whether or not such restriction provides for reversion or forfeiture of title or a lien for liquidated damages in the event of a breach;

(10) Any other covenant, condition, restriction, or limitation approved by the Secretary in the particular case. Such approval shall be a condition precedent to the guaranty of the loan;

(c) The following limitations on the • quantum or quality of the estate or property shall be deemed for the purposes of paragraph (b) of this section to have been taken into account in the appraisal of the manufactured home lot and determined by the Secretary as not materially affecting the reasonable value of such property:

(1) Building or use restrictions. Provided, (i) no violation exists, (ii) the proposed use by a veteran does not presage a violation of a condition affording a right of reverter, and (iii) any right of future modification contained in the building or use restrictions is not exercisable, by its own terms, until at least 10 years following the date of the loan.

(2) Violations of equal opportunity restrictions. Violations of a restriction based on race, color, religion, sex, handicap, familial status, or national origin, whether or not such restriction provides for reversion or forfeiture of title or a lien for liquidated damages in the event of a breach.

(3) Violations of building or use restrictions of record. Violations of building or se restrictions of record which have existed for more than 1 year, are not the subject of pending or threatened litigation, and which do not provide for a reversion or termination of title or condemnation by municipal authorities or a lien for liquidated damages which may be superior to the lien seCuring the guaranteed loan.

1 (4) Easements. (i) Easements for pubc utilities along one or more of the property lines and easements for drainage or irrigation ditches, provided the exercise of the rights thereof do not interfere with the use of the manufactured home or improvements located on the subject property.

(ii) Mutual easements for joint driveways located partly on the subject property and partly on adjoining prop

erty, provided the agreement is recorded in the public records.

(iii) Easements for underground conduits which are in place and which do not extend under any buildings in the subject property.

(5) Encroachments. (i) On the subject property by improvements on the adjoining property where such encroachments do not exceed 1 foot within the subjects boundaries, provided such encroachments do not touch any buildings or interfere with the use or enjoyment of any building or improvement on the subject property.

(ii) By hedges or removable fences belonging to subject or adjoining property.

(iii) Not exceeding 1 foot on adjoining property by driveways belonging to subject property, provided there exists a clearance of at least 8 feet between the buildings on the subject propert and the property line affected by the encroachment.

(6) Variations of lot lines. Variations between the length of the subject property lines as shown on the plot plan or other exhibits submitted to the Department of Veterans Affairs and as shown by the record or possession lines, provided such variations do not interfere with the current use of any of the improvements on the subject property including the manufactured home and do not involve a deficiency of more than 2 percent with respect to the length of the front line or more than 5 percent with respect to the length of any other line.

(d) In a combination loan (loan to finance the purchase of a manufactured home and to finance the purchase of a lot and/or necessary site preparation) the total indebtedness of the veteran arising from such combination loan transaction must be secured by a first lien or the equivalent thereof on the estate of the veteran in the manufactured home lot, which real estate security interest shall be in addition to the manufactured home security interest required by § 36.4234.

(e) Tax liens special assessment liens, and ground rents shall be disregarded with respect to any requirement that loans shall be secured by a lien of specified dignity. With the prior approval of the Secretary, Under Secretary for

Benefits, or Director, Loan Guaranty Service, liens retained by nongovernmental entities to secure assessments or charges for municipal type services and facilities clearly within the public purpose doctrine may be disregarded. In determining whether a loan for the purchase or improvement of a manufactured home lot is secured by a first lien the Secretary may also disregard a superior lien created by a duly recorded covenant running with the realty in favor of a private entity to secure an obligation to such entity for the homeowner's share of the costs of the management, operation, or maintenance of property, services or programs within and for the benefit of the development or community in which the veteran's realty is located, if the Secretary determines that the interests of the veteran-borrower and of the Government will not be prejudiced by the operation of such covenant. In respect to any such superior lien created after June 6, 1969, the Secretary's determination must have been made prior to the recordation of the covenant.

