European Stars And Stripes (Newspaper) - May 12, 1988, Darmstadt, Hesse                                Thursday May 12, 19bb the stars and stripes More Money fed into a program mortgage fund sinking to the red As foreclosures on Home Loans n be Page 9 by Chuck v1nch Washington Bureau Washington despite grumblings from Law makers Over inc Valerani administration s handling of tit Home loan guarantees Congress has approved an extra $736 million to save the foundering program. Hint brings the level of funds appropriated for the program this year to almost ii billion a congressional staffer said. And a officials have said they May need As much As another $200 million this fiscal year la keep he program solvent. The mortgage fund has been sinking deeply into the red because he number of foreclosures on a backed Home Loans has been rising sharply according to a report released by inc general accounting office. The report said services members defaults on Loans in 1987 numbered about 15,200 a month up nearly 100 per month Over 198 1, and the amount of claims paid out by the a was up 25 percent Over the same period. The a paid claims on almost 44,000 fore closed properties which caused the mortgage fund to lose j465 million in fiscal 1987. The a docs not make Home Loans but guarantees a mortgage Bank that if inc Homeowner defaults it will pay offa certain amount of the loan. Currently inc a guarantees 50 percent on Loans under 545,000 and 40 percent on Loans above that up to a maximum of s36,Doo. Lawmakers Are upset not so much about the need to bail oui inc fund As they Are about the Way he a tried to Correct the Cash How problem on its own by auctioning off properties Al prices sometimes far below their True Market value. The a normally holds auctions Only As a last re son after making All possible Effort to Market prop erties individually. There is no set period of time Fol lowing a foreclosure that the Agency must wait before deciding to auction a property although an informal guideline used in the past was in months. In n letter to he a last month. Sens. Alan Cranston d-calif., and Frank Murkowski it Alaska both member of the Senate veterans affairs commit tee urged the Agency to exercise More restraint in deciding whether to auction off properties. The congressional staffer said a hearing last week showed that in a Houston auction in Early april the a got Only 41 percent of the Market value of Lite properties up forbid losing an avenge of 127,000 on each. The main concern in Congress is that this is a pattern of questionable fiscal policy by the a she said. Until about four Yean ago the mortgage fund vat Fine. What s been happening is thai the a has been steadily Selling asset Over the Yean not to bolster the mortgage fund out to Shore up other areas of heir budget to make the Overall budget picture look Good. Since the mortgage fund Bank has been slowly depleted the a was unable to handle inc situation when the foreclosure Rale started rising she said so the Agency has been holding auctions almost cry wreck end for the past three months to gel Quick Cash which has no bearing on the big picture three four or five years Down the.  a spokesman for the a said the mortgage Guaran tee fund was never self supporting. But until inc 1980s we were Able to keep in healthy through earnings from our Home loan program he said. It was much smaller than our mortgage Guaran tee program but we did make actual Home Loans to veterans in some areas where Bank financing is nol readily  Congress gradually phased out that program in the Early 1980s, be said. Thai s nol the entire reason for our current prob Lem we have had an unusual and unprecedented number of defaults in economically depressed arean of mortgage payment bite on new Loon pc blog Inge Sriry Norm the country but doing away with thai Home loan program is certainly a big Factor in what s happening now with the mortgage guarantee  the a spokesman said the Clra funding approved last week by Congress has enabled the Agency to Call off some planned and ions and reconsider Ulen scheduled around the country in the near future even though most of those auctions arc for older properties that the Agency had been unable to sell individually. The spokesman said the a will try to stick to its guideline of trying to Market properties individually for about 13 months before resorting to auctions now thai Congress has propped up the mortgage program. The congressional staffer said lawmakers will con Sider a number of actions Over the next few months to prevent a recurrence of inc a s mortgage fund prob Lem. She could not provide details. County Bill would regulate High tech sweatshops Hauppauge