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AB-3634 Veterans farm and home purchase: interest rate.(1993-1994)

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AB3634:v96#DOCUMENT

Assembly Bill No. 3634
CHAPTER 277

An act to amend Section 987.87 of the Military and Veterans Code, relating to veterans.

[ Filed with Secretary of State  July 21, 1994. Approved by Governor  July 20, 1994. ]

LEGISLATIVE COUNSEL'S DIGEST


AB 3634, Knight. Veterans farm and home purchase: interest rate.
Existing law, the Farm and Home Purchase Act of 1974, requires the Department of Veterans Affairs, by a 2/3 vote of the California Veterans Board and with the approval of the Veterans’ Finance Committee of 1943, to establish a uniform rate of interest payable upon the amount remaining unpaid under any veteran’s purchase contract executed on or after September 26, 1974.
Existing law authorizes the board and the committee to raise and lower the effective rate of interest payable under these contracts annually if 90 days’ advance notice is given.
This bill would, instead, require that at least 90 days’ advance written notice be given to contractholders before any increase in the interest rate becomes effective and would make other changes of a technical nature.

The people of the State of California do enact as follows:


SECTION 1.

 Section 987.87 of the Military and Veterans Code is amended to read:

987.87.
 (a)  The department shall establish the actual interest rate to be paid. To this end, the department, by a two-thirds vote of California Veterans Board members and with the approval of the Veterans’ Finance Committee of 1943, is empowered to establish a uniform rate of interest payable upon the amount remaining unpaid under any veteran’s purchase contract executed on or after September 26, 1974. The board and the committee shall periodically, at least once each year, make a finding as to the rate of interest to be charged, determined by a floating rate based upon the actual cost of general obligation bond and revenue bond sales, plus a certain percent for administrative costs to be determined annually by the board and committee, taking into consideration the current value of money, the solvency of the Veterans’ Farm and Home Building Fund of 1943, and the interest paid on any participation contracts to which the interest of the department may be subject. The board and the committee may raise or lower the effective rate of interest payable under these contracts annually as they deem to be for the best interests of the department, as well as the contractholders, if in so doing this action is made applicable alike to any and all of these contracts. The interest rate shall not be raised so that the effective date of a higher rate of interest occurs more than once in any calendar year, unless the board and committee, by a two-thirds vote of the members of each, make a finding that an additional increase in the interest rate is necessary to enable the department to maintain the financial solvency of the fund or to meet its obligations to bondholders or purchasers. At least 90 days’ advance written notice to the contractholders shall be given before any increase in the interest rate becomes effective.
(b)  The total amount of any installment payment shall be raised or lowered to reflect any change in the effective rate of interest. The department may, however, adjust or postpone any installment payment for good cause pursuant to Section 987.71 and, for these purposes, good cause shall include a consideration of whether an increased installment payment would be excessively burdensome in light of a purchaser’s financial circumstances. The department shall include notice of this provision in the 90 days’ advance notice required under subdivision (a).