(f) In the case of a combination loan or a loan to purchase a lot upon which a manufactured home owned by the veteran will be placed it shall be the responsibility of the lender that the veteran initially obtains or has an estate in the land constituting the manufactured home lot meeting the requirements of paragraph (a) of this section and to obtain and retain a security interest thereon meeting the requirements of paragraph (d) of this section.

(g) In the case of a combination loan to purchase a manufactured home lot and to refinance an existing purchase money loan on a manufactured home unit which is or will be located on the lot to be purchased, it shall be the responsibility of the lender to assure that the veteran obtains or retains an estate in the manufactured home and in the land meeting the requirements of paragraph (a) of this section and §36.4234. The lender must also obtain and retain a first lien or the equivalent thereof on the estate of the veteran in both the manufactured home and in

the lot on which the manufact home is located.

(Authority: 38 U.S.C. 501, 3703(c), and (a)(1)(G), (e)(3) and (g))

[36 FR 3368, Feb. 23. 1971, as amended FR 55720, Aug. 21, 1980; 47 FR 49093 Nd 1982; 48 FR 40231, Sept. 9. 1983; 49 FR May 25, 1984; 55 FR 25976, June 26, 1990 37860, July 14, 1993; 61 FR 28058, June 4, §36.4254 Fees and charges.

(a) Except as provided in § 36.4232 and charges incident to origination combination loan or a loan to pard a lot upon which a manufactured owned by the veteran will be pl which may be paid by the veteran be limited, with respect to the real tate portion of the loan, to reason and customary amounts for any of following:

(1) Fees of the Department of erans Affairs appraiser and of com ance inspectors designated by the partment of Veterans Affairs, es appraisal fees incurred for the determination of reasonable value quested by others than veteran or er,

(2) Recording fees and recon taxes or other charges incident to ordation,

(3) Credit report,

(4) That portion of taxes, as ments, and other similar items for current year chargeable to the rower and an initial deposit (lumppayment) for any tax and insurance count,

(5) Survey, if required by lender veteran,

(6) Title examination and title insti ance, if any,

(7) The actual amount charged flood zone determinations, including charge for a life-of-the-loan flood a determination service purchased at time of loan origination, if made b third party who guarantees the act racy of the determination. A fee m not be charged for a flood zone dete mination made by a Department Veterans Affairs appraiser or for lender's own determination, and

(8) Such other items as may be a thorized in advance by the Under Se retary for Benefits as appropriate fo

don under this paragraph as propal variances.

rity: 38 U.S.C. 3712; 42 U.S.C. 4001 note,

A lender may charge and the vetmay pay a flat charge not exceedle (1) percent of the amount of the less the portion thereof allocated e manufactured home: Provided, such flat charge shall be in lieu of ther charges relating to costs of lation not expressly specified and Red in this schedule.

Except for a refinancing loan purto 38 U.S.C. 3712(a)(1)(F) or (G) and charges specified in this secmay not be included in the loan. 1) Notwithstanding the provisions ragraph (c) of this section and subto the limitations set out in parahs (d)(4) and (d)(5) of this section, a just be paid to the Secretary. A fee percent of the total loan amount t be paid to the Secretary before a bination manufactured home and loan (or a loan to purchase a lot 1 which a manufactured home ed by the veteran will be placed) be eligible for guaranty. Provided, ever, that the fee shall be 0.50 perof the total loan amount for interrate reduction refinancing loans ranteed under 38 U.S.C. (a)(1)(F). All or part of such fee be paid in cash at loan closing or or part of the fee may be included in loan without regard to the reasonvalue of the property or the comed maximum loan amount, as appriate. In computing the fee, the der will disregard any amount inded in the loan to enable the borer to pay such fee.

thority: 38 U.S.C. 3729(a))

1) Subject to the limitations set out paragraphs (d)(3) and (d)(4) of this tion, a fee of one-half of one percent the loan balance must be paid to the cretary in a manner prescribed by Secretary by a person assuming a in to which section 3714 of chapter 37 38 U.S.C. applies. The instrument sering such a loan shall contain a prosion describing the right of the holdto collect this fee as trustee for the epartment of Veterans Affairs. The an holder shall list the amount of

this fee in every assumption statement provided and include a notice that the fee must be paid to the holder immediately following loan settlement. The fee must be transmitted to the Secretary within 15 days of receipt by the holder of notice of the transfer.

