[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: 38CFR36.4211]

[Page 555-556]
 
            TITLE 38--PENSIONS, BONUSES, AND VETERANS' RELIEF
 
          CHAPTER I--DEPARTMENT OF VETERANS AFFAIRS (CONTINUED)
 
PART 36--LOAN GUARANTY--Table of Contents
 
Sec. 36.4211  Amortization--prepayment.

    (a) To be eligible for guaranty under 38 U.S.C. 3712 a loan shall be 
amortized

[[Page 556]]

fully within the term of the loan in accordance with any generally 
recognized plan of amortization requiring approximately equal monthly 
payments. The loan shall not be payable on demand or at sight or 
presentation, or at a time not specified or computable from the language 
in the evidence of indebtedness, or on a renewal basis at the option of 
the holder. The first payment may be deferred not longer than 2 months 
from the date the loan is closed.
    (b) No guaranteed loan security instrument shall contain any 
provision giving the holder a right to declare the loan due or otherwise 
to declare a default if the holder ``shall feel insecure'' or upon the 
occurrence of any similar condition at the holder's option, without 
regard to any act or omission by the debtor.
    (c) The debtor shall have the right, without penalty or fee, to 
prepay all or not less than one installment of the indebtedness at any 
time. Credit for any partial prepayment made on other than an 
installment due date may be postponed to the next installment due date. 
The holder and the debtor may agree at any time that any prepayment not 
previously applied in satisfaction of matured installments shall be 
reapplied for the purpose of curing or preventing any subsequent 
default. Any prepayment in full of the indebtedness (unpaid principal 
balance plus earned interest) shall be credited on the date received. In 
determining the amount required to prepay the indebtedness in full the 
holder of the loan shall exclude all unearned interest or discount.
    (d) Subject to paragraph (a) of this section any amounts which under 
the terms of a loan do not become due and payable on or before the last 
maturity date permissible for loans of its class under the limitations 
contained in Sec. 36.4204 shall automatically fall due on such date.