The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
FEDERAL RESERVE BANK
OF NEW YORK
r Circular N o . 2 9 0 1 T
L February 8, 1945 , J
GUARANTY
PURSUANT
TO
OF
LOANS
SERVICEMEN'S
TO
VETERANS
READJUSTMENT
ACT
OF
1944
To all Banks and Trust Companies
in the Second Federal Reserve
District:
For your information, we are enclosing copies of the following forms prescribed by the
Veterans' Administration for use in connection with the guaranty of loans pursuant to the
Servicemen's Readjustment Act of 1944:
Business or business realty loans
(a) Loan Guaranty Certificate (Finance Form 1841)
(b) Application for Business or Business Realty Loan Guaranty (Finance Form 1842)
(c) Application for Business or Business Realty Loan Guaranty (Duplicate) (Finance Form
1842a)
(d) Supplement to Application for Business or Business Realty Loan Guaranty (Exhibit A)
(Finance Form 1842b)
(e) Supplement to Application for Business or Business Realty Loan Guaranty (Exhibit B)
(Finance Form 1842c)
(f) Explanation of Business Loan or Business Realty Loan Guaranty (Finance Form 1844)
(g) Appraiser's Check Sheet (Finance Form 1845)
Farm loans
(li) Loan Guaranty Certificate (Finance Form 1821)
(i) Application for Farm Loan Guaranty (Finance Form 1822)
Other forms for use in connection with the guaranty of farm loans to veterans were forwarded to you with our Circular No. 2891, dated January 11, 1945.
The Certification of Eligibility (Finance Form 1800) and the Loan Closing Statement
(Finance Form 1806) forwarded to you with our Circular No. 2873, dated November 28,1944,
should be used in connection with applications for the guaranty of business and business realty
loans and farm loans, as well as home loans.
Among the enclosures sent you with our Circular No. 2891, dated January 11, 1945, was a
pamphlet published by the Veterans' Administration, containing regulations issued by the
Administrator of Veterans' Affairs relating to the guaranty of loans for the purchases of
(OVER)
businesses, etc. Pages 10, 11 and 12 of such pamphlet contain an amendment to the regulations
theretofore issued by the Administrator relating to the guaranty of home loans and farm loans.
W e are enclosing herewith a separate reprint of this amendment with the thought that it might
be helpful to you in considering the regulations relating to the guaranty of home loans and
farm loans if this reprint is used in conjunction with the original regulations relating to such
loans which were enclosed with our Circular No. 2859, dated November 1, 1944, and our
Circular No. 2891, dated January 11, 1945, respectively.
W e are also enclosing a pamphlet issued by the Veterans' Administration, entitled
44 Handbook
for Lenders—Home L o a n s " , relative to matters of policy and procedure in con-
nection with home loans to veterans pursuant to the Servicemen's Readjustment Act of 1944.
W e are not in a position to furnish you with additional supplies of the enclosed material
but have been informed that such supplies may be obtained from the following regional offices
of the Veterans' Administration:
Newington, Connecticut
Lyons, New Jersey
Batavia, New York
215 West 24th Street, New York 11, New York.
Inquiries by veterans concerning the guaranty of loans pursuant to the Servicemen's Readjustment Act of 1944 should be made to the nearest regional office. Inquiries by lending institutions should be made to the loan guarantee office of the Veterans' Administration at 2 Park
Avenue, New York 16, New York.
ALLAN SPROUL,
President.
:RANS ADMINISTRATION
F i n a n c e F o r m 1841
UNITED STATES OF AMERICA
LOAN GUARANTY CERTIFICATE
Issued by
VETERANS
ADMINISTRATION
ate
No. L-B
( W h e r e property is located)
( L e n d e r , exactly as payee's n a m e will appear o n note)
( R . F . D . o r street)
( P o s t office)
( T o be filled In by V . A . )
(Borrower-veteran, exactly as to b e signed on note and m o r t g a g e )
(County)
( R . F . D . o r street)
( P o s t office)
(State)
(County)
(State)
I
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.
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 (38 U. S. Code 693; 58 Stat. 284), 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 $
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.
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
ADMINISTRATOR OF VETERANS' AFFAIRS,
ITE.—If loan is not closed the proposed lender, or when
id, the holder of the note will mark this certificate " C a n e d , " sign thereunder, and return t o Veterans Administion.
(Authorized a g e n t )
At
( P o s t office)
II
Description o f property to be " m o r t g a g e d " ( L o t and block, section and township, land lot and
land district etc. and surveyor's field notes where appropriate, and any other language proper
to complete description. Include description of personal property, if any. Describe f u l l y : Show
serial numbers, if available, or any other means of identification.)
•emises identified as
same o f nearest h i g h w a y .
( N a m e o f place, i f any, and R . F . D .
A l s o number o r
Street and number in city, e t c . )
(City, t o w n , v i l l a g e )
(County, parish)
(State, district, territory)
id further described as:
/
( I f more space is needed, detach and continue description on reverse)
la—tasay-i
PAGE 2
Applicant's age
5. Sex
6. Race
7. Service or serial No.
Date of birth _
9. Place of birth
Indicate by a cross (x) the branch of service in which you served:
• Army
• Navy
• Marine Corps
• Coast Guard
Date entered service
12. Date separated from active duty
Rank and organization at time of separation
If you have served in any branch under another name, state that name, the branch, and dates between which
you served under that name. If none, so answer
Have you applied to the Administrator of Veterans' Affairs for guaranty of any other loan or loans?
(Yea o r n o )
If yes, give the following information for each application.
(a)
Date of
Application (s)
<C)
Purpose
of L o a n ( s )
(b)
Name and Address of Lender(s)
(e)
(d)
Amount of
Guaranty
W a s Loan
Closed ?
(a) Purpose of loan hereby applied f o r :
(6) Purchase price, $
(d) Rate of interest
% (e) Guaranty
(c) Amount of loan hereby applied for $
mortgage, or
requested $
( / ) Secured by a
each
years (h) Payable $ —
(g) For
(a) Is loan to be secured by a second lien pursuant to section 505 of the Act?
(b) If "yes," state name and address of holder of primary loan
(c) Amount of primary loan $—
( / ) Amount
(d) Interest rate
.% per year, (e) Final maturity date
(h) Name of Federal agency
of payments $
(fir) How often due
making, insuring or guaranteeing primary loan
Land:
PLAT.—Indicate below shape, location, and dimensions o f
(a) The land has
feet frontage
lot, distance f r o m nearest intersections, and names o f
streets o r roads.
on
Street (or road),
and is
feet deep. Area
N
about
(sq. ft. or acres).
(b) Easements (location and purpose: Also mark
on diagram).
E
W
. Leasehold
(Yea o r n o )
and expires
Option expires ..
Rental, $
per year. Lease is dated
Options: Renewable for
years: Purchasable for
PAGE 5
. What estate in the land described on page 1 hereof are you to own or do you now own ?
(State whether fee simple, o r other estate.
If a lease only, so state and when it expires)
(Also state whether all, o r an undivided interest; and if latter, how much)
. Street: (a) Right-of-way width
feet, (b) Surfaced with
feet wide. (c) Curbs and gutters in place
(d) Sidewalks in place
(Yes o r no)
(Yes o r no)
. Utilities (answer "Yes" or "No" as to each connected to the building) : (a) Electricity
(public main)
(c) Public sewers
(d) Septic tank and drain
supply: Public
Private
Other (specify)
(b) Gas
(e) Water
. Structure: (a) When built
(b) Type of construction: Frame
1
Brick veneer
Masonry
Other
; (c) Roof material
(d) Stories above basement
(e) Floor area
sq. ft. ( / ) For improvements
other than buildings use separate sheet and describe fully.
