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conditions prescribed by law, to exer- with the purchase, construction, or recise the powers and functions of the modeling of a housing unit on which Secretary with respect to assisting eli the grant is made. gible veterans to acquire specially

[13 FR 7283, Nov. 27, 1948, as amended at 46 adapted housing.

FR 43674, Aug. 31, 1981) (b) Designated positions: Under Secretary for Benefits.

$36.4411 Geographical limits. Director, Loan Guaranty Service.

Any real property purchased, conAssistant Director for Construction and structed, altered, improved, repaired, Valuation.

or specially adapted, in whole or in Chief, Specially Adapted Housing Unit, Loan Guaranty Service.

part, with the proceeds of any specially Director, Medical and Regional Office Cen

adapted housing grant, shall be situter.

ated in the United States, which, for Director, VA Regional Office and Insurance purposes of 38 U.S.C. chapter 21, is deCenter.

fined as the several States, Territories, Director, VA Regional Office.

and possessions, including the District Loan Guaranty Officer.

of Columbia, the Commonwealth of Assistant Loan Guaranty Officer.

Puerto Rico, Guam, American Samoa, (C) Nothing in this section shall be the Commonwealth of the Northern construed to authorize any employee Mariana Islands, and any other area designated in paragraph (b) of this sec over which the United States may, at tion to determine basic eligibility or some future date, acquire sovereignty. medical feasibility, except as otherwise

(Authority: 38 U.S.C. 501, 2101 (a) and (b)) authorized.

[47 FR 29231, July 6, 1982] [13 FR 7282, Nov. 27, 1948, as amended at 19 FR 3225, June 2, 1954; 46 FR 43674, Aug. 31,

DIRECT LOANS 1981; 61 FR 28059, June 4, 1996) $36.4409 Guaranteed or insured loans

AUTHORITY: Sections 36.4500 through 36.4600

issued under 38 U.S.C. 501. under 38 U.S.C. chapter 37.

NOTE: Those requirements, conditions, or In any case where, in addition to the limitations which are expressly set forth in benefits of chapter 21, the veteran will 38 U.S.C. chapter 37 are not restated herein utilize the veteran's entitlement to the and must be taken into consideration in the loan guaranty or insurance benefits of

interpretation or application of the regula38 U.S.C. chapter 37, the complete

tions concerning direct loans to veterans. transaction must be in accord with ap [24 FR 2658, Apr. 7, 1959) plicable regulations promulgated thereunder excepting $36.4306 thereof.

$36.4500 Applicability. (24 FR 2657, Apr. 7, 1959, as amended at 46 FR

(a) The regulations concerning direct

loans to veterans shall be applicable to 43674, Aug. 31, 1981)

loans made by Department of Veterans $36.4410 Allocation of the funds of the Affairs pursuant to 38 U.S.C. 3711. grant.

(b) Sections 36.4501, 36.4512, and Any amount payable as a grant under

36.4527, which concern direct loans to section 2101(a), chapter 21 may be re

Native American veterans shall be apquired by the Secretary to be utilized

plicable to loans made by the Secas the Secretary deems advisable for

retary pursuant to 38 U.S.C. 3761 payment of any of the following costs

through 3764. or debts which are obligations of the veteran before any part of the grant

(Authority: 42 U.S.C. 4012a) may be paid to the veteran directly:

(c) Title 38, U.S.C. chapter 37 is a (a) Cost of necessary land,

continuation and restatement of the (b) Cost of constructing, adapting, or provisions of title III of the Serviceremodeling a housing unit.

men's Readjustment Act of 1944, and (c) Delinquent taxes secured by a lien may be considered to be an amendment on the housing unit,

to such title III. References in the reg(d) Reduction or retirement of any ulations concerning direct loans to vetindebtedness incurred in connection erans to the sections or chapters of title 38, United States Code, shall, or 3762 and the regulations concerning where applicable, be deemed to refer to direct loans to veterans. the prior corresponding provisions of Meaningful interest means a leasehold the law.

estate or other interest in trust land [24 FR 2658, Apr. 7, 1959, as amended at 58 FR

and any improvements thereon which 59660, Nov. 10, 1993; 62 FR 5531, Feb. 6, 1997) permits the use, occupancy and enjoy

ment of that land and any improve8 36.4501 Definitions.

ments by the grantee. This interest Wherever used in 38 U.S.C. 3711, 3762 must be capable of being conveyed (1) or the regulations concerning direct as security for a loan made under 38 loans to veterans, unless the context CFR 36.4527, (2) by the grantee to a otherwise requires, the terms defined third party subject to the approval of in this section shall have the meaning the tribal organization and the Secherein stated, namely:

retary or designee, and (3) by the SecCost means the entire consideration retary or other foreclosing mortgagee, paid or payable for or on account of the subject to the provisions of a memoapplication of materials and labor to randum of understanding entered into tangible property.

by the Secretary or designee, the tribal Default means failure of a borrower

organization, and the Bureau of Indian to comply with the terms of a loan Affairs. agreement.

