[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: 38CFR36.4209]

[Page 553-555]
 
            TITLE 38--PENSIONS, BONUSES, AND VETERANS' RELIEF
 
          CHAPTER I--DEPARTMENT OF VETERANS AFFAIRS (CONTINUED)
 
PART 36--LOAN GUARANTY--Table of Contents
 
Sec. 36.4209  Reporting requirements.

    (a) Each loan proposed for guaranty under 38 U.S.C. 3712 shall, 
unless otherwise provided in the Sec. 36.4200 series, be submitted to 
the Secretary for approval prior to closing. The Secretary upon 
determining any such proposed loan to be eligible for guaranty will 
issue a certificate of commitment.
    (b) Except as provided in paragraph (c) of this section, a 
certificate of commitment shall entitle the holder to the issuance of 
the evidence of guaranty upon the ultimate actual payment of the full 
proceeds of the loan for the purposes described in the original report 
and upon the submission within 60 days thereafter of a supplemental 
report showing such fact and:
    (1) That the loan conforms to the terms of the certificate of 
commitment;
    (2) The identity of all property purchased therewith, including the 
itemized list required by Sec. 36.4204(f);
    (3) That all property purchased with the proceeds of the loan has 
been encumbered as required by the Sec. 36.4200 series;
    (4) In respect to any property purchased with the loan proceeds as 
to which the Secretary issued a certificate of reasonable value which 
was conditioned upon completion of any construction, repairs, 
alterations or improvements not inspected and approved subsequent to 
completion by a compliance inspector designated by the Secretary that 
such construction, repairs, alterations or improvements have been 
completed according to the plans and specifications upon which such 
reasonable value was based; and
    (5) That the loan conforms otherwise to the applicable provisions of 
38 U.S.C. chapter 37 and Sec. 36.4200 series.
    (c) A deviation of more than five (5) percent between the estimates 
upon which the certificate of commitment was issued and the report of 
final payment of the proceeds of the loan, or a change in the identity 
of the property acquired by the veteran with the loan proceeds will 
invalidate the certificate of commitment, unless such deviation or 
change is approved by the Secretary.
    (d) Upon the failure of the lender to report in accordance with 
paragraph (b) of this section, the certificate of commitment shall have 
no further effect; Provided, nevertheless, That if the loan otherwise 
meets the requirements of this section, said certificate of commitment 
may be given effect by the Secretary, notwithstanding the report is 
received after the date otherwise required.
    (e) Subject to compliance with the regulations concerning guaranty 
of manufactured home loans to veterans, the Certificate of Guaranty will 
be issuable within the available entitlement of the veteran on the basis 
of the loan reported, except for refinancing loans for interest rate 
reductions. No certificate of commitment shall be issued, and no loan 
shall be guaranteed, unless the lender, the veteran, and the loan are 
shown to be eligible; nor shall guaranty be issued on any manufactured 
home loan unless the Secretary determines that there has been compliance 
by the veteran with the certification requirements of 38 U.S.C. 
3712(e)(5).


(Authority: 38 U.S.C. 3712(a)(4), (c)(2), (e)(5))

    (f) Any amount of the loan that is disbursed for an ineligible 
purpose shall be excluded in computing the amount of guaranty.
    (g) Approval by the Secretary pursuant to 38 U.S.C. 3712(c)(1) is 
required before a lender may close manufactured home loans or 
manufactured home lot loans on the automatic basis. Evidence of guaranty 
will be issuable if the loan closed on the automatic basis is reported 
to the Secretary within 60 days of full disbursement, and upon 
certification of the lender that no default exists thereunder which has 
continued for more than 30 days and that the loan complies with 
paragraphs (b)(2), (3), (4), and (5), (e), and (f) of this section. Upon 
the failure of the lender to report in accordance with this paragraph 
the loan will not be eligible for guaranty unless the lender submits 
with the report a certification that the

[[Page 554]]

loan is not in default and an explanation as to why the loan was not 
timely reported.