. Taxes and assessments: (a) Real estate taxes: Amount levied this fiscal year, $
(b) Special
assessments: Total amount outstanding $
; (c) Amount payable this fiscal
year $
{d) Per year $
, beginning
. Personal status of veteran:
(a) Period of residence in this city, county, or town
(b) Indicate by X :
Married
Single
(c) Number of dependents
(d) Ages
Divorced
Widower
. Data concerning spouse:
(а) Name
(б) Occupation
(c) Income per year: (i) Salary $
(ii) Other $
(d) Employed by
(e) At
( / ) Assets owned separately by spouse or jointly by veteran and spouse (other than property described in
Par. 3 hereof or in Supplement to this Application (Exhibit A or B as applicable)) :
Type of Asset
Owned in the Name of
Estimated
Value
Debts owing by spouse, showing (a) type of obligations; (b) name of creditor; (c) amount owing; (d) repayments periods; and (e) repayments amounts required.
Have you read or had read to you Form 1844, "Explanation of Business or Business Realty Loan Guaranty"?
( Y e s o r no)
Insurance will be obtained against: (a) Fire $
coverage, Form No
$
(6) Windstorm $
(d) Other
(c) Extended
(Specify)
The person signing this application as the veteran hereby represents that he is the veteran named in question 2
on page 1 of this application. His identity as such has been established to the satisfaction of the lender by
V
"(State method, e. e . , personal acquaintance of stated period ; comparing signature and description on certificate of discharge : etc.)
11 the information reflected by the application is true to the best of lender's information and belief.
PAGE 4
The undersigned borrower (veteran) and lender (or seller) hereby apply for guaranty by the United States
tf a loan in accordance with this application, which is also an application to the lender by the borrower for
said loan; said guaranty to be pursuant to the Servicemen's Readjustment Act of 1944 (58 Stat. 284), which
\ct and the regulations issued pursuant thereto and in effect on the date of the loan guaranty certificate issued
bursuant to this application shall be a part of the contract between the United States, the borrower, the
ender, and each of them.
Sorrower and lender understand and agree that, if issued, the guaranty will be issued in reliance upon the
^formation contained in this application.
?he lender, or authorized employee, or agent of the lender, has read this entire application as completed, has
jeen and spoken with applicant, believes he is the veteran, and he appears to be competent to understand the
Mature of the transaction and to enter into it.
(If a corporation)
Lender.
Attest
_
Secretary.
(Authorized signature)
[CORPORATE
(Title)
SEAL]
( I f required by State l a w )
Borrower
(s).
(Date o f application)
^natures of lender and borrower must exactly correspond in every detail with the names as typed at top of page
-notwithstanding name of borrower so shown may differ from name in question 14. A married woman will
;lude her surname before marriage, but sign husband's surname as her surname.
Recommendation of Designated Agency
is application and the attached papers are forwarded to the Administrator of Veterans' Affairs by the underTied designated Federal agency, which hereby recommends that said Administrator
d application for a guaranty.
(Designated a g e n c y )
By
( D a t e o f recommendation)
(Authorized signature)
INSTRUCTIONS—Continued
. Reference is made to the following sections of the regulations for guidance in connection with applications
for (a) acquisition of a business, sec. 4204; (b) purchase of supplies, equipment, machinery or tools (new or
used), sec. 4205; (c) purchase of business realty, sec. 4208; (d) two or more borrowers, sec. 4222; (e) second
loans under section 505 (a) of the Act, sec. 4221.
r. The veteran should have read Form 1844, "Explanation of Business or Business Realty Loan Guaranty,"
before signing appplication.
r.
Permissible loan charges, see regulations, sec. 4216.
A notary's certificate is not required on the application. Nevertheless, it must be remembered that Federal
statutes provide severe penalties including forfeitures, fines, and imprisonment for fraud on the part of the
applicant and also as to any person who shall "knowingly make or cause to be made, or conspire, combine,
aid or assist in, agree to, arrange for, or in anywise procure the making or presentation of a false or fraudulent affidavit, declaration, certificate, statement, voucher, or paper, or writing purporting to be such," concerning any application for the guaranty of a loan by the Administrator. (38 U. S. Code 697, 715, 450, 451,
454a, 556a; 18 U. S. Code 80.)
Jan. 45—800M
ie—42565-1
u. s.
GOVERNMENT PRINTING O F F I C E
ltUUDOe F o r m 1 8 4 2
„
PAGE 1
VETERANS
ADMINISTRATION
APPLICATION FOR BUSINESS
OR BUSINESS REALTY LOAN GUARANTY
;ate
No. I^B _
(Where property is located)
2. ..
(Lender, exactly as payee's name will appear on note)
( R . F . D. o r street)
(Post office)
(County)
(To te fiUed in h y ' v " X ) "
(Borrower-veteran, exactly as to be signed on note and mortgage)
(R. F. D. o r street)
(Post office)
(State)
(County)
<Stats)
INSTRUCTIONS
(Read carefully before beginning to fill out this f o r m )
LOAN GUARANTY CERTIFICATE ( F o r m
1841).
Fill in all spaces at top of the form, except the " L - B " number. Also complete Part II, "Description of
Property to be Mortgaged," in such manner that all required information will be duplicated by a carbon
impression in the proper spaces on page 1 of the application. If it is necessary to continue the property
description on the reverse side of the certificate, use space on page 2 of the application for the carbon impression thereof. The certificate may be separated from the application along the perforated line at the bottom
of the page. Submit it to the agency with the application and other papers. (See regulations, sec. 4225.)
No copy of the certificate other than the original is necessary. It will be signed and returned to the lender by
the Veterans Administration if the application is approved.
. APPLICATION FOR BUSINESS OR BUSINESS REALTY LOAN
GUARANTY
Supplement (EXHIBIT A and EXHIBIT B) (Form 1842 b and Form 1842 c ) .
(a) The application and Exhibit A are to be executed in duplicate in every case. Exhibit B also in
duplicate is only required if the loan is in excess of $5,000. The duplicate will be retained by the lender.
The original signed copy will be permanently retained by the Veterans Administration and should be sent to
the agency with other papers. (See regulations, sec. 4225.)
(b) Every question must be answered except that if no real property is to be encumbered, questions 18
to 24 inclusive, need not be answered. Place a check mark ( V ) in space for answer to any question that is
not applicable.
( S e e continuation of instructions, page 4)
3. Description of property to be "Mortgaged." (Lot and block, section and township, land lot, and land
district etc. and surveyor's field notes where appropriate, and any other language proper to complete
description. Include description of personal property, if any. Describe fully: Show serial numbers, if
available, or any other means of identification.)
remises identified as
(Name o f place, if any, and R . P. D.
Also number or name of
nearest highway, street and number in city, etc.)
(City, town, village)
(County, parish)
(State, district, territory)
\
( I f m o r e s p a c e is needed, continue carbon c o p y of description on p a g e 2 of
application)
18—42686-1
( C o n t i n u e l e g a l d e s c r i p t i o n if n e c e s s a r y in the s p a c e b e l o w )
}
III
CERTIFICATION BY BORROWER AND LENDER
We hereby warrant that (1) the undersigned borrower named on the reverse hereof executed the note, the
face amount of which is $
consisting of $
principal and $
interest,
as defined in the regulations; (2) it is dated the
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).
The undersigned lender warrants that (1) the same "mortgage" duly executed and witnessed, acknowledged,
or proved as required by law, was properly filed, or filed for record, if and as provided by law on the
day of
19
; at
M ; and was given file 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, unless the application indicates it is for a loan to be secured by a second lien as prescribed by the
regulations; 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.
