Public enterprise funds-Continued CANTEEN SERVICE REVOLVING FUND-Continued primarily as a result of the Government Employees Salary Reform Act of 1964. Financing. No appropriation by the Congress will be required for the operation of the Veterans Canteen Service during 1966. Operations will be financed from current revenues. The Congress originally appropriated a total of $4,965 thousand to establish and operate the Service. Funds in excess of the needs of the Service totaling $9,900 thousand have been paid to the Treasury as of June 30, 1964. Operating results and financial condition. Operating revenue is expected to be sufficient to cover operating expenses. Funds at the close of the year in excess of the needs of the Service for the ensuing year will be paid to the Treasury. Revenue, Expense, and Retained Earnings (in thousands of dollars) 1965 1966 estimate estimate 279 Such loans are made only in rural areas, small cities, and towns where private credit for the making of GI loans is and has been generally unavailable. The maximum loan amount is $15 thousand and the maximum term is 30 years. The interest rate is the same as the rate allowable for GI loans (38 U.S. Code, section 1811 as amended). Budget program-1. Direct loans to veterans.-Under 1,800 existing legislation, authority to make or to enter into commitments to make loans expires July 25, 1967, for World War II veterans, and January 31, 1975, for Korean conflict veterans. The following table summarizes the new loan activity: 40,272 43,379 226, 128 194,987 28,950 139,087 2. Vendee loans.-Most sales of acquired property involve a small cash down payment by the purchaser and the establishment of a new mortgage loan or installment contract to be held by the Veterans Administration. Cash expenditures are not involved in the establishment of vendee loans or installment contracts. However, it is often necessary to subsequently advance cash on behalf of the borrower in order to protect the interest of the Government. 3. Property improvements.-Properties are acquired through foreclosure or voluntary conveyance of defaulted loans. This involves the exchange of noncash assets and are excluded from capital outlay on the program and financing schedule. However, capital expenditures are often necessary to put the property in salable condition. The following table summarizes these expenditures. 1964 actual 1965 estimate 1966 estimate year: 24.47 24.98 Fund balance. 249,372 265,848 78,848 909,014 25.47 Unobligated balance lapsing: Authorization to spend from public debt receipts..... Number of properties improved. Total cost (in thousands).. Note. The above statement excludes the following, exchanges of nonworking capital assets: The settlement of defaulted veterans loans by foreclosures and conveyances (1964, $9,961 thousand; 1965, $10,097 thousand; 1966, $9.937 thousand): The settlement of vendee loans by foreclosures and conveyances (1964, $617 thousand; 1965, $715 thousand; 1966, $865 thousand): The acquisition of vendee loans in exchange for real property (1964, $8,782 thousand; 1965, $9,185 thousand; 1966, $9,185 thousand). Balances of selected resources are identified in the statement of financial con. dition. Direct loans are made to purchase, construct, or improve a home; to purchase a farm on which there is a farm residence to be occupied by the veteran as his home; or to construct, alter, repair or improve a farm dwelling to be occupied by the veteran as his home. 4. Interest on borrowings from Treasury.-The actual interest cost for 1964 was $43,745 thousand. However, in order to effect the adjustment in interest paid in prior years (1962 and 1963) required by Public Law 88-274, approved February 1964, payments were reduced by $4,972 thousand for a net of $38,503 thousand in 1964. Approximately 65% of the total earned revenue through 1964 was used to pay interest expense on borrowings from the Treasury. 5. Operating expenses, general.-Includes a variety of miscellaneous expenses borne by the Government incident to closing and liquidating loans. 6. Property management expense.-Includes all the cost of ownership of acquired properties except those which increase the value of the property and are included under capital improvements. Included in management expense is grass cutting, repair of broken windows, winterizing, etc., also payments for services performed by management brokers and real estate taxes. 7. Sales expense.-Includes broker's fees and advertising costs incident to the sale of properties owned by Veterans Administration and averages approximately 5% of the selling price. Financing.-Public Law 87-84, approved July 6, 1961, authorizes the Veterans Administration to draw $1.1 billion from the U.S. Treasury at stated intervals through 1966 with the provision that after the first year (1962) the amount so authorized was to be reduced by the amount of loans sold in the preceding fiscal year. Through Public enterprise funds-Continued DIRECT LOAN REVOLVING FUND-Continued Financial Condition (in thousands of dollars)—Continued 1963 actual 1964 1965 1966 actual estimate estimate 1964, $400 million was borrowed from the Treasury and $200.6 million lapsed due to loan sales in prior years. No borrowings are contemplated in 1965 or 1966. Funds provided by the repayment of principal on loans outstanding, the sale of loans, the sale of mortgage pool participation certificates, and other revenue will provide sufficient funds for the requirements of the Direct loan program; and also make available $200 million for transfer to the Loan guaranty fund in 1965 and $180 million in 1966. Therefore, appropriation language is proposed to rescind the new 1966 authorization. Public Law 88-507, approved in August 1964, continued the authority to transfer "retained earnings" of this fund to the Loan guaranty fund and, in addition, provided authority to transfer, as needed, up to $200 million of unobligated balances of the Direct loan fund to the Loan guaranty fund. Language is proposed to extend these provisions through 1966. Mortgage pools.