Native American means: Dwelling means a building designed

(1) An Indian, as defined in section primarily for use as a home, consisting

4(d) of the Indian Self-Determination of one residential unit only and not

and Education Assistance Act (25 containing any business unit.

U.S.C. 450b(d)); Energy conservation improvement. An improvement to an existing dwelling'or

(2) A native Hawaiian, as defined in farm residence through the installation

section 201(a)(7) of the Hawaiian Homes of a solar heating system, a solar heat

Commission Act of 1920, (Public Law ing and cooling system, or a combined

67–34, 42 Stat. 108); solar heating and cooling system, or

(3) An Alaska Native within the through application of a residential en meaning provided for the term 'Native' ergy conservation measure as pre in section 3(b) of the Alaska Native scribed in 38 U.S.C. 3710(d) or by the Claims Settlement Act (43 U.S.C. Secretary.

1602(b)); and Farm residence means a dwelling lo- (4) A Pacific Islander, within the cated on a farm which is to be occupied meaning of the Native American Proby the veteran as the veteran's home. grams Act of 1974 (42 U.S.C. 2991 et seq.)

Guaranty means the obligation of the Native American veteran means any United States, incurred pursuant to 38 veteran who is a Native American. U.S.C. chapter 37, to repay a specified

Period of more than 180 days means 181 percentage of a loan upon the default

or more calendar days of continuous of the primary debtor.

active duty. Home means a place of residence.

Purchase price means the entire legal Improvement means any addition or

consideration paid or payable upon or alteration which enhances the utility

on account of the sale of property, exof the property for residential pur

clusive of acquisition costs, or for the poses. Indebtedness means the unpaid prin

cost of materials and labor to be apcipal and interest plus any other sums

plied thereto. a borrower is obligated to pay Depart

Reasonable value means that figure ment of Veterans Affairs under the

which represents the amount a repterms of the loan instruments or of the

utable and qualified appraiser, unafregulations concerning direct loans to

fected by personal interest, bias, or veterans.

prejudice, would recommend to a proLoan means a loan made to a veteran

spective purchaser as proper price or by Department of Veterans Affairs pur cost in the light of prevailing condisuant to the provisions of 38 U.S.C. 3711 tions.

Repairs means any alteration of ex- amount which would have been charged isting realty which is necessary or ad- had the loan been closed subsequent to visable for protective, safety, or restor- such date. ative purposes.

(Authority: 38 U.S.C. 3711(d)(2)(A)) Secretary means the Secretary of Veterans Affairs, or any employee of the

(55 FR 40657, Oct. 4, 1990) Department of Veterans Affairs authorized to act in the Secretary's

$36.4503 Amount and amortization. stead.

(a) The original principal amount of Tribal organization has the same any loan made on or after February 1, meaning given in section 4(1) of the In 1988, shall not exceed an amount which dian Self-Determination and Education bears the same ratio to $33,000 as the Assistance Act (25 U.S.C. 450b(1)) and amount of the guaranty to which the includes the Department of Hawaiian veterans is entitled under 38 U.S.C. 3710 Homelands, in the case of native Ha at the time the loan is made bears to waiians, and such other organizations

$36,000. This limitation shall not preas the Secretary may prescribe.

clude the making of advances, otherTrust land means any land that:

wise proper, subsequent to the making (1) Is held in trust by the United of the loan pursuant to the provisions States for Native Americans;

of $ 36.4511. Except as to home improve(2) Is subject to restrictions on alien- ment loans, loans made by VA shall ation imposed by the United States on near interest at the rate of 742 percent Indian lands (including native Hawai- per annum. Loans solely for the purian homelands);

poses of energy conservation improve(3) Is owned by a Regional Corpora ments or other alterations, improvetion or a Village Corporation, as such ments, or repairs shall bear interest at terms are defined in section 3(g) and the rate of 9 percent per annum. 3(j) of the Alaska Native Claims Settlement Act, respectively (43 U.S.C. (Authority: 38 U.S.C. 3711(d)(2)(A)) 1602(g), (j)); or

(b) Each loan shall be repayable on (4) Is on any island in the Pacific

the basis of approximately equal Ocean if such land is, by cultural tradi

monthly installments; except that in tion, communally-owned land, as deter

the case of loans made for any of the mined by the Secretary.