( A l l s i g n a t u r e s must be in i n k )
f a corporation)
Secretary.
Mr.
Mrs.
Miss
Lender
(s).
By—
CORPORATE
(Title (president, vice president, e t c . ) )
SEAL
( R e q u i r e d here in all c a s e s )
Date
Mr.
Mrs.
Miss
Mr.
Mrs.
Miss
Borrower
TE 1 . — I f t h e n o t e i3 u n s e c u r e d , r e f e r e n c e s t o " m o r t g a g e " in p a r a g r a p h s " A " and " B " a b o v e a r e inapplicable.
(s).
( S e e regulations,
S e c . 4205, 4 2 0 8 . )
TE 2 . — I f t h e l o c a l l a w p r o v i d e s f o r filing o n l y , n o t r e c o r d i n g , chattel m o r t g a g e s o r s i m i l a r instruments, p a r a g r a p h " B " a b o v e
n e v e r t h e l e s s is t o b e c o m p l e t e d . I t r e f e r s t o not o n l y the c o u n t y r e c o r d e r o r c l e r k , but also t o the S t a t e C o m m i s s i o n e r o f
M o t o r V e h i c l e s o r o t h e r official w h o k e e p s m o t o r v e h i c l e m o r t g a g e r e c o r d s , a n d t o o t h e r similar officials, S t a t e o r c o u n t y .
Jan. 4S—600M
10—42565-1
u. s.
OOVEKWMENT PRINTING
o.-Fice
"liionce Form 1842a
PAGE 1
VETERANS
ADMINISTRATION
APPLICATION FOR BUSINESS
OR BUSINESS REALTY LOAN GUARANTY
State
L
No. L-B
( W h e r e property ia located)
...
( L e n d e r , exactly aa payee'a n a m e will appear o n note)
( R . F. D. o r street)
( P o s t office)
2.
(County)
( T o be filled in by V . A . )
(Borrower-veteran, exactly aa to be signed on note a n d m o r t g a g e )
( R . F. D . o r street)
( P o s t office)
(State)
(County)
(State)
INSTRUCTIONS
(Read carefully before beginning to fill out this form)
I. LOAN GUARANTY CERTIFICATE ( F o r m 1 8 4 1 ) .
Fill in all spaces at top of the form, except the " L - B " number.
plete Part II, "Description of
Property to be Mortgaged," in such manner that all required infori
ilLbe duplicated by a carbon
impression in the proper spaces on page 1 of the application,
to continue the property
description on the reverse side of the certificate, use space on pai
.the application for the carbon impression thereof. The certificate may be separated from the appl
g the perforated line at the bottom
of the page. Submit it to the agency with the application ai
papers. (See regulations, sec. 4225.)
No copy of the certificate other than the original is neateSZry.
be signed and returned to the lender by
the Veterans Administration if the application is mjprvved,
I. APPLICATION FOR BUSINESS OR BUSINES
Supplement
( E X H I B I T A and E
(a) The application an
duplicate is only required
The original signed co
the agency with other
GUARANTY
orm 1842 b and Form 1842 c),
re to be executed in duplicate in every case. Exhibit B also in
is "in excess of $5,000. The duplicate will be retained by the lender,
anently retained by the Veterans Administration and should be sent to
( S e e regulations, sec. 4225.)
(b) Every question must be answered except that if no real property is to be encumbered, questions 18
to 24 inclusive, need not be answered. Place a check mark ( V ) in space for answer to any question that is
not applicable.
(See continuation of instructions, page 4)
3. Description of property to be "Mortgaged." (Lot and block, section and township, land lot, and land
district etc. and surveyor's field notes where appropriate, and any other language proper to complete
description. Include description of personal property, if any. Describe fully: Show serial numbers, if
available, or any other means of identification.)
'remises identified as
( N a m e o f place, i f any, and R . F . D .
A l s o number or name o f
nearest h i g h w a y , street and number in city, etc.)
(City, t o w n , village)
(County, pariah)
(State, district, territory)
(If more space is needed, continue carbon copy of description on page 2 of application)
16-42809-1
PACE 2
!. Applicant's age
5. Sex
6. Race
7. Service or serial No
!. Date of birth
9. Place of birth
I. Indicate by a cross (x) the branch of service in which you served:
• Army
• Navy
• Marine Corps
• Coast Guard
. Date entered service
12. Date separated from active duty
!. Rank and organization at time of separation
[. If you have served in any branch under another name, state that name, the branch, and dates between which
you served under that name. If none, so answer
». Have you applied to the Administrator of Veterans' Affairs for guaranty of any other loan or loans?
(Yea or no)
If yes, give the following information for each application.
(O)
Date of
Application(a)
(O
Purpose
of Loan (a)
Name and Address of Lender (a)
(d)
Was Loan
Closed?
I. (a) Purpose of loan hereby applied f o r : _„
(e)
Amount of
Guaranty
(6) Purchase price, $
(d) Rate of interest
% (e) Guaranty
(c) Amount of loan hereby applied for $
mortgage, or
requested J}>
( / ) Secured by a
(#) For
years (h) Payable
each
T. (a) Is loan to be secured by a second lien pursuant to section 505 of the Act?
(6) If "yes," state name and address of holder of primary loan
(c) Amount of primary loan
( / ) Amount
(d) Interest rate
% per year, (e) Final maturity date
(h) Name of Federal agency
of payments $
(g) How often due
making, insuring or guaranteeing primary loan
i. Land:
PLAT.—Indicate b e l o w shape, location, and dimensions o f
lot, distance f r o m nearest intersections, and n a m e s o f
(a) The land has
feet frontage
streets o r roads.
on
Street (or road),
and is
feet deep. Area
N
about.
(sq. ft. or acres).
(6) Easements (location and purpose: Also mark
on diagram).
W
9. Leasehold
(Yea o r n o )
and expires
Option expires
Rental,
per year. Lease is dated
Options: Renewable for
years: Purchasable for $-
PAGE 3
l. What estate in the land described on page 1 hereof are you to own or do you now own?
(Stats whether fee simple, o r other estate.
If a lease only, so state and when it expires)
(Also state whether all, o r an undivided interest; and if latter, how much)
. Street: (a) Right-of-way width
feet. (6) Surfaced with
feet wide, (c) Curbs and gutters in place
(d) Sidewalks in place
(Yea or no)
(Yes or no)
!. Utilities (answer "Yes" or " N o " as to each connected to the building): (a) Electricity
(public main)
(c) Public sewers
(d) Septic tank and drain
supply: Public
Private
Other (specify)
(b) Gas
(e) Water
.Structure: (a) When built
(6) Type of construction: Frame
Brick veneer
Masonry
Other
; (c) Roof material
(d) Stories above basement
(e) Floor area
sq. ft. ( / ) For improvements
other than buildings use separate sheet and describe fully.
L Taxes and assessments: (a) Real estate taxes: Amount levied this fiscal year, $
(b) Special
assessments: Total amount outstanding $
; (c) Amount payable this fiscal
year $
(d) Per year ?
beginning
i. Personal status of veteran:
(a) Period of residence in this city, county, or town
(b) Indicate by X :
Married
Single
( c ) Number of dependents
(d) Ages .
