Page:United States Statutes at Large Volume 110 Part 1.djvu/581

 PUBLIC LAW 104-106—FEB. 10, 1996 110 STAT. 557 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 0-3 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.". (2) The table of sections at the beginning of chapter 37 of title 38, United States Code, is amended by inserting after the item relating to section 3707 to following new item: "3708. Authority to buy down interest rates: pilot program.". (c) AUTHORITY OF SECRETARY OF DEFENSE. — 38 USC 3708 (1) REIMBURSEMENT FOR BUY DOWN COSTS. — The Secretary note. of Defense shall reimburse the Secretary of Veterans Affairs for amounts paid by the Secretary of Veterans Affairs to mort-

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