[Code of Federal Regulations]
[Title 38, Volume 2]
[Revised as of July 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 38CFR36.4205]

[Page 550-551]
 
            TITLE 38--PENSIONS, BONUSES, AND VETERANS' RELIEF
 
          CHAPTER I--DEPARTMENT OF VETERANS AFFAIRS (CONTINUED)
 
PART 36--LOAN GUARANTY--Table of Contents
 
Sec. 36.4205  Computation of guaranty.

    (a) The amount of guaranty in respect to a loan guaranteed under 38 
U.S.C. 3712 shall be forty (40) percent of the original principal amount 
of the loan or $20,000, whichever is less. With respect to a loan 
guaranteed under 38 U.S.C. 3712(a)(1)(F), the dollar amount of guaranty 
may not exceed the original dollar amount of guaranty on the loan being 
refinanced. With respect to a loan guaranteed under 38 U.S.C. 
3712(a)(1)(G), the dollar amount of guaranty previously used to obtain a 
manufactured unit loan may be transferred pursuant to Sec. 36.4224(b) 
for use in refinancing the unit when simultaneously acquiring a lot.
    (b) Subject to the provisions of paragraph (c) of Sec. 36.4203, the 
following formulas will determine the amount of guaranty entitlement 
which remains available to an eligible veteran after prior use of 
entitlement:
    (1) If a veteran previously secured a nonrealty (business) loan, the 
amount of nonrealty entitlement used is doubled and subtracted from 
$36,000. The sum remaining is the amount of available entitlement for 
use not to exceed $20,000 for manufactured home purposes.
    (2) If a veteran previously secured a realty (home) loan, the amount 
of realty (home) loan entitlement used is subtracted from $36,000. The 
sum remaining is the amount of available entitlement for use not to 
exceed $20,000 for manufactured home purposes.
    (3) If a veteran previously secured a manufactured home loan, the 
amount of entitlement used for manufactured home purposes is subtracted 
from $36,000. The sum remaining is the amount of available entitlement 
for use for home loan purposes only. To determine the amount of 
additional entitlement available for manufactured home purposes, the 
amount of entitlement previously used for manufactured home purposes is 
subtracted from $20,000. Except for manufactured home loans to be 
obtained pursuant to 38 U.S.C. 3712(a)(1)(F) or (G), the sum remaining 
is the amount of available entitlement for use for manufactured home 
purposes.
    (c) For the purpose of computing the remaining guaranty benefit to 
which a veteran is entitled, manufactured home and manufactured home lot 
loans guaranteed prior to October 1, 1978, shall be taken into 
consideration as if made subsequent thereto, and the veteran's 
entitlement will be reduced by the amount of the Secretary's guaranty 
issued in the particular loan transaction.
    (d) A guaranty is reduced or increased pro rata with any deduction 
or increase in the amount of the guaranteed indebtedness, but in no 
event will the amount payable on a guaranty exceed the amount of the 
original guaranty or the percentage of the indebtedness corresponding to 
that of the original guaranty.
    (e) The amount of any guaranty for a manufactured home or 
manufactured home lot loan shall be charged against the original or 
remainder of the borrower's guaranty benefit available for manufactured 
home purposes. Complete or partial liquidation, by payment or otherwise, 
of the veteran's guaranteed indebtedness does not increase the remainder 
of the guaranty benefit, if any, otherwise available to

[[Page 551]]

the veteran. When the maximum guaranty available legally to a veteran 
for manufactured home purposes shall have been granted, no further 
guaranty for manufactured home purposes shall be available to the 
veteran.
    (f)(1) The amount of guaranty entitlement, available and unused, of 
an eligible unremarried surviving spouse (whose eligibility does not 
result from his or her own service) is determinable in the same manner 
as in the case of any veteran, and any entitlement which the decedent 
(who was his or her spouse) used shall be disregarded. A certificate as 
to the eligibility of such surviving spouse, issued by the Secretary, 
shall be a condition precedent to the guaranty or insurance of any loan 
made to a surviving spouse in such capacity.


(Authority: 38 U.S.C. 3701(a)(2), 3712(c)(4))

    (2) For the purpose of obtaining an interest rate reduction 
refinancing loan purusant to 38 U.S.C. 3712(a)(1)(F), an unmarried 
surviving spouse who was a co-obligor under an existing Department of 
Veterans Affairs guaranteed loan shall be considered to be eligible for 
the 38 U.S.C. 3712(a)(1)(F) benefit.


(Authority: 38 U.S.C. 3712(a)(4)(C))

    (g) Any evidence of guaranty issued by the Secretary in respect to 
such loan shall be conclusive evidence of the eligibility of the loan 
for guaranty and of the amount of such guaranty, Provided, however, That 
the Secretary may establish against the original lender, defenses based 
on fraud or material misrepresentation and that the Secretary may by 
regulations in force at the date of such issuance establish partial 
defenses to the amount payable on the guaranty.

[44 FR 22724, Apr. 17, 1979, as amended at 46 FR 43669, Aug. 31, 1981; 
48 FR 40228, Sept. 6, 1983; 58 FR 37859, July 14, 1993]