Divorced
I. Data concerning spouse:
(a) Name
(c) Income per y e a r i 4 i )
(6) Occupation.^
(d) Employed by
(e) At
( / ) Assets owned separately by spouse or jointly
n and spouse (other than property described in
(Exhibit A or B as applicable)):
Par. 3 hereof or in Supplement to thij
Type of
Owned in the Name of
Asset
Estimated
Value
$
'. Debts owing by spouse, showing (a) type of obligations; (b) name of creditor; (c) amount owing; (d) repayments periods; and (e) repayments amounts required.
. Have you read or had read to you Form 1844, "Explanation of Business or Business Realty Loan Guaranty"?
(Yea or no)
. Insurance will be obtained against: (a) Fire $
coverage, Form No.
$
(b) Windstorm $
(d) Other
(c) Extended
(Specify)
». The person signing this application as the veteran hereby represents that he is the veteran named in question 2
on page 1 of this application. His identity as such has been established to the satisfaction of the lender by
(State method, e. g., personal acquaintance of stated period : comparing signature and description on certificate of discharge; etc.)
All the information reflected by the application is true to the best of lender's information and belief.
18—42560-1
PAGE 4
The undersigned borrower (veteran) and lender (or seller) hereby apply for guaranty by the United States
of a loan in accordance with this application, which is also an application to the lender by the borrower for
said loan; said guaranty to be pursuant to the Servicemen's Readjustment Act of 1944 (58 Stat. 284), which
Act and the regulations issued pursuant thereto and in effect on the date of the loan guaranty certificate issued
pursuant to this application shall be a part of the contract between the United States, the borrower, the
lender, and each of them.
. Borrower and lender understand and agree that, if issued, the guaranty will be issued in reliance upon the
information contained in this application.
. The lender, or authorized employee, or agent of the lender, has read this entire application as completed, has
seen and spoken with applicant, believes he is the veteran, and he appears to be competent to understand the
nature of the transaction and to enter into it.
(If a corporation)
Lender.
Attest
Secretary.
(Authorized signature)
[CORPORATE
(Title)
SEAL]
( I f required by State law)
Borrower
(s).
(Date of application)
ignatures of lender and borrower must exactly correspond in every detail with the names as typed at top of page
—notwithstanding name of borrower so shown may differ from name in question 14. A married woman will
dude her surname before marriage, but sign husband's surname as her surname.
Recommendation of Designated Agency
his application and the attached papers are forwarded to the Administrator of Veterans' Affairs by the undergned designated Federal agency, which hereby recommends that said Administrator
lid application for a guaranty.
(Designated agency)
By
(Date o f recommendation)
(Authorized signature)
INSTRUCTIONS—Continued
I. Reference is made to the following sections of the regulations for guidance in connection with applications
for (a) acquisition cf a business, sec. 4204; (b) purchase of supplies, equipment, machinery or tools (new or
used), sec. 4205; (c) purchase of business realty, sec. 4208; (d) two or more borrowers, sec. 4222; (e) second
loans under section 505 (a) of the Act, sec. 4221.
V. The veteran should have read Form 1844, "Explanation of Business or Business Realty Loan Guaranty,"
before signing appplication.
V. Permissible loan charges, see regulations, sec. 4216.
rI.
A notary's certificate is not required on the application. Nevertheless, it must be remembered that Federal
statutes provide severe penalties including forfeitures, fines, and imprisonment for fraud on the part of the
applicant and also as to any person who shall "knowingly make or cause to be made, or conspire, combine,
aid or assist in, agree to, arrange for, or in anywise procure the making or presentation of a false or fraudulent affidavit, declaration, certificate, statement, voucher, or paper, or writing purporting to be such," concerning any application for the guaranty of a loan by the Administrator. (38 U. S. Code 697, 715, 450, 451,
454a, 556a; 18 U. S. Code 80.)
18—42508-1
Jan. 45—000M
u.
S . GOVERNMENT P R I N T I N G
ore
ICE
VETERANS ADMINISTRATION
F i n a n c e F o r m 1842b
VETERANS
No.
ADMINISTRATION
L-B
Supplement to
T o bo filled in by V . A .
APPLICATION FOR BUSINESS OR BUSINESS REALTY LOAN GUARANTY
EXHIBIT A
Note
( a ) . — I f purpose o f loan is to establish a business, state f u l l y the nature thereof, your qualifications and experience to
operate it, and describe the equipment, machinery, tools, o r supplies you desire to purchase.
Note
( b ) . — I f purpose of loan is to purchase all o r part of an existing business, state f u l l y the nature thereof and your qualifi-
cations and experience to operate it.
Note
(e).—If
fully.
purpose o f loan is t o purchase additional equipment, machinery, tools, supplies f o r an established business, describe
On loans f o r such purpose the Earnings Data called f o r in 5 is not required.
I. I f purpose of loan is to establish a new business, the f o l l o w i n g information is required:
Veteran's Estimated Income and Expense f o r the N e x t 12 Months
I. I N C O M E
II. E X P E N S E
source:
Total estimated income f r o m Col. 1...
a. F r o m sales o f goods and services
$
b. Cost of goods and services s o l d - $
b. Compensation o r pension f r o m G o v e r n m e n t - $
c. Operating expense
$
c. O t h e r
d. Income and other taxes
$
e. Payments on loans
$
/ . Other business expense
$
Total, $
d. S p e c i f y source o f Other Income ( e )
g. Excess o f all income over total business expense
h. Estimated personal and living expense
S e e reverse side hereof f o r financial data required t o complete this application.
;nder i n all cases.
This f o r m must be signed b y borrower and
I f loan applied f o r is in excess of $5,000 do not fill in reverse hereof, use Exhibit B, Finance F o r m 1842c.
16—42587-1
. Financial statement o f
i
as of
_
19
( N a m e ( s ) of veteran and firm name, if any)
Fill in all blanks using " n o n e " if appropriate.
lash on hand and in bank
$
Notes, conditional sales contracts, chattel mort-
iccounts receivable
gages, o r other obligations due within 1 year
lerchandise, supplies o r other inventory
Accounts payable
Total
$
Income o r other taxes
-and and buildings
Total
Ixtures, machinery, tools, equipment, o r other
$
A l l liabilities due a f t e r 1 year ( m t g . on R. E .
fixed assets
chattel m t g . •
i f e insurance—Cash surrender value ( n e t ) _
cond. sales contract •
(describe) •
Jood will
•
other
)
Reserve accounts-.
•repaid expense
Total all liabilities
>ther assets
$
N e t worth
Total
$
Total-
A r e you a co-maker, endorser, o r guarantor on any obligation ?
..
• Yes
• No.
I f yes, describe
Condensed Statement of Sales, Profits, o r Loss
This year to date
Last
а ) Gross sales
$—:
б ) Cost o f g o o d s sold
c)
Operating expenses ( t o t a l ) *
d)
Depreciation
e ) N e t profit o r loss b e f o r e owner's withdrawals
f)
$
__
year
( a ) Gross sales
(b)
Cost o f goods sold
(c)
Operating expenses ( t o t a l ) *
(d)
Depreciation
( e ) N e t profit or loss b e f o r e owner's withdrawals-
T o t a l withdrawn b y owner
(/)
Total withdrawn b y owner
•Do not include personal income taxes.
>. Give name and address of three credit references:
E a c h o f the undersigned represents that to the best o f his knowledge and belief all the information in this Exhibit A is true and
»mplete.
B o r r o w e r and lender understand and a g r e e that, if issued, the g u a r a n t y will be issued in reliance upon the information conf i n e d in this Exhibit A and the application o f which it is to be considered a part.
attest
Secretary.
Lender.
By
(Authorized signature)
CORPORATE SEAL
( I f required b y State law).
(TiUe)
Borrower
( D a t e o f application )
U . * - GOVERNMENT P R I N T I N G OFFLCL
18—425C7-1
JAN.
