(d) All insurance effected on the mortgaged property shall contain appropriate provisions for payment to the "creditor," (or trustee, or other appropriate person for the benefit of the "creditor"), of any loss payable thereunder. If by reason of the "creditor's" failure to require such loss payable provision in the insurance policy, payment is not made to the "mortgagee" the liability on the guaranty nevertheless shall be reduced as provided in paragraph (b) of this section with respect to an uninsured loss, except to the extent that the liability under the policy was discharged by restoring the damaged property, by the insured, or out of payments thereunder to the insured, or otherwise. No waiver pursuant to paragraph (a) of this section shall modify this paragraph.

(e) Upon the "creditor" (or trustee or other person) collecting the proceeds of any insurance contract, or other sum from any source by reason of loss of or damage to the "mortgaged" property. he shall be obligated to account for same. by applying it on the indebtedness, or by restoring the property to the extent the expenditure of such proceeds will permit. As to any portion of such proceeds the "mortgagee" is not entitled to retain for credit on such indebtedness or by reason of other legal right, he shall hold and be obligated to pay over the same as trustee for the United States and for the debtor, as their respective interests may appear.

(f) Nothing in the regulations in this part shall operate to prevent the veteran from procuring acceptable insurance through any authorized insurance agent or broker he selects. In all cases the insurance carrier shall be one licensed to to such business in the State wherein the property is situated.

§ 36.4116 Loan charges.

(a) In the case of a purchase of real or personal property by the veteran and a guaranty pursuant to the act and §§ 36.4100-36.4151 of an indebtedness representing part of the purchase price, there may be charged to the veteran and included in said note amounts actually paid or incurred by the seller ("mortgagee") for such expenses and charges as are chargeable to such purchaser in accord with local custom, if the purchaser so agrees, such as fees for appraisals, credit and character report on the veteran, surveys, fees of purchaser's (not seller's) attorney, recording fees for recording the deed and the "mortgage"

only, premiums on fire and other hazard insurance that may be required in accordance with §§ 36.4100-36.4151.

(b) In the case of a loan to the veteran, charges in accord with local custom, such as fees for appraisals, credit and character report, surveys, abstract, or title search, curative work and instruments, attorney fees, fees for tax certificates showing all taxes paid, premiums on fire and other hazard insurance that may be required in accordance with 88 36.4100-36.4151, revenue stamps, recording fees, etc., all limited to amounts actually paid or incurred by the lender, may be charged to the borrower and withheld from the gross amount of the loan.

(c) Any unreasonable charges shall be ground for denying an application for guaranty. No brokerage or other charges shall be made against the veteran for obtaining any loan guaranty under this title.

(a) The rate of interest chargeable on a loan guaranteed fully or in part, shall not exceed 4 percent per annum on unpaid principal balances. Interest may be computed in accordance with standard amortization practices.

(b) The rate of interest on a secondary loan which is guaranteed pursuant to section 505 of the act may exceed by not more than 1 percent per annum the rate charged on the principal loan, but in no event shall the rate on the secondary loan exceed 4 percent per annum. § 36.4118

Advances.

(a) Nothing herein shall prevent the creditor from making advances for the benefit of the mortgagor to pay taxes, assessments and insurance premiums as they become due, and the cost of emergency repairs needed to protect the property. The amount guaranteed by the Administrator shall be increased pro rata with all such increases in the unpaid principal balance of the loan: Provided, (1) That the annual interest rate on all advances shall not exceed 4 percent per annum; (2) that the terms of repayment shall not extend the date of the amortization of the loan and (3) that the amount of the guaranty shall in no event exceed the original amount thereof, nor exceed the percentage of the indebtedness originally guaranteed.

(b) In the case of any advance made by a creditor to a debtor, the creditor

of the obligors is an eligible veteran and application by him or them is granted, the maximum aggregate amount of the guarantees will be the sum of the amounts available to each applying veteran but in no event will the aggregate of the guarantees for more than one veteran exceed 50 percent of the total loan except as provided under section 505 of the act.

(c) For the purpose of this section the wife of a principal obligor shall not be counted unless (1) she is legally liable on the obligation under the law of the jurisdiction where she executed it, and (2) if she is a veteran she be properly chargeable with a part or all of the guaranty as provided in § 36.4122. § 36.4124 Veteran's application.

