VA Terminates Vendee Program
The Department of Veterans Affairs halted is "vendee loan" program last month, which was used to finance sales of VA-foreclosed single-family homes.
"Effective for all listings on or after Jan. 31, 2003, the VA will no longer offer vendee financing," DVA announced. The Office of Management and Budget has been trying to shut down the vendee program for the past two years. But the VA had resisted on the grounds that vendee financing improves recoveries on sales of real estate-owned.
However, OMB targeted the vendee loan program again in the last budget round, and VA secretary Anthony Principi agreed to halt the financing of REO sales with VA-guaranteed loans. About $1 billion in vendee loans are securitized annually. "In the event that a listing issued prior to Jan. 31, 2003 is subject to a bid period which extends beyond Jan. 31, offers submitted with vendee financing will still be considered," DVA said.
The omnibus appropriations bill includes report language that supports the program. "Until the administration can provide a study to show the vendee program is not of financial benefit to the department, the committee directs the VA to continue the vendee loan program," the VA-HUD appropriations bill says. House and Senate appropriators will be meeting in the next few weeks to iron out their differences and it remains to be seen if Congress will insist on preserving the financing program. Meanwhile, the VA is in the midst of deciding whether to privatize its REO sales operation and the elimination of the vendee financing required the bidders to make alterations to their proposals. VA Loan Guaranty Service director Keith Pedigo also is in the middle of revamping VA servicing policies so servicers will have more flexibility in dealing with delinquent loans.
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