4 5 — 6 0 0 M
(s).
VETERANS ADMINISTRATION
F i n a n c e Form 1 8 4 2 b
VETERANS
A D M I N I S T R A T I O NNo.L-B
No. L-B
Supplement to
(To be filled In b y V . A.)
APPLICATION FOR BUSINESS OR BUSINESS REALTY LOAN GUARANTY
EXHIBIT B
(For use only when loan applied for is in excess of $5,000)
Financial statement of
as Of.
(Name(s) of veteran and firm name if any)
19.
(Fit! in all blanks, using " n o n e " where appropriate)
1.
I.
H.
ASSETS
LIABILITIES
A . Amounts d u e in not more than 1 year—secured or unsecured.
Notes:
(a) Cash on hand and in b a n k .
(a) T o banks (except (e))
(6) Notes receivable (good).
(&) T o others (except (c))
(e) Accounts receivable (good).
(c) Conditional Sales Contracts or Chattel Mort-
(d) Merchandise (how valued):
$
gages (itemize on separate sheet)
(i) Finished
(d) Accounts payable
(e) Income and other taxes
(ii) In process.
(f) Other liabilities payable, due in not more
(iii) R a w material
than 1 year (itemize on separate sheet)
(e) Other (itemize on separate sheet).
(0
(g)
f Total current liabilities
$
*Total current assets
B . Amounts payable, due more than 1 year.
(g) Land
(h) Secured b y —
(h) Buildings.
(i) Machinery and equipment-
(1) Mortgages on real estate
( j ) Furniture and fixtures
(2) Conditional Sales Contracts or Chattel
Mortgages
(k) Life insurance—Gash surrender value (net)
:
( i ) All other liabilities (secured or unsecured)
(Itemize on separate sheet)
([) Prepaid expenses
( n ) Goodwill
( j ) Reserve accounts (itemize)
(n) Patents and trade marks.
(k)
Co) Other assets (itemize on separate sheet).
(t) Net worth
(p)
$
?
Total
(m)
Total liabilities
Total
2.
<o) *Contingent liabilities: Accounts or notes receivable, discounted o r sold with endorsement or guaranty, $.
(Name of assignee)
(6) f l f a n y of the current liabilities are secured, state a m o u n t and itemize collateral pledged as security
(c)
Is the amount stated in (a) included in I (J)
(Yes or no)
-J in II (g)
"
S e e reverse side hereof for financial data required to complete this application
(Yes
or no)
3. Comparative statement of sales, profit or loss, etc.
5th Prior Year
4th Prior Year
3d Prior Year
2d Prior Year
Last Year
1
2
3
4
5
S
-
$
$„„.
$
This Year to
Date 19
6
$
$.....
(e) N e t profit o r loss before owner(s) withdrawal (s)
—
(/) T o t a l withdrawn b y owner(s)
_
• D o not Include personal income taxes.
E a c h of the undersigned represents that to the best of his knowledge and belief all the information in this Exhibit B is true and
complete.
Borrower and lender understand and agree that, if issued, the guaranty v,-ill be issued in reliance upon the information contained in this
Exhibit B and the application of which it is t o be considered a part.
Attest
Secretary.
Lender.
By
(Authorized signature)
CORPORATE SEAL
(II required b y State l a v )
(Title)
(Date of application)
Jan. 46—200M
Borrower( s).
». »- E O M N K N T
PRINTING O F F I C E
IB—42548-1
VETERANS ADMINISTRATION
F i n a n c e F o r m 1842b
V E T E R A N S A D M I N I S T R A T I O NNo.L-B
EXPLANATION OF BUSINESS LOAN OR BUSINESS REALTY LOAN GUARANTY
(Under
the Servicemen's
Readjustment
Act of 1944)
Veterans s h o u l d read this explanation b e f o r e signing t h e a p p l i c a t i o n f o r m
1. T h e V e t e r a n s A d m i n i s t r a t i o n h a s no a u t h o r i t y t o m a k e a l o a n . The loan is m a d e b y banks and o t h e r lenders a t not o v e r 4
p e r c e n t interest. W h e n m a d e in a c c o r d a n c e with the r e g u l a t i o n s it m a y b e p a r t i a l l y g u a r a n t e e d b y the A d m i n i s t r a t o r .
The guara n t y is available on purchase m o n e y notes also. F o r c o n v e n i e n c e these t r a n s a c t i o n s a r e called loans in this e x p l a n a t i o n . P a y m e n t s
m a y e x t e n d o v e r a period o f 20 y e a r s s u b j e c t h o w e v e r to the r e q u i r e m e n t that the m a t u r i t y shall n o t b e in e x c e s s of the n o r m a l
u s e f u l l i f e o f the collateral a n d t h e e a r n i n g c a p a c i t y o f the business.
2. I f the v e t e r a n f a i l s to m a k e p a y m e n t s as they b e c o m e due a c c o r d i n g t o his c o n t r a c t with t h e l e n d e r the p r o p e r t y m a y b e
f o r e c l o s e d . I f the V e t e r a n s A d m i n i s t r a t i o n is required to p a y a n y o r all o f the a m o u n t g u a r a n t e e d , t h e v e t e r a n will b e c o m e oblig a t e d f o r the r e p a y m e n t to the G o v e r n m e n t o f the a m o u n t paid on a c c o u n t o f the g u a r a n t y .
3. Interest f o r the first y e a r on t h e a m o u n t g u a r a n t e e d will be p a i d b y the G o v e r n m e n t .
amount.
T h e v e t e r a n does not r e p a y this
4. A n y lender has the r i g h t to r e f u s e to m a k e a loan, w i t h o r w i t h o u t s t a t i n g a reason. T h e f a c t t h a t a p a r t i c u l a r lender
r e f u s e s t o lend the m o n e y d o e s not m e a n that another l e n d e r m a y n o t be w i l l i n g to lend it. T h e V e t e r a n s A d m i n i s t r a t i o n will det e r m i n e w h e t h e r to g u a r a n t e e the loan o n the basis o f the f a c t s presented, i r r e s p e c t i v e o f who m a y b e t h e p r o p o s e d lender ( o r
seller).
5. N e i t h e r t h e a c t n o r t h e r e g u l a t i o n s l i m i t the a m o u n t o f t h e loan, but the m a x i m u m a m o u n t o f g u a r a n t y available to an
e l i g i b l e v e t e r a n is $2,000. Once this a m o u n t has been g u a r a n t e e d b y t h e A d m i n i s t r a t o r i t c a n n o t be m a d e available on another
loan, f o r a n y p u r p o s e .
6. U n d e r certain c o n d i t i o n s the A d m i n i s t r a t o r m a y g u a r a n t e e a loan s e c u r e d b y a " s e c o n d m o r t g a g e , " obtained f o r the p u r p o s e o f a c q u i r i n g a business o r business r e a l t y , if the " f i r s t m o r t g a g e " is to s e c u r e a loan " m a d e , g u a r a n t e e d , or i n s u r e d " b y a
" F e d e r a l a g e n c y . " M o s t lenders c a n f u r n i s h details a b o u t such a l o a n .
