(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 effective rate of interest. The California Veterans Board and the Veterans’ Finance Committee shall periodically, at least once each year, make a finding as to the effective rate of interest to be charged, not to exceed 5 percent per annum, taking into consideration the current value of money and the solvency of the Veterans’ Farm and Home Building Fund of 1943 and the interest paid on participation contracts to which the interest of the department is subject. The California Veterans Board may raise or lower the effective rate of interest payable under those contracts for any given period as many times and as frequently as it deems to be for the best interests of the department, as well as the contractholders, if in so doing its action is made applicable alike to any and all contracts executed after the effective date of this section, and 90 days’ advance notice be given of the time when the new rate of interest is to become effective.

(b) The total amount of any installment payment shall be raised or lowered to reflect a change in the effective rate of interest. The department shall, upon request of the purchaser, instead increase or decrease the period fixed by the department for amortization of the purchase price without changing the amount of the installment payment. The department shall provide the purchaser with full information as to the repayment options available to him or her under this subdivision and, upon request of the purchaser, the financial consequences of each option. The actual interest rate to be paid on the amount remaining unpaid under any veteran’s purchase contract shall be a rate of interest that, when combined with the interest paid on the unpaid balance of a participation contract to which the department’s interest is subject, equals the effective rate of interest.

(Amended by Stats. 1994, Ch. 114, Sec. 68. Effective January 1, 1995.)