(f) Copy of purchase option, if any; and copy of conditional sales agreement if loan is to be predicated on such an instrument. (g) Proposed loan closing statement of the estimated amounts to be disbursed by the lender for the account of the borrower (see Form 1806). (h) Unless stated in the mortgage, or otherwise in the papers submitted, a statement of the kinds and amounts of insurance to be required to protect the mortgagor, the lender and the Administrator against loss by fire and other hazards, and the estimated premium cost thereof. (See § 36.4115.) (i) When applicable, the original and copy (both signed) of Form 1862, Application to Amend Loan Guaranty Certificate. (See § 36.4131 (c) and (d).) § 36.4126 Recommendation proval of guaranty. for ap The Agency shall review the papers to determine whether it will recommend approval of the application for guaranty. Thereupon the Agency shall forward all the papers to the appropriate office of the Administrator with recommendation that (a) the Administrator approve the application, or (b) he disapprove it. If disapproval is recommended the reasons therefor shall be stated in writing at the time the papers are forwarded. A recommendation that the application be approved, shall be appropriately endorsed on the original of the application. If more than one person functions as or for the Agency in making such recommendation each such person shall sign the recommendation made, indicating concurrence or dissent. In case any such person fails to participate in the decision or is absent, the appropriate fact and name of such person shall be noted on the recommendation. § 36.4127 Administrator's action on ap plication. (a) Upon receipt of the papers from the Agency, the Administrator will determine whether to approve the application. If disapproved he shall return to the proposed lender all papers received from the lender except the original application for guaranty and the original appraisal report and shall state that the application for guaranty has been denied and the reasons therefor. He shall send a copy of the letter to the veteran and the Agency. Upon denial any expenses incurred by the lender or the borrower shall be borne by them or either of them as they shall have agreed. (b) (1) The veteran and the proposed lender, or either, may appeal to the Administrator for review of a denial of the application. (2) Such appeal may be by letter, or on any prescribed form, and shall be mailed or delivered to central office of the Veterans' Administration within one month after receipt of notice of denial. If (c) (1) If for any reason the loan transaction is not concluded and the same or another lender thereafter wishes to consider making a loan on the same security described in the original application, a supplemental application, if the same lender, or a new application if a different lender, may be submitted. accompanying it is a statement by the borrower and lender that the condition of the security is substantially the same as when the appraisal report was made, the supplemental or new application may be approved without a new appraisal, if the supplemental or new application shall have been received by the Administrator within three months from the date of the appraisal report. (2) Without reference to the time limit stated in subparagraph (1) of this paragraph, a copy of the appraisal report will be supplied without cost to a prospective new lender or to the original proposed lender at the currently prescribed price for a copy. § 36.4128 Execution and form of guar anty. (House or Box Number-R. F. D. or StreetPost Office County) (State) (House or Box Number-Street-Post officeCounty) (State) I A. This certificate shall become effective when the requirements of the statute and regulations have been complied with and the acts certified in Part III hereof have been accomplished in compliance with said requirements. B. When it becomes effective as hereinabove prescribed, this certificate shall obligate the United States of America to pay to the legal holder of the "note" described on the reverse hereof upon his duly filing claim therefor: 1. All or such portion of the maximum amount hereby guaranteed as becomes payable upon the conditions, at the times stated in, and in accordance with the provisions of the Servicemen's Readjustment Act of 1944 (58 Stat. 284; 38 U. S. C. 693), and the regulations issued pursuant thereto which are in effect on the date of this certificate. In no event will the obligation under this certificate exceed $2,000. Subject to the foregoing, this guaranty is for per centum of the principal amount of said "note", but not for more than 8In no event will it exceed said percentage of the principal amount. 2. At the expiration of i year from the date of the "note", an amount equal to the interest for 1 year at the contract rate on that portion of the indebtedness ("note") originally guaranteed hereby, such payment to be credited on the indebtedness as prescribed by said regulations. C. Executed on behalf of the United States of America by the Administrator of Veterans' Affairs through the undersigned authorized agent on this date, to become effective in the manner hereinabove prescribed. 