(Authority: 38 U.S.C. 3714, 3729)

(3) The lender is rquired to pay to the Secretary the fee described in paragraph (d)(1) of this section within 15 days after loan closing. Any lender closing a loan, subject to the limitations set out in paragraphs (d)(4) and (d)(5) of this section, who fails to submit timely payment of this fee will be subject to a late charge equal to 4 percent of the total fee due. If payment of the 1 percent fee is made more than 30 days after loan closing, interest will be assessed at a rate set in conformity with the Department of Treasury's Fiscal Requirements Manual. This interest charge is in addition to the 4 percent late charge, but the late charge is not included in the amout on which interest is computed. This interest charge is to be calculated on a daily basis beginning on the date of closing, although the interest will be assessed only on funding fee payments received more than 30 days after closing.

(Authority: 38 U.S.C. 501)

(4) The lender is required to pay to the Secretary electronically through the Automated Clearing House (ACH) system the fees described in paragraphs (d)(1) and (d)(2) of this section and any late fees and interest due on them. This shall be paid to a collection agent by operator-assisted telephone, terminal entry, or CPU-to-CPU transmission. The collection agent will be identified by the Secretary. The lender shall provide the collection agent with the following: authorization for payment of the funding fee (including late fees and interest) along with the following information: VA lender ID number; four-digit personal identification number; dollar amount of debit; VA loan number; OJ (office of jurisdiction) code; closing date; loan amount; information about whether the payment includes a shortage, late charge, or interest; veteran name; loan type; sale amount; downpayment; whether the

veteran is a reservist; and whether this is a subsequent use of entitlement. For all transactions received prior to 8:15 p.m. on a workday, VA will be credited with the amount paid to the collection agent at the opening of business the next banking day.

(Authority: 38 U.S.C. 3729(a))

(5) The fee described in paragraphs (d)(1) and (d)(2) of this section shall not be collected from a veteran who is receiving compensation or who but for the receipt of retirement pay would be entitled to receive compensation) or from a surviving spouse described in section 3701(b)(2) of title 38 U.S.C.

(Authority: 38 U.S.C. 3729(b))

(6) Collection of the loan fee in this paragraph does not apply to loans closed prior to August 17, 1984, between October 1, and October 15, 1987, inclusive, between November 16 and December 20, 1987, inclusive, nor to loans closed after September 30, 1989.

(Authority: 38 U.S.C. 3729(c))

(The information collection requirements in this section have been approved by the Office of Management and Budget under control number 2900-0474)

[36 FR 3369, Feb. 23, 1971, as amended at 46 FR 43671, Aug. 31, 1981; 47 FR 46700, Oct. 20, 1982; 48 FR 40231, Sept. 6, 1983; 50 FR 5754, Feb. 12, 1985; 53 FR 27048, July 18, 1988; 55 FR 37473, Sept. 12, 1990; 60 FR 38259, July 26, 1995; 61 FR 28058, June 4, 1996; 62 FR 63278, Nov. 28, 1997]

§36.4255 Loans for the acquisition of a lot.

(a) A loan to finance all or part of the cost of acquisition by the veteran of a lot on which to place a manufactured home owned by the veteran shall be eligible for guaranty, Provided, That:

(1) The veteran will acquire title to such lot that conforms to the requirements of § 36.4253(a),

(2) The loan is secured as required by § 36.4253(d),

(3) The lot is determined by the Secretary to be an acceptable manufactured homesite pursuant to § 36.4208,

(4) The portion of the loan allocated to acquisition of the lot does not exceed the reasonable value of the lot as determined by the Secretary,

(5) The loan conforms otherwis the requirements of the §36.4200

(b) The cost of lot acquisition will not be paid from the procee the loan must be paid by the veteri cash from his or her own resources

(c) For the purpose of this sed acquisition of a manufactured hom includes:

(1) The refinancing of the bal owed by the veteran as purchaser an existing real estate installment tract, and

(2) The refinancing of existing gage loans or other liens which at cured of record on a manufact home lot owned by the veteran.

