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Determine how its VA deliny and foreclosure rates compare ates in various reports published 3 industry, investors and others;

Analyze significant variances beits foreclosure and delinquency and those found in available reand publications and take approcorrective action.

Holders shall provide available tical data on delinquency and osure rates and their analysis of data to the Secretary upon re

wed by the Office of Management and tunder Control Number 2900-0530)

29114, May 19, 1993]

279 Extensions and reamortizaons.

Provided the debtor(s) is (are) a nable credit risk(s), as determined he holder based upon review of the or's (s') creditworthiness, includIa review of a current credit re(s) on the debtor(s), the terms of yment of any loan may, by written ement between the holder and or(s), be extended in the event of ilt, to avoid imminent default, or by other case where the prior apal of the Secretary is obtained. Exwith the prior approval of the Secy, no such extension shall set a of amortization less than that sufnt to fully amortize at least 80 perof the loan balance so extended in the maximum maturity preed for loans of its class.

In the event of a partial prepay# pursuant to §36.4211, the balance he indebtedness may, by written ement between the holder and the or(s), be reamortized, provided the mortization schedule will result in repayment of the loan within the ginal maturity, and provided the tor(s) is (are) a reasonable credit (s), as determined by the holder ed upon review of the debtor's (s') litworthiness, including a review of rrent credit report(s) on the debt}.

Unless the prior approval of the retary has been obtained, any exsion or reamortization agreed to by older which relieves any obligor n liability will release the liability

of the Secretary under the guaranty on the entire loan. However, if such release of liability of an obligor results through operation of law by reason of an extension or other act of forbearance, the liability of the Secretary as guarantor will not be affected thereby, Provided, The required lien is maintained and the title holder is and will remain liable for the payment of the indebtedness: And further provided, That if such extension or act of forbearance will result in the release of the veteran, all delinquent installments, plus any foreclosure expenses which may have been incurred, shall have been fully paid.

(d) The holder shall promptly forward to the Secretary an advice of the terms of any agreement effecting a reamortization or extension of a guaranteed loan, together with cop(y)(ies) of the credit report(s) obtained on the debtor(s).

(Authority: 38 U.S.C. 3712)

[36 FR 1253, Jan. 27, 1971, as amended at 53 FR 34295, Sept. 6, 1988]

§ 36.4280 Reporting of defaults.

The holder of any guaranteed loan shall give notice to the Secretary within 15 days after any debtor:

(a) Is in default by reason of nonpayment of two full installments; or

(b) Is in default by failing to comply with any other covenant or obligation of such guaranteed loan which failure persists for a continuing period of 60 days after demand for compliance therewith has been made, except that if the default is due to nonpayment of real estate taxes, the notice shall not be required until the failure to pay when due has persisted for a continuing period of 120 days.

(c) In the event any failure of the months or for more than 1 month on an extended loan, the holder may then or thereafter give the notice in the manner described in paragraph (e) of this section.

(d) The notice prescribed in paragraph (e) of this section may be submitted prior to the time prescribed in paragraph (c) of this section in any case where any material prejudice to

the rights of the holder or to the Secretary or hazard to the security warrants more prompt action.

(e) Except upon the express waiver of the Secretary, a holder shall not begin proceedings in court or give notice of sale under power of sale, repossess the security, or accelerate the loan, or otherwise take steps to terminate the debtor's rights in the security until the expiration of 30 days after delivery by certified mail to the Secretary of a notice of intention to take such action; provided, that immediate action as required under 38 CFR 36.4278(i) may be taken if the property to be affected thereby has been abandoned by the debtor, or has been or may be otherwise subjected to extraordinary waste or hazard.

