13, 2010, 124 Stat. 2889, provided that: ‘‘The amendments made by subsection (a) [amending this section] shall apply with respect to a housing loan guaranteed after the date of the enactment of this Act [Oct. 13, 2010].’’ EFFECTIVE DATE OF 1993 AMENDMENT Pub. L. 103–66, title XII, § 12006(b), Aug. 10, 1993, 107 Stat. 414, provided that: ‘‘The amendments made by this section [amending this section] shall become effec- tive October 1, 1993.’’ EFFECTIVE DATE OF 1989 AMENDMENT Pub. L. 101–237, title III, § 308(b)(2), Dec. 18, 1989, 103 Stat. 2075, provided that: ‘‘The amendment made by paragraph (1) [amending this section] shall take effect as of October 1, 1989.’’ EFFECTIVE DATE OF 1987 AMENDMENT Pub. L. 100–198, § 4(b), Dec. 21, 1987, 101 Stat. 1316, pro- vided that: ‘‘The amendment made by subsection (a) [amending this section] shall take effect on March 1, 1988.’’ Pub. L. 100–198, § 5(c), Dec. 21, 1987, 101 Stat. 1317, pro- vided that: ‘‘The amendments made by subsection (a) [amending this section] shall apply to defaults which occur more than 60 days after the date of the enact- ment of this Act [Dec. 21, 1987].’’ EFFECTIVE DATE OF 1984 AMENDMENT Pub. L. 100–136, § 1(a), Oct. 16, 1987, 101 Stat. 813, pro- vided that: ‘‘Notwithstanding section 2512(c) of the Def- icit Reduction Act of 1984 (Public Law 98–369) [set out below], the provisions of section 1816(c) [now 3732(c)] of title 38, United States Code, shall continue in effect through November 15, 1987.’’ Pub. L. 98–369, div. B, title V, § 2512(c)(1), July 18, 1984, 98 Stat. 1120, provided that: ‘‘The amendments made by subsection (a) [amending subsec. (a) and adding sub- secs. (c) and (d) of section 1816 [now 3732(a), (c) and 3733(a)] of this title] shall take effect on October 1, 1984.’’ Pub. L. 98–369, div. B, title V, § 2512(c)(2), July 18, 1984, 98 Stat. 1120, which provided that subsecs. (c) and (d) of section 1816 (now 3732(a), (c) and 3733(a)) of this title would cease to be effective on Oct. 1, 1987, was repealed by Pub. L. 100–198, § 5(b), Dec. 21, 1987, 101 Stat. 1317. EFFECTIVE DATE OF 1976 AMENDMENT Amendment by Pub. L. 94–324 effective June 30, 1976, see section 9(a) of Pub. L. 94–324, set out as a note under section 3701 of this title. ‘‘NET VALUE’’ DEFINED WITH RESPECT TO LOANS CLOSED BEFORE OCTOBER 1, 1993 Pub. L. 102–389, title I, Oct. 6, 1992, 106 Stat. 1574, pro- vided in part: ‘‘That notwithstanding the provisions of 38 U.S.C. 3732(c)(1)(C) and (c)(11) or any other law, with respect to any loan guaranteed for any purpose speci- fied in 38 U.S.C. 3710 which was closed before October 1, 1993, the term ‘net value’ for purposes of paragraphs (4) through (10) of 38 U.S.C. 3732[(c)] shall mean ‘the amount equal to (i) the fair market value of the prop- erty, minus (ii) the total of the amounts which the Sec- retary estimates the Secretary would incur (if the Sec- retary were to acquire and dispose of the property) for property taxes, assessments, liens, property mainte- nance, property improvement, administration, resale (including losses sustained on the resale of the prop- erty), and other costs resulting from the acquisition and disposition of the property, excluding any amount attributed to the cost of the Government of borrowing funds’.’’ § 3733. Property management (a)(1) Of the number of purchases made during any fiscal year of real property acquired by the Secretary as the result of a default on a loan guaranteed under this chapter for a purpose de- scribed in section 3710(a) of this title, not more than 65 percent, nor less than 50 percent, of such purchases may be financed by a loan made by the Secretary. The maximum percentage stated in the preceding sentence may be increased to 80 percent for any fiscal year if the Secretary de- termines that such an increase is necessary in order to maintain the effective functioning of the loan guaranty program. (2) After September 30, 1990, the percentage limitations described in paragraph (1) of this subsection shall have no effect. (3) The Secretary may, beginning on October 1, 1990, sell any note evidencing a loan referred to in paragraph (1)— (A) with recourse; or (B) without recourse, but only if the amount received is equal to an amount which is not less than the unpaid balance of such loan. (4)(A) Except as provided in subparagraph (B), the amount of a loan made by the Secretary to finance the purchase of real property from the Secretary described in paragraph (1) may not ex- ceed an amount equal to 95 percent of the pur- chase price of such real property. (B)(i) The Secretary may waive the provisions of subparagraph (A) in the case of any loan de- scribed in paragraph (5). (ii) A loan described in subparagraph (A) may, to the extent the Secretary determines to be necessary in order to market competitively the property involved, exceed 95 percent of the pur- chase price. (5) The Secretary may include, as part of a loan to finance a purchase of real property from the Secretary described in paragraph (1), an amount to be used only for the purpose of reha- bilitating 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 re- habilitation is completed. (6) The Secretary shall make a loan to finance the sale of real property described in paragraph (1) at an interest rate that is lower than the pre- vailing mortgage market interest rate in areas where, and to the extent, the Secretary deter- mines, in light of prevailing conditions in the real estate market involved, that such lower in- terest rate is necessary in order to market the property competitively and is in the interest of the long-term stability and solvency of the Vet- erans Housing Benefit Program Fund estab- lished by section 3722(a) of this title. (7) During the period that begins on December 16, 2003, and ends on September 30, 2020, the Sec- retary shall carry out the provisions of this sub- section as if— (A) the references in the first sentence of paragraph (1) to ‘‘65 percent’’ and ‘‘may be fi- nanced’’ were references to ‘‘85 percent’’ and ‘‘shall be financed’’, respectively;