(a) The board shall administer the veterans’ housing assistance fund and the Veterans’ Housing Assistance Program in accordance with this chapter.
(1) The board may contract with other agencies of the state or with private entities to administer all or part of the program.
(2) To the extent that it is cost effective, the board may contract with the commission to determine whether or not applicants qualify as veterans under the terms of this chapter.
(3) The board may set and collect fees it considers reasonable and necessary from each applicant to cover the expenses of administering the program, and these fees shall be deposited in the State Treasury and credited to a special housing program fee fund.
(b) The board shall adopt rules governing the administration of the fund and program, the making or acquiring of veterans’ housing assistance loans, the criteria for approving lending institutions, the use of insurance on the loans and the homes financed under the program, as deemed appropriate by the board, as further security for the loans, the verification of occupancy of the home by the veteran as his principal residence, and the terms and conditions of any contract made with any lending institution for processing, originating, servicing, or administering the loans. In determining the terms of any contracts for the origination or servicing of loans, the board shall review the prudent lending practices prevalent in the residential mortgage lending industry and shall follow such practices to the maximum extent practical.

(c) The board shall determine the quality and type of homes to be financed under the Veterans’ Housing Assistance Program.
(d) The board shall maintain a list of approved lending institutions and shall review and revise such list as necessary at least annually.
(e) When the Veterans’ Land Board applies under Subchapter C, Chapter 1231, Government Code, for the Bond Review Board’s approval of a bond issuance, or on request of the Bond Review Board, with respect to loans made under the program, the Veterans’ Land Board shall file with the Bond Review Board a report on the performance of the loans. The Bond Review Board shall review the reports filed by the Veterans’ Land Board under this subsection to assess the performance of loans made under the program. The filing dates and the contents of the reports must comply with any rules adopted by the Bond Review Board.