86-084-68- 45 Include description of personal property, (if any). Describe fully: show serial numbers, if available, or any other means of identification. Premises identified as (Name of farm, if any, and R. F. D. also number or name of nearest highway) (City, Town, Village) (County, Parish) (State, District, Territory) and further described as:. ---- (If more space is needed, detach and continue description on reverse) III CERTIFICATION BY BORROWER AND LENDER 411 ----- A. We hereby warrant that (1) the undersigned borrower named on the reverse hereof executed the note, the face amount of which is $ consisting of $-------- principal and 8 interest as defined in the Regulations; (2) it is dated_______ day of 19_---; (3) borrower (s) and mortgagor(s) delivered it together with the "mortgage" (as defined in the regulations) bearing the same date, and executed to secure payment of said note; (4) said note and mortgage are in the form and type contemplated in the application of the undersigned pursuant to which this loan guaranty certificate was issued; and (5) the principal stated above has been paid to, or according to the directions of, the undersigned borrower(s). ------- B. The undersigned lender warrants that (1) the same "mortgage," duly executed and witnessed, acknowledged, or proved as required by law, was properly filled, or filled for record, if and as provided by law on the day of 19____, at M; and was given file No.---- by the Recorder or other proper official; (2) that it covers the property described on the reverse hereof, which is the same property described, or otherwise identified, or referred to, in the above-mentioned application for guaranty and in this loan guaranty certificate, or in the application to amend loan guaranty certificate, if any, applicable to such loan; (3) that no lien superior to said "mortgage" has intervened since the date of said application; and (4) if the approved application for guaranty related to a loan wholly or partly to be secured by a hypothecation or a pledge of personal property, such hypothecation or pledge has become effective by appropriate delivery to the lender and no superior lien has intervened since date of application. (All signatures must be in ink) (If a corporation) (Secretary) NOTE 1. If the note is unsecured, references to "mortgage" in paragraph “A” and "B" above are inapplicable. (See § 36.4108 (c).) NOTE 2. If the local law provides for filling only, not recording, chattel mortgages or similar instruments paragraph "B" above nevertheless is to be completed. It refers not only to the County Recorder or Clerk, but also the State Commissioner of Motor Vehicles or other officials who keep motor vehicle mortgage records, and to other similar officials, State or County. (See § 36.4133.) (b) The word principal as used in the Loan Guaranty Certificate and the certification on the reverse thereof means the amount of money actually disbursed to or for the account of the borrower. § 36.4129 Disposition of papers. The original application for guaranty and the appraisal report will be retained in the files of the Veterans' Administration. The Loan Guaranty Certificate and all other papers will be forwarded to the proposed lender with instructions as to closing the loan in a manner to make the guaranty effective. § 36.4130 Loan procedure after approval of guaranty. Upon receipt of the papers from the Administrator, the lender shall: (a) Satisfy himself by "title certificate", as defined in §§ 36.4100-36.4151, as to the title to the real estate to be encumbered (§ 36.4100 (p)), and satisfy himself in such reasonable manner as may be available as to the title to personal property to be encumbered. (b) Cause all necessary instruments to be properly signed and those to be filed, or filed and recorded, properly witnessed, acknowledged or proved so as to entitle them to filing or recordation. (c) Disburse all funds in substantial accord with the proposed loan closing statement submitted with the application. (See § 36.4125 (g) and Form 1806 or 1861.) (d) File with the proper State, county or other public official to be retained where required, or recorded and returned, the "mortgage", and any other appropriate instrument which under the law of the State is required or permitted to be filed or recorded for the purpose of establishing a valid lien as between the parties, or third persons, or of giving actual or constructive notice of the "mortgage," pledge, hypothecation, or other transaction. (e) Take possession or do any other necessary act to make effective the pledge, or hypothecation, if any. § 36.4131 Report of closing loan. (a) Within 2 months after closing the loan and filing with appropriate public official of the proper instruments, or the taking of other appropriate steps, if any, to make the lien effective, the lender shall complete and forward to the Administrator (using prescribed form, if available) a properly signed report of closing the loan stating that: (1) The disbursement of the amount