purposes described in clause (2), (3), or Department of Veterans Affairs means

(4) of subsection (a) of 38 U.S.C. 3710, the Secretary of Veterans Affairs, or such loans may provide for repayment any employee of the Department of

in quarterly, semiannual, or annual inVeterans Affairs authorized to act in stallments, provided that such plan of the Secretary's stead.

repayment corresponds to the present

and anticipated income of the veteran. Authority: 38 U.S.C. 3761-3764)

(c) The first installment payment on (24 FR 2658, Apr. 7, 1959, as amended at 31 FR

a loan to construct, alter or improve a 16713, Dec. 30, 1966; 35 FR 17180, Nov. 7, 1970;

farm residence or other dwelling may $0 FR 4143, Jan. 28, 1975; 41 FR 32218, Aug, 2,

be postponed for a period not exceeding 1976; 41 FR 44859, Oct. 13, 1976; 45 FR 20472, 12 months from the date of the loan inMar. 28, 1980; 46 FR 43674, Aug. 31, 1981; 58 FR struments. The first installment pay59660, Nov. 10, 1993]

ment for a loan for the purchase of a

dwelling or farm on which there is a $36.4502 Use of guaranty entitlement.

farm residence may not be postponed The guaranty entitlement of the vet. more than 60 days from the date of eran obtaining a direct loan which is loan closing: Provided. That if the loan closed on or after February 1, 1988, is repayable in quarterly, semi-annual shall be charged with the lessor of the or annual installments, the first inloan amount or an amount which bears stallment payment date may be postthe same ratio to $36,000 as the amount poned for not more than 12 months of the loan bears to $33,000. The charge from the date of the loan instruments. against entitlement of a veteran who (d) The final installment on any loan obtained a direct loan which was closed shall not be in excess of two times the prior to the aforesaid date, shall be the average of the preceding installments, except that on a construction loan the computing the fee, the Department 1 final installment may be for an amount Veterans Affairs will disregard an not in excess of 5 percent of the origi- amount included in the loan to enab nal principal amount of the loan. The the borrower to pay such fee. If all ( limitations imposed by this paragraph part of the fee is included in the loa. on the amount of the final installment the amount of the loan as increase shall not apply in the case of any loan may not exceed $33,000. extended or recast pursuant to $36.4505 or 36.4506.

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

(ii) The fee described in paragrap (Authority: 38 U.S.C. 501, 3703(c)(1), 3711(d)(1), 3712 (f) and (g))

(b)(2)(i) of this section shall not be co

lected from a veteran who is receivin [15 FR 6288, Sept. 20, 1950, as amended at 24

compensation (or who but for the r FR 2658, Apr. 7, 1959; 52 FR 12382, Apr. 16, 1987; 52 FR 18357, May 15, 1987; 53 FR 18983,

ceipt of retirement pay would be ent May 26, 1988; 53 FR 44401, Nov. 3, 1988; 53 FR

tled to receive compensation) or from 51551, Dec. 22, 1988; 54 FR 24557, June 8, 1989;

surviving spouse described in sectio 54 FR 30384, July 20, 1989; 55 FR 6983, Feb. 28, 3701(b)(2) of title 38 U.S.C. 1990; 55 FR 40657, Oct. 4, 1990; 57 FR 37713, Aug. 20, 1992)

(Authority: 38 U.S.C. 3729(b)) 8 36.4504 Loan closing expenses.

(iii) Collection of the loan fee de

scribed in this paragraph (b)(2) of thi (a) Department of Veterans Affairs

section shall not apply to loans close will designate a loan closer to rep

prior to August 17, 1984, or to loan resent the Department of Veterans Af

closed after September 30, 1987. fairs at the closing and in advance thereof will agree with the loan closer

(Authority: 38 U.S.C. 3729(d)) upon the fee to be paid by the Department of Veterans Affairs for preparing

(3) Costs or expenses normally paid the loan closing instruments and at by a purchaser or lienor incident to tending at the closing of the loan. The loan closing including but not limited loan closer as such is neither an agent to the following: nor employee of the Department of (i) Fee of Department of Veterans Af Veterans Affairs.

fairs designated compliance inspector; (b) With respect to a loan made to a

(ii) Recording fees and recording veteran-borrower pursuant to an appli- taxes or other charges incident to rec cation (VA Form 26-1802a, received by ordation; the Department of Veterans Affairs on (iii) That portion of taxes, assessor after March 3, 1966, the borrower ments, and other similar items for the shall pay the Department of Veterans

current year chargeable to the borAffairs the following:

rower and the initial deposit (lump(1) $50, or one percent (1%) of the sum payment) for the tax and insurloan amount, whichever is greater, ance account; which charge shall be in lieu of the (iv) Hazard insurance as required by loan closer's fee, credit report, and cost $36.4512, of appraisal: Provided, That if the loan (v) Survey, if any; is to finance the cost of construction, (vi) Title examination and title evirepairs, alterations, or improvements

improvements dence. necessitating disbursements of the loan Charges or costs payable by the vetproceeds as the construction or other eran-borrower, except as to the paywork progresses, the charge to the vet ment of the loan fee described in paraeran-borrower shall be two percent graph (b)(2)(i) of this section, shall be (2%) of the loan amount, but not less paid in cash and may not be paid out of than $50 in any event.