(f) The notice required under subparagraph (e) of this paragraph shall also be provided to the original veteran-borrower and any other liable obligors by certified mail within 30 days after such notice is provided to the Secretary in all cases in which the current owner of the property is not the original veteran-borrower. A failure by the holder to make a good faith effort to comply with the provisions of this subparagraph may result in a partial or total loss of guaranty pursuant to VA Regulation 36.4286(b), but such failure shall not constitute a defense to any legal action to terminate the loan. A good faith effort will include:

(1) A search of the holder's automated and physical loan record systems to identify the name and current or last address of the original veteran and any other liable obligors;

(2) A search of the holder's automated and physical loan record systems to identify sufficient information (e.g., Social Security Number) to perform a routine trace inquiry through a major consumer credit bureau;

(3) Conducting the trace inquiry using an in-house credit reporting terminal;

(4) Obtaining the results of the inquiry;

(5) Mailing the required notices and concurrently providing the Secretary with the names and addresses of all obligors identified and sent notice; and

(6) Documentation of the holder records.

[36 FR 1253, Jan. 27, 1971, as amended at FR 29116, May 19, 1993]

§ 36.4281 Refunding of loans in defau

Upon receiving a notice of default t Secretary may at any time prior to tl termination of the borrower's intere in the property require the holder up penalty of otherwise losing the gua anty to transfer and assign the lo and the security therefor to the Se retary or to another designated by hi or her upon receipt of payment of th balance of the indebtedness remainir unpaid to the date of such assignmen Such assignment may be made witho recourse but the transferor shall n thereby be relieved from the provision of § 36.4286.

[36 FR 1253, Jan. 27, 1971, as amended at FR 37474, Sept. 12. 1990]

§ 36.4282 Legal proceedings (notice repossession).

(a) When the holder institutes suit c otherwise becomes a party in any lega or equitable proceeding brought on c in connection with the guaranteed ir debtedness, or involving title to, o other lien on, the security, such holde within the time that would be require. if the Secretary were a party to th proceeding, shall deliver to the Se retary, by mail or otherwise, by mal ing such delivery to the loan guarant officer at the office which granted th guaranty, or other office to which th holder has been notified the file i transferred, a copy of every procedura paper filed on behalf of holder, an shall also so deliver, as promptly a possible, a copy of each similar plead ing served on holder or filed in th cause by any other party thereto. No tice of, or motion for, continuance an orders thereon are excepted from th foregoing.

(b) A copy of a notice of sale under power by a holder or one acting at hi or her behest (e.g., trustee or public of ficial) shall be similarly delivered to the Secretary at or before the date of first publication, posting, or other notice, but in any event, except in emergency or when waived by the Secretary, not less than 10 days prior to

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of sale. Copy of any other notice e served on the holder or of which she has knowledge shall be simidelivered to the Secretary, inig any such notice of sale under r other superior lien or any judiale.

The procedure prescribed in parais (a) and (b) of this section shall e applicable in any proceeding to the Secretary is a party, after ecretary's appearance shall have entered therein by a duly authorttorney.

In any legal or equitable proag (including probate and banky proceedings) to which the Secy is a party, original process and ther process prior to appearance, r to be served on the Secretary, be delivered to the loan guaranty r of the office of the Department terans Affairs having jurisdiction e area in which the court is situWithin the time required by apable law, or rule of court, the Secry will cause appropriate special or ral appearance to be entered in the e by the Secretary's authorized aty.

After appearance of the Secretary torney, all process and notice othe proper to serve on the Secretary e or after judgment, if served on ecretary's attorney of record shall the same effect as if the Secy were personally served within irisdiction of the court.

If following a default the holder not begin appropriate action withdays after requested in writing by Secretary to do so, or does not cute such action with reasonable ence, the Secretary shall have the n to intervene in, or begin and cute to completion any action or eeding, in the Secretary's name or he name of the holder, which the retary deems necessary or approte. and may fix a date beyond h no further charges may be ined in the computation of the guarclaim. The Secretary shall pay, in nce if necessary, any court costs ther expenses incurred by the Secry, or properly taxed against the etary, in any such action to which Secretary is a party, but may ge the same, and also a reasonable

amount for legal services, against the guaranteed indebtedness, or the proceeds of the sale of the security to the same extent as the holder (see § 36.4276), or otherwise collect from the holder any such expenses incurred by the Secretary because of the neglect or failure of the holder to take or complete proper action. The rights and remedies herein reserved are without prejudice to any other rights, remedies, or defenses, in law or in equity, available to the Secretary.