-This fund received $93 million in 1965 from the sale of participation certificates in the government mortgage liquidation trust, authorized by the Housing Act of 1964, Public Law 88-560, approved in September 1964. These estimates also include revenue of $600 million in 1966 from the sale of additional mortgage pool participation certificates. Revenue, Expense, and Retained Earnings (in thousands of dollars) Revenue.... Less portion applicable to participation certificates sold: Government mortgage liquidation Invested capital and earnings. 44,527 33,376 30,849 28,849 595,495 592,757 1,281,294 1,258,469 1,055,519 630,344 987,862 342,634 trust... Subtotal.. 1,921,316 1,884,602 1,716,712 1,359,345 -280,512-249, 372-265, 848-78,848 Total Government equity... 1,640,804 1,635,231 1,450,864 1,280,497 1 The changes in these items are reflected on the program and financing schedule. Object Classification (in thousands of dollars) Cash. 808 Other 8,776 Net book value of properties sold. -9,957 900 9,185 -9,885 950 9,185 -9,935 [During the current fiscal year, the] The Loan guaranty revolving fund shall hereafter be available for expenses [, but not to exceed $380,000,000,] for property acquisitions and other loan guaranty and insurance operations under Chapter 37, title 38. United States Code, except administrative expenses, as authorized by section 1824 of such title: Provided, That the [retained earnings of the Direct loans to veterans and reserves revolving fund shall be available, during the current fiscal year, for transfer to said Loan guaranty revolving fund in such amounts as may be necessary to provide for the foregoing expenses: Provided further, That, in addition, not to exceed $200,000,000 of] unobligated balances including retained earnings of [said] the Direct loans revolving fund shall hereafter be available, during the current fiscal year,] for transfer to the Loan guaranty revolving fund in such [amount] amounts as may be necessary to provide for the foregoing expenses and the Administrator of Veterans' Affairs shall not be required to pay interest on amounts so transferred after the time of such transfer. (Independent Offices Appropriation Act, 1965.) Assets: Treasury balance.. Accounts receivable, net.. Funds on deposit with trustee for payment of principal on participation certificates... Loans receivable, net: Direct loans to veterans. 408,181 413,484 439,654 2,604 7,026 1,261,041 1,230,673 1,112,602 Less: Sale of participation certificates.... -93,000-693,000 93 94 Expenditures.. Note. The above statement excludes the following exchanges of nonworking capital assets: The settlement of VA-guaranteed or insured loans by the acquisition of real property (1964. $255,791 thousand: 1965, $288,000 thousand; 1966, $302,000 thousand): The settlement of defaulted VA-owned loans by acquisition of real property (1964, $32,693 thousand: 1965, $38,200 thousand; 1966, $44,300 thousand): The acquisition of vendee loans in exchange for real property (1964, $321.697 thousand; 1965, $309,000 thousand; 1966, $322,000 thousand). The Loan guaranty revolving fund was established at the beginning of 1962 by 74 Stat. 533, in order that the 5. Cash advances-vendee loans.-Cash expenditures are not involved in the establishment of vendee loans or installment contracts. However, it is often necessary to subsequently advance cash on behalf of the borrower in order to protect the interest of the Government. These disbursements are of two general types, i.e., those necessary to prevent foreclosure such as deficiencies in escrow accounts established for the payment of taxes and insurance on the mortgaged property and those necessary to cover foreclosure costs that should be paid by the borrower. These advances are added to the unpaid loan balance and are included in the capital outlay section of the program Financing. Normal revenue and receipts consist principally of interest income and repayments on mortgage loans made incident to the sale of real property acquired as a result of foreclosure on guaranteed loans. It is estimated that $62 million in 1965 and $50.7 million in Also an esti1966 will be received from these sources. mated $250 million vendee loans will be sold in 1965 and 1966, respectively. Advances for bidding at public Claims receivable, net (veterans Loans receivable.. Less sale of participation certifi- 524 11,262 Subtotal, loans receivable, net. 354,517 78 Stat. 661 provided authority to transfer from the Direct loan revolving fund "retained earnings", as available, and, in addition up to $200 million as needed of "unobligated balances" to this fund to cover expenses for property acquisitions and other loan guaranty and insurance operations under 38 U.S.C. 37, except administrative expenses, as authorized by section 1824 of such title. Language is proposed to extend these provisions Liabilities: through 1966. Mortgage pools.-This fund received $7 million in 1965 from the sale of participation certificates in the Government Mortgage Liquidation Trust, authorized by the Housing Act of 1964, Public Law 88-560. These estimates also include revenue of $200 million in 1966 from the sale of additional mortgage pool participation certifi cates. Revenue, Expense, and Retained Earnings (in thousands of dollars) of acquiring title.. Total assets.. Current.. Government equity: Reclassification to noninterest Transfer from "Direct loans to Capital (borrowings from 27.273 30.909 32,155 -872 -6,875 Reclassification from noninter est-bearing-capital (Public 27.273 30,037 25,280 Law 88-274). 105,718 |