the proceeds of the loan. No service or (2)(i) A loan fee of one percent of the brokerage fee shall be charged against total loan amount. All or part of such the veteran-borrower by any third fee may be paid in cash at loan closing party for procuring a direct loan or in or all or part of the fee may be in connection therewith. cluded in the loan without regard to (c) With respect to a loan to conthe reasonable value of the property. In struct, repair, alter, or improve a farm

residence or other dwelling, the De- parent current ability to pay or may partment of Veterans Affairs may re- enter into an appropriate recasting or quire the veteran to deposit with the extension agreement: Provided, That no Department of Veterans Affairs, or in such agreement shall extend the ultian escrow satisfactory to the Depart mate repayment of a loan beyond the ment of Veterans Affairs, 10 percent of

expiration of 30 years and 32 days from the estimated cost thereof or such al- the date of the loan. Provided further, ternative sum, in cash or its equiva

That nothing in this section shall be lent, as the Department of Veterans

deemed to limit the forbearance or inAffairs may determine to be necessary

dulgence which the Secretary may exin order to afford adequate assurance

tend in an individual case pursuant to that sufficient funds will be available,

the provisions of 38 U.S.C. 3720(f). from the proceeds of the loan or from other sources, to assure completion of (46 FR 43675, Aug. 31, 1981) the construction, repair, alteration, or improvement in accordance with the $36.4507 Refinancing of mortgage or plans and specifications upon which other lien indebtedness. the Department of Veterans Affairs

(a) Loans may be made for the purbased its loan commitment.

pose of refinancing (38 U.S.C. 3710(a)(5))

an existing mortgage loan or other in(Authority: 38 U.S.C. 501, 3724, and 3729)

debtedness secured by a lien of record [15 FR 6288, Sept. 20, 1950, as amended at 23 on a dwelling or farm residence owned FR 2339, Apr. 10, 1958; 33 FR 6976, May 9, 1968;

and occupied by an eligible veteran as 35 FR 17180, Nov. 7, 1970; 41 FR 32218, Aug. 2, 1976; 47 FR 46700, Oct. 20, 1982; 50 FR 5755,

the veteran's home, provided that: Feb. 12, 1985)

(1) The amount of the loan does not

exceed the sum due the holder of the $36.4505 Maturity of loan.

mortgage or other lien indebtedness on (a) The maturity of a loan shall not

such dwelling or farm residence, and exceed 25 years and 32 days. If the De also is not more than the reasonable partment of Veterans Affairs deter- value of the dwelling or farm residence, mines the income and expenses of a and veteran-applicant under customary (2) The loan is otherwise eligible. credit standards would prevent the vet (b) A refinancing loan for an amount eran from making the required loan which exceeds the sum due the holder payments for a loan which matures in of the mortgage or other lien indebted25 years and 32 days, but the veteran ness (the excess proceeds to be paid to would be able to make the loan pay

the veteran) may also be made, Proments over a longer period of time, the vided. That: loan may be made with a maturity not (1) The loan is otherwise eligible, and in excess of 30 years and 32 days.

(2) The issuance of a commitment to (b) Every loan shall be repayable

make any such loan for an amount within the estimated economic life of the property securing the loan.

which exceeds eighty (80) percent of the (c) Nothing in this section shall pre

reasonable value of the veteran's dwellclude extension of the loan pursuant to

ing or farm residence shall require, unthe provisions of 8 36.4506.

less the Under Secretary for Benefits

otherwise directs, the approval of the Authority: 38 U.S.C. 3703 (c)(1), (d)(1))

Director, Loan Guaranty Service. 46 FR 43675, Aug. 31, 1981]

(c) Nothing shall preclude making a

loan pursuant to the provisions of 38 $36.4506 Recasting.

U.S.C. 3710(a)(5) to an eligible veteran In the event of default or to avoid having home loan guaranty entitleimminent default, the Department of ment to refinance a loan previously Veterans Affairs may at any time enter guaranteed insured or made by the Secinto an agreement with the borrower retary which is outstanding on the which will permit the latter tempo- dwelling or farm residence owned and rarily to repay the obligation on a occupied or to be reoccupied after the basis appropriate to the borrower's ap

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