7. T h e V e t e r a n s A d m i n i s t r a t i o n will not u n d e r t a k e t o advise a veteran as to the p u r c h a s e or n o n p u r c h a s e o f a specific p r o p e r t y a s this is a decision f o r w h i c h the v e t e r a n m u s t a c c e p t p e r s o n a l responsibility, but i n f o r m a t i o n o f a g e n e r a l c h a r a c t e r m a y be
m a d e a v a i l a b l e . H o w e v e r , there m a y b e essential elements o f a p r o p o s e d t r a n s a c t i o n w h i c h r e q u i r e specialized k n o w l e d g e and it
m a y b e t o the v e t e r a n ' s interest t o consult e x p e r t s in such m a t t e r s w h o s e o w n i n t e r e s t s a r e n o t involved, b e f o r e a g r e e i n g t o a n y
t r a n s a c t i o n . S i m i l a r l y it m a y be advisable t o c o n s u l t disinterested e x p e r t s as t o t h e legal a n d o t h e r details p e r t a i n i n g t o t h e
transaction.
8. Y o u m a y o b t a i n a loan f o r the total price o f t h e e q u i p m e n t , m a c h i n e r y , o r t o o l s y o u desire t o p u r c h a s e , o r y o u m a y obtain
a loan f o r t h e initial d o w n p a y m e n t if y o u p r e f e r to c o n s e r v e t h e a m o u n t of g u a r a n t y that will b e required to obtain the l o a n .
T h e loan f o r a d o w n p a y m e n t m a y be o b t a i n e d f o r a s m u c h a s one-third o f t h e p u r c h a s e p r i c e but m a y not b e in e x c e s s o f $1,000.
T h e s m a l l e r d o w n p a y m e n t y o u m a k e , t h e less o f y o u r g u a r a n t y r i g h t y o u will h a v e to use. T h i s is because y o u will n o t need t o
b o r r o w so m u c h f o r t h e d o w n p a y m e n t . T h i s is t h e a m o u n t f o r w h i c h y o u will need the g u a r a n t y , n o t t h e r e m a i n i n g balance. On
t h e o t h e r h a n d t h e r e a r e m a n y s i t u a t i o n s w h e r e in f a c t it w i l l be b e t t e r business t o m a k e a l a r g e r d o w n p a y m e n t .
C i r c u m s t a n c e s will g o v e r n w h i c h plan is t o y o u r b e s t interest, b u t it is i m p o r t a n t to r e m e m b e r that the t o t a l g u a r a n t y available
t o y o u is $2,000. L a t e r y o u m a y need an additional loan f o r s o m e permissible business purpose. F u r t h e r m o r e , should y o u
d e s i r e t o p u r c h a s e a h o m e or f a r m , t h e loan will o r d i n a r i l y r e q u i r e a substantial g u a r a n t y and, t h e r e f o r e , y o u should e n d e a v o r t o
conserve the amount of your guaranty.
9. i R e a d t h e e n t i r e A p p l i c a t i o n F o r m 1842 and E x h i b i t A , F o r m 1842B. T h i s will s u g g e s t m a t t e r s w h i c h , while not p r e c i s e l y
c o v e r e d in t h e a p p l i c a t i o n , require c a r e f u l c o n s i d e r a t i o n in the p u r c h a s e o f a business o r t h e p u r c h a s e o f fixtures, m a c h i n e r y ,
e q u i p m e n t , t o o l s , o r supplies, i f y o u a r e g o i n g t o establish a n e w business, f o r e x a m p l e :
( a ) E x p e r i e n c e in t h e line o f business y o u intend t o b u y o r establish is one o f y o u r m o s t v a l u a b l e assets. I f y o u
l a c k t h e e x p e r i e n c e b u t h a v e s o m e k n o w l e d g e o f t h e business, it m a y be d e s i r a b l e to establish a p a r t n e r s h i p w i t h s o m e o n e
w h o h a s h a d a c t u a l e x p e r i e n c e in o p e r a t i n g the s a m e k i n d o f a business. M o s t n e w l y established businesses f a i l f o r lack o f
m a n a g e r i a l c a p a c i t y o r sufficient w o r k i n g c a p i t a l .
( b ) G u a r a n t y o f l o a n s t o p r o v i d e w o r k i n g c a p i t a l is n o t included in t h e A c t . I t is, t h e r e f o r e , a n absolute necessity
t h a t y o u h a v e sufficient cash o r o t h e r w o r k i n g capital to assure the business a c h a n c e o f success. W i t h o u t sufficient w o r k i n g
c a p i t a l y o u will b e in i m m e d i a t e difficulty. B u d g e t y o u r o p e r a t i o n s realistically and obtain e x p e r t a c c o u n t i n g advice with
r e s p e c t t o r e c o r d s y o u will require f o r t a x p u r p o s e s and o t h e r r e p o r t s required b y v a r i o u s State and F e d e r a l l a w s that r e g u l a t e
business.
( c ) I f y o u a r e g o i n g to be a retailer, choose t h e location o f y o u r business c a r e f u l l y , as a g r e a t deal o f y o u r c h a n c e f o r
s u c c e s s d e p e n d s on l o c a t i o n , the kind o f p e o p l e l i k e l y t o b u y , t h e a m o u n t o f t h e rent, the c o n d i t i o n o f t h e building, the m o d e r n n e s s o f fixtures, a n d s t o r e f r o n t . Check y o u r c o m p e t i t i o n a n d k n o w w h a t y o u will h a v e to meet. D e c i d e on y o u r policies
o f o p e r a t i o n , l o w e r p r i c e s , p o o r e r q u a l i t y a n d v o l u m e , o r h i g h e r - p r i c e d q u a l i t y m e r c h a n d i s e . B e s u r e y o u h a v e the t e m p e r a m e n t n e c e s s a r y t o m e e t a n d sell the public.
(rf) T h e p r o b l e m s o f m a n u f a c t u r i n g o r w h o l e s a l i n g i n v o l v e a n entirely d i f f e r e n t s e t o f f a c t o r s , b u t here a g a i n e x p e r i e n c e
a n d w o r k i n g c a p i t a l a r e m o s t f r e q u e n t l y the d e c i d i n g f a c t o r s b e t w e e n success o r f a i l u r e .
10. T h e p u r c h a s e o r establishment o f a n y business has m a n y h a z a r d s . E l i m i n a t e all t h e f o r e s e e a b l e a n d be s u r e y o u a r e p r e p a r e d f o r s o m e o f t h e u n f o r e s e e n . A c o p y o f the r e g u l a t i o n s , w h i c h a r e p a r t o f the c o n t r a c t , is a v a i l a b l e a t a n y office o f the
V e t e r a n s A d m i n i s t r a t i o n a n d p r o b a b l y a t a n y b a n k o r o t h e r l e n d i n g institution.
FRANK
T.
HINES,
A dminis tra tor.
U. S
GOVERNMENT PRINTING O F F I C E
16—42816-1
VETERANS ADMINISTRATION
F i n a n c e F o r m 1845
\T0
T _ R
( T o be filled in by V . A . )
VETERANS
ADMINISTRATION
APPRAISER'S
CHECK
SHEET
Business Loans
T o THE ADMINISTRATOR,
VETERANS ADMINISTRATION :
In connection with the application for guaranty of the business loan being negotiated by:
(Name of veteran-borrower)
with
(Service serial N o . )
( A d d r e s s : Show street N o . , city. S t a t e )
:
( N a m e o f lender)
( A d d r e s s : Show street No., city. State)
the following information is submitted for consideration of the designated agency and the Administrator:
Total purchase price
7
$
Amount of loan
Amount of guaranty applied for
Purpose of Loan
Type of Organization
•
To purchase an existing business.
• Operate as individual.
•
To purchase
• Operate as partnership.
(Describe)
•
Operate as
(Describe)
These questions pertain either to manufacturing, wholesale, retail, or service establishments, including
restaurants and other types of eating and drinking places.