(a) To apply for a guaranteed loan the veteran and the prospective lender shall complete and sign in duplicate Form 1822, Application for Farm Loan Guaranty. Before or after preparing the application, and before submitting it, the lender and the veteran will address a joint inquiry to the nearest office of the Veterans' Administration on Form 1800, Certification of Eligibility, or otherwise. In addition to the necessary identifying information, they will state whether the property to be encumbered is real or personal, or both, the State and county in which it is situated, and the nearest highway. The Administrator will reply on said Form 1800 or otherwise, stating the name and address of an approved appraiser of realty, and in the case of personal property, the person or persons to function as such.

(b) If instructed by the Administrator so to do, on Form 1800, Certification of Eligibility, or otherwise, the creditor will secure a credit report. If not so instructed such report will not be required by the Veterans' Administration. (See paragraph (d) of this section.)

(c) If the proposed loan is for repairs, alterations or improvements to realty the appraisal report shall reflect an examination of the building contract, and the plans and specifications, if any, and shall include appropriate data sufficient to afford a basis for estimating the increased value of the farm to result from such repairs, alterations or improvements: Provided, however, That if the cost of such repairs, alterations and improvements does not exceed $500 the appraisal requirements of §§ 36.4100-36.4151 will be met by an appraisal report

by the agency, and no plans or detailed specifications will be required as a condition to a guaranty otherwise proper. Such appraisal report may be abbreviated and consist of bill of material, estimate of labor cost, general description of the work to be done, and opinion of the agency as to reasonable normal value, and the enhancement of the value of the propetry.

(d) The veteran, the lender, and the appraiser shall be entitled, before or during the preparation of the application and other papers preliminary to a loan or purchase, to consult with the agency.

(e) In every case the appraiser's report shall indicate the basis, by survey or otherwise, of identifying the real property appraised as that to be encumbered to secure the proposed loan.

(f) If (1) the loan does not exceed $500, (2) the lender does not require a mortgage, and (3) the loan otherwise complied with §§ 36.4100-36.4151, the provisions of paragraphs (b), (c) and (e) of this section; § 36.4125 (d), (e) and (h); § 36.4130 (a), (c) and (d); § 36.4131 (a), (2) and (3); and § 36.4132 (c) and (e) shall be inapplicable to such loan and any guaranty thereof: Provided, however, That in every such case there shall be submitted with the application a report by the agency as to the reasonable normal value of the work, or property, real or personal, to be purchased, repaired, altered, or improved.

(g) If the guaranty is applied for in connection with the acquisition of, or a loan upon livestock, equipment, machinery, or implements, the agency shall upon inspection or evidence and review of the application report its opinion as to the reasonable normal value of such property, and its recommendation as to the guaranty. Such report shall constitute an appraisal.

§ 36.4125 Papers required.

The prospective lender shall submit to the agency the following papers:

(a) Certification of eligibility (see § 36.4124 (a)).

(b) Loan Guaranty Certificate (Form 1821 attached to application).

(c) Original application for guaranty signed by prospective lender and borrower (see § 36.4124 (a)).

(d) The credit report, if required. (See 36.4124 (b) and (d).)

(e) The original appraisal report, Form 1833. (See § 36.4124 (c), (f) and (g).)

(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 rec

ommendation 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 application.

(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.

(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. If 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.

(a) If the Administrator approves the application he shall notify the Agency and the veteran thereof. For the purpose of evidencing the contract of guaranty, he shall execute a Loan Guaranty Certificate, to become effective upon the conditions therein stated. It shall be in substantially the form following: Finance Form 1821 Nov. 1944

UNITED STATES OF AMERICA

LOAN GUARANTY CERTIFICATE ISSUED BY
VETERANS' ADMINISTRATION

(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 8.. In no event will it exceed said percentage of the principal amount.

2. At the expiration of 1 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.

Dated

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

A. We hereby warrant that (1) the undersigned borrower named on the reverse hereof executed the note, the face amount of which is 8 consisting of 8--- --- principal and 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 filed for record, if and as provided by law on the day of 19____, at M; and was given fille 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)