(g) The holder, no later than 10 days after it has repossessed a property, must advise the Secretary of such repossession. The holder shall proceed thereafter, within a reasonable time after repossession, to terminate the debtors' rights in the property. If it is a legal requirement or if the Secretary requires that the debtors' rights be terminated by public sale, the holder shall follow the procedures set forth in paragraph (b) of this section. Otherwise, the holder shall proceed in the manner set forth in § 36.4283(f).

[36 FR 1253, Jan. 27, 1971, as amended at 47 FR 12965, Mar. 26, 1982; 53 FR 34296, Sept. 6, 1988]

§ 36.4283 Foreclosure or repossession.

(a) Upon receipt by the Secretary of notice of a judicial or statutory sale, or other public sale under power of sale contained in the loan instruments, to liquidate any security for a guaranteed loan, the Secretary may specify in advance of such sale the minimum amount which shall be credited to the indebtedness of the borrower on account of the value of the security to be sold, subject to the provisions of paragraphs (a)(1), (2), (3), and (4) of this section:

(1) If a minimum amount has been specified in relation to a sale of the property and the holder is the successful bidder at the sale for an amount not in excess of such specified amount the holder shall dispose of the property in the manner set forth in paragraph (f) and the amount realized from the resale of the property shall govern in the final accounting for determining the rights and liabilities of the holder and the Secretary.

(2) If a minimum amount has been specified by the Secretary and:

(i) A third party is the successful bidder at the sale for an amount equal to or in excess of that specified, the holder shall credit to the indebtedness the net proceeds of the sale.

(ii) A third party is the successful bidder at the sale for an amount less than that specified, the holder shall credit to the indebtedness the amount specified less expenses allowable under § 36.4276.

(iii) The holder is the successful bidder at the sale for an amount in excess of the specified amount the indebtedness shall be credited with the net proceeds of the sale or an amount established in accordance with paragraph (f) of this section, whichever is the greater, unless the bid in excess of the specified amount was made pursuant to paragraph (d) of this section.

(3) If a minimum amount has not been specified by the Secretary under paragraph (a)(1) or (2) of this section, and the Secretary advised the holder that it did not intend to specify an amount, and the property is purchased at the sale by a third party, the holder shall credit against the indebtedness the net proceeds of the sale except as provided in paragraph (d) of this section. However, if the property is purchased at the sale by the holder, the indebtedness will be credited with the net proceeds of the sale or an amount established in accordance with paragraph (f) of this section, whichever is greater.

(4) The holder shall notify the Secretary of the results of the sale within 10 days after the sale is completed.

(b) In the event that any real property which is security for a guaranteed loan is to be acquired by a holder in a manner other than as provided in paragraph (a) or (c) of this section (e.g., by strict foreclosure or by the termination without a public sale of the purchaser's interest in a land sale contract), the holder shall notify the Secretary of the acquisition within 15 days thereafter and account to the Secretary for the proceeds of the liquidation of the security in accordance with paragraph (f) of this section.

(c) When a debtor proposes to convey or transfer any property to a holder to avoid foreclosure or other judicial, contractual, or statutory disposition of

the obligation or of the security consent of the Secretary to the la of such proposal shall be obtain advance of such conveyance or fer. If the Secretary consents th the holder may acquire the pr and account to the Secretary f proceeds of the liquidation of the rity in accordance with paragraph this section.

(d) If a minimum bid is re under applicable State law, or deg s foreclosure or order of sale, or lawful order or decree, the holder bid an amount not exceeding amount legally required. If an am has been specified by the Secretar the holder is the successful bidde an amount not exceeding the am legally required, such specified an shall govern for the purpose of this tion.