If applicable, the lender will supply information as follows:
1. Is the public now being adequately served by businesses of this type?
Yes •
No
•
2. Are such businesses old and well established?
Yes •
No
•
3. Will existing businesses afford keen competition?
Yes •
No
•
4. Have any businesses of this type closed recently?
Yes •
No
•
Yes •
No
•
(If answer is yes, show number and state briefly the cause.)
5. Is the location which has been selected desirable for this type of business ?.
16—42628-1
2
Yes
•
No
•
8. Are the display windows suitable?
Yes
•
No
•
9. Is the store front modern and attractive?
Yes
•
No
•
Yes
•
No
•
11. Is the building of sound construction, and attractive?
Yes
•
No
•
12. Will any major remodeling or alterations be necessary?
Yes
•
No
•
13. Are the plumbing facilities adequate?
Yes
•
No
•
14. Is there a satisfactory heating plant?
Yes
•
No
•
15. Are there any built-in fixtures or equipment?
Yes
•
No
•
„„... Yes
•
No
•
Yes •
No
•
Yes •
No
•
6. Are there other similar establishments nearby?
7. From what sources will the business draw its trade?
10. Is the space adequate for present needs?
Yes •
No •
For future needs?
16. Are the terms of the lease satisfactory?
(a) Does it provide for cancellation? Yes •
No •
For subleasing? Yes •
For renewal?
No •
—
17. Does it provide for reimbursement for alterations?
18. Is the rent a fixed dollar amount?
Yes •
No •
Amount
$
19. If a percentage of sales, state percent and how computed
20. What is your estimate of gross sales per month ?
$
Expense ?
$
Net? $
21. Are sales for cash or credit?
If credit, show the usual
terms
22. What do suppliers think of the prospects for success for a business of this type in this trading area?
18—13828-1
23. What do local businessmen in noncompeting lines think of the prospects for success for a business of this
type?
24. Have you checked applicant's references?
Yes •
No •
25. Their opinion
26. The Business Loan Guaranty regulations of the Servicemen's Readjustment Act define "reasonable
normal value" as follows:
"Reasonable normal value for the purposes of the Act is that which can be justified as a fair and
reasonable price to be paid for the real or personal property for the purposes for which it is being
acquired, assuming a reasonable business risk, but without undue speculative or other hazard as to the
future of such value.
"The purpose and intent are to assure that the price to be paid is not in excess of that on which a
fair profit can be earned based on (a) the past record, if any; (b) the reasonable probabilities of the
future; and (c) reasonably efficient management."
27. In your opinion does the purchase price stated herein represent a reasonable normal
value as so defined ?
Yes •
No •
28. Comments, if any:
The answers to the foregoing questions and the statements made above are true and complete to the best
of my information and belief. I have no financial interest in the subject matter of the transaction contemplated and do not represent a lender wholly or partially controlled by the vendor. The information hereinabove contained is and shall be confidential and shall not be disclosed except as provided by law.
(Signature o f person f u n c t i o n i n g as appraiser)
( A p p r a i s e r ' s business address—street a n d number)
( T y p e his n a m e o n this line)
(City o r town and State)
( N a m e o f his employer)
( E m p l o y e r ' s address)
(Title, i f any)
(Date)
U. S . GOVERNMENT P R I N T I N G O F F I C E
10
42628-1
VETERANS ADMINISTRATION
F i n a n c e F o r m 1821
PAGE 1
UNITED STATES OF AMERICA
3£aait
( S u a r a n t g
ISSUED
VETERANS
State
ADMINISTRATION
Number L. F
( W h e r e p r o p e r t y ia located)
(Lender)
C e r i t f t t a i x
BY
( E x a c t l y aa payee's n a m e will a p p e a r o n note)
( T o be filled in by V . A . )
"(Bm'rower—Veteran)
(House o r b o x number, R . F . D . o r atreet. post office, county)
( E x a c t l y as to be signed o n note~an~d~ mVrYgageT
(House o r b o x numbeV. s t r ^ t r ^ s r o f f i M r c o u n t y ) "
(State)
(State)""
I
A . This certificate sEall 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 o f the " n o t e " described on the reverse hereof upon his duly filing claim t h e r e f o r :
1. A l l o r 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 A c t of 1944 (38 U . S. Code 693;
58 Stat. 284) and the regulations issued pursuant thereto which are in effect on the date o f this certificate. In no event
will the obligation under this certificate exceed $2,000. Subject to the f o r e g o i n g , this guaranty is f o r
per centum
o f the principal amount o f said " n o t e , " but not f o r m o r e than $
c e n t a g e of the principal amount.
In no event will it exceed said per-
2. A t the expiration o f 1 year f r o m the date of the "note," an amount equal t o the interest f o r 1 year at the contract
rate on that portion o f the indebtedness ( " n o t e " ) originally guaranteed hereby, such payment to b e credited on the
indebtedness as prescribed b y said regulations.
C. Executed on behalf of the United States o f A m e r i c a b y the Administrator o f Veterans' Affairs, through the undersigned
authorized a g e n t on this date, t o become effective in the manner hereinabove prescribed.
Dated
A D M I N I S T R A T O R OF V E T E R A N S ' A F F A I R S ,
N O T E . — I f loan is not closed, proposed lender, o r
when paid the holder of the note, will m a r k this certificate " C a n c e l e d , " sign thereunder, and return to Veterans
Administration.
By
.
(Authorized agent)
At
( P o s t office)
II
Description of Property To Be "Mortgaged"
( L o t and block, section and t o w n s h i p , land lot and land district, e t c . , a n d s u r v e y o r ' s field notes where appropriate, and a n y other l a n g u a g e proper to
complete description. Include description o f personal p r o p e r t y , if a n y . Describe f u l l y . Show serial numbers, i f available, or any other means o f
identification)
Premises identified as
( N a m e o f f a r m , if any, and R . F . D .
Also number or n a m e o f
nearest h i g h w a y )
(City, t o w n , village)
( C o u n t y , parish)
(State, district, territory)
and f u r t h e r described a s :
(II
more space
is needed,
detach
and continue
description
on
reverse)
PAGE 2
>
4. A p p l i c a n t ' s age
5. Sex
6. Race
8. Date o f birth
7. Service o r Serial N o
9. Place o f birth
10. Indicate b y c r o s s ( X ) the branch o f service in which you s e r v e d :
•
Army
•
Navy
•
11. D a t e entered service
Marine Corps
•
Coast Guard
12. Date separted f r o m active duty
13. R a n k and organization a t time o f separation
14. I f you have served in any branch under another name, state that name, the branch, and dates between which you served
u n d e r that name.
15. Check o n e : •
I f none, so answer
Married
•
Single
•
Divorced
•
Widower (or Widow).
Number o f children
Full name o f w i f e o r husband
Boys'ages
Girls'ages
16. F a r m i n g E x p e r i e n c e :
DATES
T Y P E S OF
FARMINO
(a)
(B)
17. ( a ) Lender's
Y E A R S A S LABORER. R E N T E R , S n A R E C R o r r E R , O W N E R ,
OR S T U D E N T ( $ J A T E W H I C H )
LOCATION
(d)
(E)
(seller's)
$
N U M B E R or
estimate
of
value
Buildings, $
of
property
(b)
which will b e encumbered
to secure the
loan?
Land,
Personal p r o p e r t y ( i d e n t i f y generally)
( c ) N a m e and location o f f a r m , h i g h w a y numbers, and distance and direction f r o m nearest town
( d ) I f tenant, state amount of rent
(/)
( e ) Unexpired term
Do y o u have option to purchase?
