Unformatted text preview: proved lender. (The DVA is permitted to make direct loans in some instances.) ADMINISTRATION OF DVA
In 1944, Congress passed the GI Bill of Rights. This bill provided many benefits to veterans, including provisions guaranteeing real estate loans to veterans. The loan Guarantee Division of the Department of Veterans Affairs is responsible for administering the program. Generally, the DVA operates like the FHA. One difference is that the DVA guarantees a loan, and while the FHA insures a loan, and while the FHA insures the whole loan, the DVA guarantees a portion of it. As of 2002, the maximum guarantee on a loan is $60,000. The exact amount of guarantee to lenders in case of borrower default is based on the loan amount, as follows: Loan Amount Under $45,000 $45,000 to $56,250 $56,251 to $144,000 $144,001 to $203,000 $203,001 to $240,000 Guarantee to lender 50% of the loan $22,500 40% of the loan 25% of the loan $60,000 Example:
If a veteran were applying for a $180,000 loan, the guarantee would be $45,000 (25% X $180,000). If the loan were $40,000, the guarantee would be $20,000 (50% X $40,000). Dynasty School (www.dynastySchool.com) 5-35 REAL ESTATE FINANCE
Whether a loan is insured or guaranteed is important only if foreclosure occurs. In foreclosure cases, the DVA has two options: 1. 2. It can pay the lender the balance on the loan and take back the property. It can give the lender the property and pay it the amount of the deficiency, up to the maximum amount of the guarantee. By contrast, under FHA loans, the lender is always paid off and the property is taken back by the FHA. ELIGIBILITY / ENTITLEMENT
A veteran's eligibility or entitlement is derived from one of three active duty criteria: 90 days of continuous active duty; discharge because of a service connected disability; or separation under other than dishonorable conditions during any of the following wartime periods: World War II Korean Conflict Vietnam War Persian Conflict September 16, 1940 to July 25,1947 June 27, 1950...
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This note was uploaded on 12/30/2010 for the course SOC 101 taught by Professor Zhung during the Spring '10 term at Punjab Engineering College.
- Spring '10