
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 23, 2000]
[Document not affected by Public Laws enacted between
  January 23, 2000 and December 4, 2001]
[CITE: 38USC3708]

 
                      TITLE 38--VETERANS' BENEFITS
 
               PART III--READJUSTMENT AND RELATED BENEFITS
 
              CHAPTER 37--HOUSING AND SMALL BUSINESS LOANS
 
                          SUBCHAPTER I--GENERAL
 
Sec. 3708. Authority to buy down interest rates: pilot program

    (a) In order to enable the purchase of housing in areas where the 
supply of suitable military housing is inadequate, the Secretary may 
conduct a pilot program under which the Secretary may make periodic or 
lump sum assistance payments on behalf of an eligible veteran for the 
purpose of buying down the interest rate on a loan to that veteran that 
is guaranteed under this chapter for a purpose described in paragraph 
(1), (6), or (10) of section 3710(a) of this title.
    (b) An individual is an eligible veteran for the purposes of this 
section if--
        (1) the individual is a veteran, as defined in section 
    3701(b)(4) of this title;
        (2) the individual submits an application for a loan guaranteed 
    under this chapter within one year of an assignment of the 
    individual to duty at a military installation in the United States 
    designated by the Secretary of Defense as a housing shortage area;
        (3) at the time the loan referred to in subsection (a) is made, 
    the individual is an enlisted member, warrant officer, or an officer 
    (other than a warrant officer) at a pay grade of O-3 or below;
        (4) the individual has not previously used any of the 
    individual's entitlement to housing loan benefits under this 
    chapter; and
        (5) the individual receives comprehensive prepurchase counseling 
    from the Secretary (or the designee of the Secretary) before making 
    application for a loan guaranteed under this chapter.

    (c) Loans with respect to which the Secretary may exercise the buy 
down authority under subsection (a) shall--
        (1) provide for a buy down period of not more than three years 
    in duration;
        (2) specify the maximum and likely amounts of increases in 
    mortgage payments that the loans would require; and
        (3) be subject to such other terms and conditions as the 
    Secretary may prescribe by regulation.

    (d) The Secretary shall promulgate underwriting standards for loans 
for which the interest rate assistance payments may be made under 
subsection (a). Such standards shall be based on the interest rate for 
the second year of the loan.
    (e) The Secretary or lender shall provide comprehensive prepurchase 
counseling to eligible veterans explaining the features of interest rate 
buy downs under subsection (a), including a hypothetical payment 
schedule that displays the increases in monthly payments to the 
mortgagor over the first five years of the mortgage term. For the 
purposes of this subsection, the Secretary may assign personnel to 
military installations referred to in subsection (b)(2).
    (f) There is authorized to be appropriated $3,000,000 annually to 
carry out this section.
    (g) The Secretary may not guarantee a loan under this chapter after 
September 30, 1998, on which the Secretary is obligated to make payments 
under this section.

(Added Pub. L. 104-106, div. B, title XXVIII, Sec. 2822(b)(1), Feb. 10, 
1996, 110 Stat. 556.)


                    Authority of Secretary of Defense

    Section 2822(c) of Pub. L. 104-106 provided that:
    ``(1) Reimbursement for buy down costs.--The Secretary of Defense 
shall reimburse the Secretary of Veterans Affairs for amounts paid by 
the Secretary of Veterans Affairs to mortgagees under section 3708 of 
title 38, United States Code, as added by subsection (b).
    ``(2) Designation of housing shortage areas.--For purposes of 
section 3708 of title 38, United States Code, the Secretary of Defense 
may designate as a housing shortage area a military installation in the 
United States at which the Secretary determines there is a shortage of 
suitable housing to meet the military family needs of members of the 
Armed Forces and the dependents of such members.
    ``(3) Report.--Not later than March 30, 1998, the Secretary shall 
submit to Congress a report regarding the effectiveness of the authority 
provided in section 3708 of title 38, United States Code, in ensuring 
that members of the Armed Forces and their dependents have access to 
suitable housing. The report shall include the recommendations of the 
Secretary regarding whether the authority provided in this subsection 
should be extended beyond the date specified in paragraph (5).
    ``(4) Earmark.--Of the amount provided in section 2405(a)(11)(B) 
[110 Stat. 538], $10,000,000 for fiscal year 1996 shall be available to 
carry out this subsection.
    ``(5) Sunset.--This subsection shall not apply with respect to 
housing loans guaranteed after September 30, 1998, for which assistance 
payments are paid under section 3708 of title 38, United States Code.''