named in such report as the principal of the note has been completed by the lender, which amount may be not more than 3 percent in excess of the amount of the proposed loan as stated in the original application for guaranty, without complying with the procedure stated in paragraphs (c) and (d) of this section. (2) Such disbursements were as estimated on the loan closing statement submitted with the application, except as otherwise stated on the reverse side of the report of closing loan. (See §§ 36.4116 (a) and 36.4125 (g) and Form 1806 or 1861.) (3) The note and the mortgage (or other security instrument) were properly executed, stating the date, and the latter was duly acknowledged, witnessed, or proved, so that it was legally eligible for filing and in which it was properly filed and the filing number thereof; or in the case of a pledge, or hypothecation the necessary possession, or other steps were taken to make same effective. (4) The note was dated (stating the date thereon) and signed by the "debtor"; the actual principal amount thereof; and the rate of interest provided therein. (5) The Loan Guaranty Certificate (stating its L-Number) was completed, and appropriately signed by the lender and the borrower as therein provided. (b) If the lender is a corporation, its corporate seal shall be impressed on such report. (c) If the transaction to be closed is essentially the same as indicated in the original application except that: (1) The amount of the loan actually to be made is more than 103 percent of the amount stated in the application, or (2) Personal property to be acquired differs from that described but is for the same use or purpose, and substantially similar in kind, quality and value. Form 1862, Application to Amend Loan Guaranty Certificate, will be completed and signed in duplicate. (d) The lender will forward the original and copy of Form 1862, Application to Amend Loan Guaranty Certificate, to the "Agency." which will recommend approval or disapproval and forward both to the Veterans' Administration office which issued the Loan Guaranty Certificate. Such office will determine whether to approve the Application to Amend Loan Guaranty Certificate. Such determination will be based on the original application, the evidence submitted in or with the original application, the application to amend, the recommendation of the Agency, and such other evidence, if any, as it considers necessary. Notice of action will be given as in the case of original applications. If approved such approval will be appropriately indicated on the origiral, and such original, duly executed by the Veterans' Administration will be forwarded to the lender. It may be attached to the original Loan Guaranty Certificate to evidence amendment thereof as reflected by such "rider." § 36.4132 Construction loans. (a) Upon the submission to an Agency of an application made pursuant to section 502 of the act for the guaranty of a loan for construction on a farm owned by the veteran, or for repairs, alterations or improvements thereon (hereinafter collectively refered to as "construction loans") the guaranty will be issued to become effective only upon completion thereof, and upon fulfillment of the same requirements of the regulations in this part as are applicable to the guaranty of loans for the acquisition of residential or nonresidential farm buildings other than by construction. (b) Notwithstanding the provisions of paragraph (a) of this section, the guaranty mentioned therein may become effective without the entire amount of the loan having been disbursed if: (1) Complete disbursement is prevented, in the exercise of ordinary care, by reason of the filing of mechanics' liens or other liens, or other controversy or threat of litigation, as to entitlement to any part of the proceeds of such loans; and (2) There is paid to an escrow agent approved by the Administrator so much of such proceeds as have not been disbursed, or other arrangements satisfactory to the Administrator have been made for assuring the availability of such sums; and (3) There is issued by the Administrator Form 1863, Approval of Escrow Certificate, which may be attached to the Loan Guaranty Certificate. (c) For construction loans the lender will follow the procedure provided in §§ 36.4124 to 36.4131, inclusive, for the guaranty of loans for the purchase of farms, and in addition will furnish to the Agency: (1) Complete plans and specifications, except as provided in § 36.4124 (c). When complete plans and specifications are not required the data mentioned in § 36.4124 (c) will be supplied unless § 36.4124 (g) is applicable, in which event the requirements will be those stated therein. (2) An estimate, prepared by a qualifiled appraiser, of the normal agricultural value of the property on which the improvements will be situated together with a separate estimate of the increased value of the property which will result from the improvements according to the plans and specifications or other data. (See 36.4124 (c).) Such estimates of value are in addition to the appraiser's report, otherwise required; (3) A