proceeds of loan sales in the preceding fiscal year. In addition, the proceeds of loan repayments and loan sales are available for making loans. Of the total funds to be made available from borrowings and program operations, it is expected that $228 million will be disbursed in 1963 and $216 million in 1964. Expenses incident to closing loans are paid by the veteran, foreclosure expenses are met from interest income, and administrative expenses are borne by the appropriation for General operating expenses, Veterans Administration. Operating results and financial condition.-Retained earnings will amount to $37.2 million by June 30, 1964. Transfers of $101.2 million in retained earnings (72 Stat. 1203) and $105.7 million in capital (74 Stat. 532) were made to the Loan guaranty revolving fund during 1962. Revenue, Expense, and Retained Earnings (in thousands of dollars) Amount.. 2. Vendee loans made.-Resale of real property acquired through foreclosure or voluntary conveyance normally involves a cash down payment by the purchaser and the creation of a new mortgage loan to be held by the Veterans Administration. The noncash portions of these transactions are excluded from the program and financing schedule above; but they are included in the following activity summary (in thousands of dollars): Revenue. Expense Net operating income.. Nonoperating income: Proceeds from sales of properties: Cash proceeds. Other.. 4. Interest on borrowings.-Payments to the Treasury increase as the principal amount of notes held by the Treasury increases with additional borrowings. Out of the total earned revenue through June 30, 1962, approximately 63% was used to pay interest expense on borrowings. 5. Operating expenses, general.-Includes a variety of miscellaneous expenses incident to closing and servicing loans. Costs will increase in proportion to the increase in the number of loans outstanding. 6. Property management and selling expenses.-The costs of maintaining and selling properties acquired through foreclosure is expected to increase slightly with the increase in the number of loans outstanding. Financing. Loans are made primarily with funds borrowed from the Treasury. Borrowing authority in the amount of $1,833 million was authorized through June 30, 1962. Additional borrowing authority of $200 million in 1963 and $150 million in 1964 has been authorized. Present plans provide for utilization of the entire authorization in both 1963 and 1964. Treasury borrowings subsequent to June 30, 1962, will be reduced by the Transfer to "Loan guaranty revolving fund" (72 Stat. 1203).... Retained earnings, end of year. Financial Condition (in thousands of dollars) Assets: 1961 actual 1962 1963 actual estimate estimate 1964 221,639 121,995 190,843 230,213 1,608 2,768 2,870 3,200 1,221,937 1,333,612 1,461,612 1,573,102 6,714 9.592 13,175 16.804 2,117 3,563 3,564 3,473 Retained earnings, end of year....- 83,859 Total Government equity...1,413,937 1,424,360 1,622,755 1,774,063 LOAN GUARANTY REVOLVING FUND During the current fiscal year, the Loan guaranty revolving fund shall be available for expenses, [but not to exceed $220,545,000, 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. (Independent Offices Appropriation Act, 1963.) Program and Financing (in thousands of dollars) net. 010244,260 48,683 -179 The Loan guaranty revolving fund was established at the beginning of 1962 by 74 Stat. 533, in order that the revenues obtained from principal payments on vendee accounts and acquired loans, income from interest payments on such assets, and miscellaneous income, such as from the rental of properties, could be used to defray expenses for paying claims, acquiring, managing and selling properties. Budget program.-The activities indicated in tables 1 and 2 below represent the numbers of each asset acquired on a check issued basis. 1. Real property acquired.-Private lenders who have acquired property as a result of foreclosure on defaulted guaranteed or insured loans may elect to convey that property to the Veterans Administration. The table below reflects this activity and excludes the amount of indebtedness established against the veteran: 2. Claims paid. These payments result from veteran. borrowers failing to keep up their payments on VAguaranteed or insured loans, thus requiring the Government to assume the responsibility. The table below reflects this activity and it represents only the amount Number of sales.. Cost per sale.. Total cost (in thousands). 13,476 $507 $6,830 $9,625 Financing.-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 will be several years before interest income and principal repayments are sufficient to offset program costs, and make the fund self-sustaining. In the meantime, it will be necessary to obtain funds from other sources. In this respect, during 1963 and 1964, it is estimated that $59 million and $34 million, respectively, will be required to be transferred from the Readjustment benefits appropriation (74 Stat. 533). Also, in 1963 and 1964 an estimated $150 million and $147 million vendee loans will be sold to private investors. Proposed language change, 1963.-A language change will be proposed to remove the limitation of $221 million included in the Independent Offices Appropriation Act, 1963, for expenses involved in property acquisition and other loan guarantee expenses under chapter 37, title 38, United States Code. Current estimates indicate that the number of guaranteed and insured claim payments and properties that private lenders will elect to convey to the Veterans Administration, all uncontrollable, will exceed the totals Total assets.... 521,335 Start of year. 728,206 787,481 Transferred from "Direct loans to veterans and reserves revolving fund" (cash): 105,718 101,153 59,275 34,000 728,206 787,481 821,481 -5,464-9,121 -9,406 722,742 778,360 812,075 (74 Stat. 532 and 76 Stat. 8). Retained earnings (72 Stat. 1203). Payment from "Readjustment benefits" appropriation... End of year..... Deficit (-), end of year... Total Government equity. This fund finances the payment of claims on nonparticipating insurance policies issued to veterans with service-connected disabilities which make them ineligible for commercial insurance (38 U.S.C. 722). Administrative expenses are paid from the General operating expenses appropriation. Budget program-1. Death claims.-Payments to surviving beneficiaries continue to increase as new deaths occur among the increasing number of policyholders. 3. Cash surrenders.-A policyholder may terminate his insurance by cashing in his policy for its cash value. 4. Policy loans. A policyholder may borrow up to 94% of the cash value of bis policy. This activity increases with the increased number of policyholders. The general increase in the activity of this fund is indicated in the following table (dollars in thousands): Liabilities: Operating reserves: Reserve for cash surrender value... Reserve for future installments on matured contracts.. Total liabilities.. Government equity: 1,197 1,046 1,100 14,157 17,249 20,500 25,000 3,644 3,846 4,215 4,571 18,998 2 22,141 25,815 30,756 4,500 4,500 4,500 4.500 -20,930-24,200 -27,307 -31,344 Total Government equity.... 16,430 -19,700 -22,807 -26,844 33 Investments and loans... 42 Insurance claims and indemnities. 893 1,080 1,275 5,810 6,355 7.059 |