(e) If the Secretary has specifie amount as provided in this section the holder learns of any materia age to the property occurring pri the foreclosure sale or to the ac ance of a deed in lieu of foreclosu prior to any other event to which, specified amount is applicable, holder shall promptly advise the retary of such damage. Also, if holder acquires or repossesses the erty and the holder learns of any m rial damage to it, the holder promptly advise the Secretary of damage.

(f) When the security for a gua teed loan is acquired by the he through foreclosure or otherwise holder shall resell the property a reasonable time and may there submit its claim under the guara The Secretary, upon receipt of a no of acquisition, shall determine the rent reasonable value of the pro and advise the holder of the min selling price that will be acceptabl any accounting with the Secret upon liquidation of the security. ¡

(1) If the holder resells the prop for an amount at least equal to minimum selling price, it shall on the indebtedness with the proceed the sale.

(2) If the holder is unable to re the property for an amount at equal to the minimum selling

exposure to the market for a reale period of time, the holder may t to the Secretary a written adetting forth the price, terms, conIs and expenses of any offer re1. The Secretary shall thereupon: Assent to the resale of the propupon the terms of such offer, in 1 event the holder will credit the tedness with the proceeds of the

or

Review the minimum selling previously established and, if apfate, provide the holder with a reI minimum selling price at which roperty shall be further exposed e market.

If the holder resells the property inances the sale under the terms new security agreement and note, Secretary may, pursuant to para1 (f)(3)(iv) of this section, agree to nnify the holder against loss on lew loan.

The Secretary's maximum liabilunder the indemnity agreement 1 be the percentage of the loan inally guaranteed applied to the inedness as of the date of claim comtion as set forth in §36.4284(a), or amount originally guaranteed, or amount of the Secretary's liability r a preexisting indemnity agreet, whichever is less.

In the event the proceeds of sale less than the total indebtedness, Secretary may pay a partial claim the difference between the indebtss and the proceeds of sale and eafter agree to indemnify the holdor the amount of the maximum liity as of the date of claim comtion, less the amount of claim

i) Subject to the limitation that total amount payable under an ininity agreement shall in no event eed the Secretary's maximum lility, the remaining liability will be tinued as a percentage of the new n amount increasing or decreasing rata with any increase or decrease he balance of the loan obligation. v) The Secretary shall execute an emnity agreement evidencing the ount and terms of the indemnity lility, provided:

A) The Secretary has determined t resale of the security under an in

demnity agreement is in the best interest of the Government, and the holder has obtained the prior approval of the Secretary;

(B) The terms of repayment of the proposed loan bear a proper relationship to the borrower's present and anticipated income and expenses, and the borrower is a satisfactory credit risk;

(C) The borrower executes an agreement establishing liability to the Secretary for the amount of any claim paid under the indemnity agreement;

(D) The term of the proposed loan does not exceed the maximum term allowable under § 36.4204(c)(4);

(E) The interest rate charged the borrower does not exceed the maximum rate allowable under §36.4212 as of the date of closing pursuant to the indemnity agreement;

(F) The holder agrees to comply with VA manufactured home regulations as if the original loan had not been terminated.

(Authority: 38 U.S.C. 3712(g))

(4) If the holder has not resold the property, it may elect to submit its claim under Loan Guaranty within 60 days of the date of the Secretary's written advice of the minimum selling price.

(i) For purposes of computation of a claim submitted pursuant to this paragraph, and subject to the limitation that the maximum amount of claim payable shall in no event exceed the amount originally guaranteed, the amount payable on a claim for the guaranty shall be the percentage of the loan originally guaranteed applied to the indebtedness computed as of the date the holder acquired the security. Further:

(A) The minimum selling price determined by the Secretary and provided to the holder shall be credited to the indebtedness as proceeds of sale; or

(B) If no minimum selling price is provided then the current reasonable value of the property as determined by the Secretary and provided to the holder shall be credited to the indebtedness as proceeds of sale; and

The amount payable on the claim shall in no event exceed the remaining balance of the indebtedness.

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