copy of the agreement or agreements (which may be unsigned) on which the proceeds of the proposed loan will be disbursed. (d) Upon the receipt of such papers the Agency will follow the procedure prescribed in § 36.4126 and submit same to the Administrator for action as prescribed in §§ 36.4127 and 36.4128. (e) The Loan Guaranty Certificate shall become effective only upon the conditions stated in § 36.4130 and in addition the further condition that there be supplied to the Administrator a statement by an appraiser on Form 1803 (a), Statement by Appraiser on Completion of New Construction. It shall recite that: (1) He has inspected the construction, repairs, alterations, or improvements. (2) The same have been constructed and completed in substantial conformity with the contract, the plans and specification (if any), and any authorized changes therein (if any), permitted by §§ 36.4100-36.4151, or, in those cases embraced in § 36.4124 (c) or § 36.4124 (f) there are no plans and specifications, within good building practices. (3) The increased value of the property as completed and which will be encumbered is substantially in accord with his estimate. (f) During the course of construction the Administrator shall be entitled at his expense, to cause such inspection of the construction work at such time or times as he may determine. (g) Upon compliance with the requirements of this section and of §§ 36.4130 and 36.4131 relating to the guaranty becoming effective in other than construction loan cases, said Loan Guaranty Certificate shall become effective as originally executed (and subject to § 36.4131), or as amended pursuant to approval of application therefor on Form 1862, Application to Amend Loan Guaranty Certificate. (See § 36.4131 (c) and (d).) (h) The borrower and lender may contract for the payment to the lender of a reasonable sum for the advance of funds during the construction and supervision or inspection of the construction. (i) Minor changes may be made in the plans and specifications or substitution of material of substantially equal quality or value, as the creditor, the debtor, and the builder (contractor) may agree if same are not of a major character and in the aggregate do not increase or decrease the cost more than five per centum of the contract price. This does not modify the provisions of § 36.4131. Changes or substitutions other than as herein stated must have the approval of the Administrator. (j) On an application made pursuant to section 501 for the guaranty of a loan for the construction on farm property of a unit to be occupied by the veteran as a home, in addition to the requirements prescribed in the foregoing paragraphs the appraisal report shall include appropriate data sufficient to afford a basis for estimating the effect such new building would have on the value of the farm, as is required in the case of repairs, alterations or improvements by § 36.4124 (c). The guaranty shall not cover any loss sustained by the creditor as the result of: (a) The acceptance by the mortgagee of a "mortgage" on any real or personal property, title to which is not merchantable; (b) Failure of the mortgagee to procure a duly recorded lien of the dignity required by §§ 36.4100-36.4151; or a lien of such dignity by filling, without recording, if lawful, or by pledge or otherwise as required or permitted by applicable law in the jurisdiction where the property is situated at the time the loan is closed; (c) Failure of the mortgagee to comply with § 36.4115 with respect to insurance; (d) A tax sale pursuant to execution, or otherwise as provided by law, OCcasioned by nonpayment of taxes accruing against the mortgaged property after the date of the "mortgage" if "mortgagee" fails to give notice to the Administrator of the delinquent taxes at least one month before such sale; (e) A release by the creditor of the lien on any of the real or personal property securing the guaranteed loan, or any part thereof unless the Administrator consents in writing. Such consent may be granted if the debt is appropriately reduced or on such other terms as the Administrator may determine: Provided however, That if the land is sought by a public authority for highway or other purposes, consent is hereby given for the creditor to release without consideration or for such consideration as he deems proper and without reference to the Administrator, the creditor's lien on land without any buildings thereon if the land so released does not exceed five percent of the acreage encumbered and does not exceed $200 in value. The same consent is hereby given when the release, easement grant, or other instrument is sought by a public or private agency, or person, for the purpose of pipe line, telephone, telegraph or electric transmission lines: Provided, however, That when such releases, or grants by the lender for any one or more of the purposes stated in this paragraph, or otherwise, with or without specific consent by the Administrator, shall have decreased the security as much as 5 percent in acreage, or $200 in value, no further releases shall be executed, with |