[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: 38CFR36.4282]

[Page 584-585]
 
            TITLE 38--PENSIONS, BONUSES, AND VETERANS' RELIEF
 
          CHAPTER I--DEPARTMENT OF VETERANS AFFAIRS (CONTINUED)
 
PART 36--LOAN GUARANTY--Table of Contents
 
Sec. 36.4282  Legal proceedings (notice of repossession).

    (a) When the holder institutes suit or otherwise becomes a party in 
any legal or equitable proceeding brought on or in connection with the 
guaranteed indebtedness, or involving title to, or other lien on, the 
security, such holder, within the time that would be required if the 
Secretary were a party to the proceeding, shall deliver to the 
Secretary, by mail or otherwise, by making such delivery to the loan 
guaranty officer at the office which granted the guaranty, or other 
office to which the holder has been notified the file is transferred, a 
copy of every procedural paper filed on behalf of holder, and shall also 
so deliver, as promptly as possible, a copy of each similar pleading 
served on holder or filed in the cause by any other party thereto. 
Notice of, or motion for, continuance and orders thereon are excepted 
from the foregoing.
    (b) A copy of a notice of sale under power by a holder or one acting 
at his or her behest (e.g., trustee or public official) shall be 
similarly delivered to the Secretary at or before the date of first 
publication, posting, or other notice, but in any event, except in 
emergency or when waived by the Secretary, not less than 10 days prior 
to date of sale. Copy of any other notice of sale served on the holder 
or of which he or she has knowledge shall be similarly delivered to the 
Secretary, including any such notice of sale under tax or other superior 
lien or any judicial sale.
    (c) The procedure prescribed in paragraphs (a) and (b) of this 
section shall not be applicable in any proceeding to which the Secretary 
is a party, after the Secretary's appearance shall have been entered 
therein by a duly authorized attorney.
    (d) In any legal or equitable proceeding (including probate and 
bankruptcy proceedings) to which the Secretary is a party, original 
process and any other process prior to appearance, proper to be served 
on the Secretary,

[[Page 585]]

shall be delivered to the loan guaranty officer of the office of the 
Department of Veterans Affairs having jurisdiction of the area in which 
the court is situated. Within the time required by applicable law, or 
rule of court, the Secretary will cause appropriate special or general 
appearance to be entered in the cause by the Secretary's authorized 
attorney.
    (e) After appearance of the Secretary by attorney, all process and 
notice otherwise proper to serve on the Secretary before or after 
judgment, if served on the Secretary's attorney of record shall have the 
same effect as if the Secretary were personally served within the 
jurisdiction of the court.
    (f) If following a default the holder does not begin appropriate 
action within 30 days after requested in writing by the Secretary to do 
so, or does not prosecute such action with reasonable diligence, the 
Secretary shall have the option to intervene in, or begin and prosecute 
to completion any action or proceeding, in the Secretary's name or in 
the name of the holder, which the Secretary deems necessary or 
appropriate, and may fix a date beyond which no further charges may be 
included in the computation of the guaranty claim. The Secretary shall 
pay, in advance if necessary, any court costs or other expenses incurred 
by the Secretary, or properly taxed against the Secretary, in any such 
action to which the Secretary is a party, but may charge the same, and 
also a reasonable amount for legal services, against the guaranteed 
indebtedness, or the proceeds of the sale of the security to the same 
extent as the holder (see Sec. 36.4276), or otherwise collect from the 
holder any such expenses incurred by the Secretary because of the 
neglect or failure of the holder to take or complete proper action. The 
rights and remedies herein reserved are without prejudice to any other 
rights, remedies, or defenses, in law or in equity, available to the 
Secretary.
    (g) The holder, no later than 10 days after it has repossessed a 
property, must advise the Secretary of such repossession. The holder 
shall proceed thereafter, within a reasonable time after repossession, 
to terminate the debtors' rights in the property. If it is a legal 
requirement or if the Secretary requires that the debtors' rights be 
terminated by public sale, the holder shall follow the procedures set 
forth in paragraph (b) of this section. Otherwise, the holder shall 
proceed in the manner set forth in Sec. 36.4283(f).

[36 FR 1253, Jan. 27, 1971, as amended at 47 FR 12965, Mar. 26, 1982; 53 
FR 34296, Sept. 6, 1988]