(Authority: 38 U.S.C. 3712 (c)(1) and (g))

    (h) With respect to any loan for which a commitment was made on or 
after March 1, 1988, the Secretary must be notified whenever the holder 
receives knowledge of disposition of a manufactured home and/or lot 
securing a Department of Veterans Affairs guaranteed loan.
    (1) If the seller applies for prior approval of the assumption of 
the loan, then:
    (i) A holder (or its authorized servicing agent) who is an automatic 
lender must examine the creditworthiness of the purchaser and determine 
compliance with the provisions of 38 U.S.C. 3714. The creditworthiness 
review must be performed by the party that has automatic authority. If 
both the holder and its servicing agent are automatic lenders, then they 
must decide between themselves which one will make the determination of 
creditworthiness, whether the loan is current and whether there is a 
contractual obligation to assume the loan, as required by 38 U.S.C. 
3714. If the actual loan holder does not have automatic authority and 
its servicing agent is an automatic lender, then the servicing agent 
must make the determinations required by 38 U.S.C. 3714 on behalf of the 
holder. The actual holder will remain ultimately responsible for any 
failure of its servicing agent to comply with the applicable law and 
Department of Veterans Affairs regulations.
    (A) If the assumption is approved and the transfer of the security 
is completed, then the notice required by this paragraph shall consist 
of the credit package (unless previously provided in accordance with 
paragraph (h)(1)(i)(B) of this section) and a copy of the executed deed, 
bill of sale, transfer of equity agreement, and/or assumption agreement 
as required by the VA office of jurisdiction. The notice shall be 
submitted to the Department of Veterans Affairs with the Department of 
Veterans Affairs receipt for the funding fee provided for in 
Secs. 36.4232(e)(3) or 36.4254(d)(3) of this part.
    (B) If the application for assumption is disapproved, the holder 
shall notify the seller and the purchaser that the decision may be 
appealed to the Department of Veterans Affairs office of jurisdiction 
within 30 days. The holder shall make available to that Department of 
Veterans Affairs office all items used by the holder in making the 
holder's decision in case the decision is appealed to the Department of 
Veterans Affairs. If the application remains disapproved after 60 days 
(to allow time for appeal to and review by the Department of Veterans 
Affairs) then the holder must refund $50 of any fee previously collected 
under the provisions of Sec. 36.4275(a)(3)(iii) of this part. If the 
application is subsequently approved and the sale is completed, then the 
holder (or its authorized servicing agent) shall provide the notice 
described in paragraph (h)(1)(i)(A) of this section.
    (C) In performing the requirements of paragraphs (h)(1)(i)(A) or 
(h)(1)(i)(B) of this section the holder must complete its examination of 
the creditworthiness of the prospective purchaser and advise the seller 
of its decision no later than 45 days after the date of receipt by the 
holder of a complete application package for the approval of the 
assumption. The 45-day period may be extended by an interval not to 
exceed the time caused by delays in processing of the application which 
are documented as beyond the control of the holder, such as employers or 
depositories not responding to requests for verifications, which were 
timely forwarded, or followups on those requests.
    (ii) If neither the holder nor its authorized servicing agent is an 
automatic lender, the notice to the Department of Veterans Affairs shall 
include:
    (A) Advice regarding whether the loan is current or in default;
    (B) A copy of the purchase contract; and
    (C) A complete credit package developed by the holder which the 
Secretary may use for determining the creditworthiness of the purchaser.
    (D) The notice and documents required by this section must be 
submitted to the Department of Veterans Affairs office of jurisdiction 
no later than 35 days after the date of receipt

[[Page 555]]

by the holder of a complete application package for the approval of the 
assumption, subject to the same extensions as provided in paragraph 
(h)(1)(i) of this section. If the assumption is not automatically 
approved by the holder or its authorized agent pursuant to the automatic 
authority provisions, $50 of any fee collected in accordance with 
Sec. 36.4275(a)(3)(iii) of this part must be refunded. If the Department 
of Veterans Affairs does not approve the assumption, the holder will be 
notified and an additional $50 of any fee collected under 
Sec. 36.4275(a)(3)(iii) of this part must be refunded following 
expiration of the 30-day appeal period set out in paragraph (h)(1)(i)(B) 
of this section. If such an appeal is made to the Department of Veterans 
Affairs, then the review will be conducted at the Department of Veterans 
Affairs office of jurisdiction by an individual who was not involved in 
the original disapproval decision. If the application for assumption is 
approved and the transfer of the security is completed, then the holder 
(or its authorized servicing agent) shall provide the notice required in 
paragraph (h)(1)(i)(A) of this section.
    (2) If the seller fails to notify the holder before disposing of 
property securing the loan, the holder shall notify the Secretary within 
60 days after learning of the transfer. Such notice shall advise whether 
or not the holder intends to exercise its option to immediately 
accelerate the loan or whether an opportunity will be extended to the 
transferor and transferee to apply for retroactive approval of the 
assumption under the terms of this paragraph


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

(Approved by the Office of Management and Budget under control number 
2900-0516)

[36 FR 1253, Jan. 27, 1971, as amended at 44 FR 22725, Apr. 17, 1979; 46 
FR 43670, Aug. 31, 1981; 55 FR 37472, Sept. 12, 1990; 58 FR 37859, July 
14, 1993]