(Authority: 38 U.S.C. 501, and 3712(g)) [40 FR 13215, Mar. 25, 1975, as amended FR 40231, Sept. 6, 1983]

SERVICING, LIQUIDATION OF SECUE AND CLAIM

§ 36.4275 Events constituting and acceptability of partial ments.

(a) Except as provided in paragr (a)(1), (a)(2) and (a)(3) of this sed the conveyance of or other transf title to property by operation of la otherwise, after the creation of thereon to secure a loan which is anteed in whole or in part by the retary, shall not constitute an eve default, or acceleration of mat elective or otherwise, and shall n itself terminate or otherwise affect guaranty.

(1) The Secretary may issue guar on loans in which a State, Territo or local governmental agency pro assistance to a veteran for the act tion of a mobile home or lot. 8 loans will not be considered inelig for guaranty if the State, Territo or local authority, by virtue of its or regulations or by virtue of Fed law, requires the acceleration of m rity of the loan upon the sale or veyance of the security property person ineligible for assistance f such authority.

(2) At the time of application for loan assisted by a State, Territorial, local governmental agency, the eran-applicant must be fully inform and consent in writing to the hous

Frity restrictions. A copy of the

n's consent statement must be rded with the loan application or port of a loan processed on the latic basis.

Any housing loan which is fid under 38 U.S.C. chapter 37 and ich section 3714 of that chapter s, shall include a provision in the ity instrument that the holder declare the loan immediately due ayable upon transfer of the propsecuring such loan to any transunless the acceptability of the astion of the loan is established purto section 3714.

A holder may not exercise its opo accelerate a loan upon:

The creation of a lien or other enrance subordinate to the lender's ity instrument which does not reto a transfer of rights of occuy in the property;

The creation of a purchase money rity interest for household appli

) A transfer by devise, descent, or ation of law on the death of a joint nt or tenant by the entirety;

The granting of a leasehold interof three years or less not conng an option to purchase;

A transfer to a relative resulting the death of a borrower;

A transfer where the spouse or ren of the borrower become joint rs of the property with the bor

A transfer resulting from a decree dissolution of marriage, legal sepain agreement, or from an incial property settlement agreement hich the spouse of the borrower bees the sole owner of the property. ach a case the borrower shall have option of applying directly to the artment of Veterans Affairs renal office of jurisdiction for a rese of liability in accordance with 4285 of this part; or

D) A transfer into an inter vivos it in which the borrower is and rens a beneficiary and which does not te to a transfer of rights of occucy in the property.

i) Any instrument evidencing the 1 (ie., the retail installment conct, promissory note and/or mortgage deed of trust) shall bear in a con

spicuous position in capital letters on the first page of the document in type at least 21⁄2 times larger in height than the regular type on such page the following warning: "THIS LOAN IS NOT ASSUMABLE WITHOUT THE APPROVAL OF THE DEPARTMENT OF VETERANS AFFAIRS OR ITS AUTHORIZED AGENT." Due to the difficulty in obtaining some commercial type sizes which are exactly 21⁄2 times larger in height than other sizes, minor deviations will be permitted based on commercially available type sizes nearest to 21⁄2 times the size of the print on the document. A similar warning in regular size type must appear on every assumption statement provided on a loan to which this paragraph applies.

(iii) On any loan to which 38 U.S.C. 3714 applies, the holder may charge a reasonable fee, not to exceed the lesser of (A) $300 and the actual cost of any credit report required, or (B) any maximum prescribed by applicable state law, for processing an application for assumption and changing its records. A provision authorizing the collection by the holder of this fee shall be contained in the instrument securing the loan. (Authority: 38 U.S.C. 3704 and 3714)

197-135 D-19