note. 106 STAT. 3634 PUBLIC LAW 102-547—OCT. 28, 1992 for construction with respect to which the veteran has made a downpayment of 5 percent or more of the total purchase price or construction cost— "(I) 1.50 percent of the total loan amount if such downpayment is less than 10 percent of such price or cost; or "(11) 1.25 percent of the total loan amount if such downpayment is 10 percent or more of such price or cost; and". (2) Subparagraphs (A) and (B) of section 3725(c)(2) of such title are amended by inserting "(other than loans described in section 3729(a)(2)(D) of this title)" after "for each loan". 38 USC 3702 (c) REPORT.—The Secretary of Veterans Affairs shall transmit a report to the Committees on Veterans' Affairs of the Senate and House of Representatives no later than December 31, 1994, and annually thereafter. The report shall contain— (1) a declaration of the number of veterans (as defined by section 3701(b)(5) of title 38, United States Code) who receive mortgage loans guaranteed by the Secretary as a result of the amendments made by subsection (a); (2) a comparison of the default rate of veterans described in paragraph (1) with the default rate for all other veterans who have received loans guaranteed or insured by the Secretary; and (3) a comparison of the proportion of veterans who receive mortgage loans guaranteed by the Secretary as a result of the amendments made by subsection (a) who are first time homebuyers with the proportion of all other veterans who receive mortgage loans guaranteed or insured by the Secretary and who are first time homebuyers. SEC. 3. ADJUSTABLE RATE MORTGAGE DEMONSTRATION PROGRAM. (a) IN GENERAL.—(1) Chapter 37 of title 38, United States Code, is amended by adding after section 3706 the following new section:
- § 3707. A4ju8table rate mortgages
"(a) The Secretary shall carry out a demonstration project under this section during fiscal years 1993, 1994, and 1995 for the purpose of guaranteeing loans in a manner similar to the manner in which the Secretary of Housing and Urban Development insures adjustable rate mortgages under section 251 of the National Housing Act. "(b) Interest rate adjustment provisions of a mortgage guaranteed under this section shall— "(1) correspond to a specified national interest rate index approved by the Secretary, information on which is readily accessible to mortgagors from generally available published . V sources; J "(2) be made by adjusting the monthly payment on an ^ annual basis on the anniversary of the date on which the loan was closed; "(3) be limited, with respect to any single annual interest rate adjustment, to a maximum increase or decrease of 1 percentage point; and
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