[Federal Register Volume 62, Number 104 (Friday, May 30, 1997)] [Notices] [Page 29393] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 97-14125] ======================================================================= ----------------------------------------------------------------------- DEPARTMENT OF VETERANS AFFAIRS Loan Guaranty: Percentage to Determine Net Value AGENCY: Veterans Benefits Administration, Department of Veterans Affairs. ACTION: Notice. ----------------------------------------------------------------------- SUMMARY: This notice provides information to participants in the Department of Veterans Affairs (VA) loan guaranty program concerning the percentage to be used in determining whether the Secretary will accept conveyance of a foreclosed property. The new percentage is 13.54 percent. EFFECTIVE DATE: The new percentage is effective December 11, 1996. FOR FURTHER INFORMATION CONTACT: Mr. Leonard A. Levy, Assistant Director for Loan and Property Management (261), Loan Guaranty Service, Veterans Benefits Administration, Department of Veterans Affairs, Washington, DC 20420, (202) 273-7344. SUPPLEMENTARY INFORMATION: VA regulations concerning the payment of loan guaranty claims are set forth at 38 CFR 36.4300, et seq. The formulas for determining whether VA will offer the lender an election to convey the property to VA are set forth at 38 CFR 36.4320. A key component of this is the ``net value'' of the property to the Government, as defined in 38 CFR 36.4301. Essentially, ``net value'' is the fair market value of the property, minus the total of the costs the Secretary estimates would be incurred by VA resulting from the acquisition and disposition of the property for property taxes, assessment, liens, property maintenance, administration, and resale. Each year VA reviews the average operating expenses incurred for properties acquired under 38 CFR 36.4320 which were sold during the preceding three fiscal years and the average administrative cost to the Government associated with the property management activity. Administrative cost is based on the average holding time for properties sold during the preceding fiscal year. Property improvement expenses are estimated on an individual case basis at the time the net value is estimated. VA also includes in the net value calculation an amount equal to the gain or loss experienced by VA on the resale of acquired properties during the prior fiscal year. VA annually updates the net value percentage and publishes a notice of the new percentage in the Federal Register. For Fiscal Year 1996, the percentage was 15.11 percent. For Fiscal Year 1997, the revised percentage will be 13.54 percent, based upon the operating expenses incurred, exclusive of estimated property improvement expenses which are accounted for separately in each case, for Fiscal Years 1993, 1994, and 1995, and property resale experience for Fiscal Year 1996. Accordingly, VA will subtract 13.54 percent from the fair market value of the property to be foreclosed in order to arrive at the ``net value'' of the property to VA. This new percentage will be used in ``net value'' calculations made by VA on and after December 11, 1996, the date the new percentage was provided to VA field stations for use in these calculations. Approved: May 21, 1997. Jesse Brown, Secretary of Veterans Affairs. [FR Doc. 97-14125 Filed 5-29-97; 8:45 am] BILLING CODE 8320-01-M