( h ) Woodland
(g)
( i ) Pasture land
Number of acres, cultivated
( / ) Wasteland
( k ) Total acres
( I ) A m o u n t and kind of f e n c i n g
(m)
Source o f water supply
( n ) Is electricity available f o r lights, power?
( o ) Describe dwelling—number o f rooms, t y p e o f construction, etc
( p ) K i n d and size o f outbuildings
(q)
W h a t estate in the land described on p a g e 1 hereof a r e y o u to own o r do you now o w n ?
(State whether f e e simple o r other estate.
I f a lease only o r sharecropper, state)
(Also state whether all o r an undivided interest; and if latter, how much)
(r)
D o you o c c u p y o r intend to occupy the f a r m as y o u r home?
f a r m yourself?
(s)
Do you operate o r intend to operate the
( a s provided in sec. 4100 ( b ) o f the r e g u l a t i o n s ) .
18. P r o p o s e d F a r m Operations:
CRors
(a)
ACRES
PRODUCTION
T o B E SOLD
U N I T PRICE
TOTAL
<b)
(c)
(d)
(e)
(f)
10—42455-1
•
—
TOTAL, $
PAGE 3
19. Production o f Livestock and Livestock Products:
N U M B E R ON H A N D
LIVESTOCK
PRODUCTION
(b)
(a)
T o B E SOLD
<D)
(c)
U N I T PRICE
TOTAL
(e)
....
—
i
—
20.
I.
(o)
Cash
Assets
Total assets ( f r o m col. I )
$.
$
II.
(b)
V a l u e o f land
,(c)
Buildings
(а)
(d)
Machinery
( б ) Unsecured
(e)
Livestock
(/)
Other
(e)
(d)
Liabilities
Indebtedness:
(0)
Secured
. . . $
Total indebtedness
Net w o r t h
$
T O T A L , $_
21
I . Estimated
(a)
Crops
(b)
Livestock
Income
Total income ( f r o m col. I )
$
$
II. Estimated
(a)
Farm
operating
and
( c ) Compensation o r pension f r o m
living
expenses
U . S. Government
(b)
Expenditures
. . . $
Payment
of
debts
Other income of veteran . .
(d)
O f w i f e ( o r husband)
(e)
(c)
. . . .
(/)
Taxes
(d)
Other
(e)
T o t a l expenditures
(/)
Excess
of
$
income over
expendi-
tures
TOTAL
$
22. H a v e you applied to the A d m i n i s t r a t o r o f Veterans' A f f a i r s f o r g u a r a n t y o f a n y other loan o r loans?
(Yes o r N o )
I f yes, g i v e the f o l l o w i n g i n f o r m a t i o n f o r each application:
DATE o r
APPLICATION ( s )
NAME
A N D ADDRESS
OP L E N D E R ( s )
P U R P O S E OF L O A N ( S )
(b)
W A R LOAN
CLOSED
A M O U N T OF G U A R A N T Y
(d)
(C)
<E)
$
23. ( a )
Is loan to be secured b y a second lien pursuant to sec. 505 o f the a c t ?
(b)
I f " y e s " state name and address o f holder of p r i m a r y loan
(d)
Interest rate
_
( c ) A m o u n t of p r i m a r y loan $
•% per year
payments? $
(g)
(e)
Final m a t u r i t y date?
( / ) A m o u n t of
H o w o f t e n due?
( h ) N a m e of Federal agency making,
insuring, o r guaranteeing p r i m a r y loan?
24.
•
—:
—
;
PROPERTY
—=.
FIRK
INSURED
25. (a)
(b)
AMOUNT
(Yt» or No)
(b)
(»)
A N N U A L PREMIUM
PER $ 1 , 0 0 0
(d)
(E)
A N N U A L PREMIUM
PER $ 1 , 0 0 0
(*)
Purpose o f the loan hereby applied f o r i s :
Cost to veteran o f real o r personal property to be purchased, $
ments to a n y buildings o r equipment, $
ness, state amount o f loan f o r :
P a y a b l e this
( c ) Repairs, alterations, o r improve-
( d ) I f f o r taxes, special assessments, o r delinquent indebted-
( i ) Taxes, $
quent indebtedness, $
26. (a)
OTHER ( S p e c i f y Amount.
Nature—
e. g. storm, hail, etc.)
(e)
( i i ) Special assessments, $
( i v ) Total amount of
—
(iii)
Delin-
outstanding,
year, $..
A m o u n t o f loan n o w applied f o r , $
( b ) Rate o f interest
% per year.
( c ) Maturities
Id)
Secured b y m o r t g a g e o r
---(Deed of trust, conditional sales contract, etc.)
N O T E . — M u s t be first Hen except
as otherwise provided in regulations.
27. A m o u n t of g u a r a n t y h e r e b y requested, $
28. H a v e you read o r had read to you F o r m 1824, " E x p l a n a t i o n o f F a r m Loan G u a r a n t y " ?
29. T h e person signing this application a s the veteran hereby represents that he is the veteran named in question 2 on p a g e 1
of this application.
H i s identity as such has been established to the satisfaction o f the lender b y
j:^Ye"method,~7.~gTw
and description on certificate o f discharge, etc.)
10—tUM-l
PAGE 4
30. A l l the information reflected b y the application is true to the best o f lender's information and belief.
31. T h e undersigned b o r r o w e r ( v e t e r a n ) and lender ( o r seller) hereby apply f o r g u a r a n t y b y the United States o f A m e r i c a
o f a loan in accordance with this application, which is also an application to the lender b y the borrower f o r said l o a n ; said
g u a r a n t y to be pursuant to the Servicemen's Readjustment A c t o f 1944 (58 Stat. 2 8 4 ) , which act and the regulations
issued pursuant thereto and in effect on the date o f the loan g u a r a n t y certificate issued pursuant to this application, shall
be a p a r t o f the contract between the United States o f A m e r i c a , the borrower, the lender, and each o f them.
82. B o r r o w e r and lender understand and a g r e e that, if issued, the g u a r a n t y will be issued in reliance upon the information
contained in this application.
33. T h e lender, o r authorized employee, o r agent o f the lender, has read this entire application as completed, has seen and
s p o k e n w i t h applicant, believes he is the veteran, and he appears to be competent to understand the nature of the transaction and enter into it.
(If ft r.nvnnvntin-n \
Attest
^
''Secretary.
Lender.
Date
By
[
—
(Authorized signature)
(Title)
CORPORATE
SEAL
(Borrower ( 8 ) )
Signatures o f lender and b o r r o w e r must correspond in e v e r y detail with the name as typed at top of page 1, notwithstanding n a m e o f b o r r o w e r so shown m a y differ f r o m n a m e in question 14.
A m a r r i e d woman will include her surname
b e f o r e m a r r i a g e , but sign husband's surname as her present surname.
Recommendation o f Designated A g e n c y
34.
W e , the c e r t i f y i n g agency, a f t e r consideration of all the f a c t s , believe that the loans f o r which guaranties are sought are
f o r the purposes stated in the a p p l i c a t i o n ; that the p r o p e r t y purchased o r to be purchased with the proceeds of the loan
will b e used in and w i l l b e u s e f u l and reasonably necessary t o the efficient conduct of the bona fide f a r m i n g operations o f
the applicant, whose ability and experience and proposed operations are such that there is reasonable likelihood of his
success; and that the purchase price of the p r o p e r t y is not in excess of the reasonable normal value thereof.
This application and the attached papers are f o r w a r d e d to the Administrator o f Veterans' A f f a i r s b y the undersigned
designated F e d e r a l agency, which hereby recommends that said Administrator { a p p f o v e ° V e } s a i d
application
f o r
a
guaranty.
-(chairlnan
o f -Committee)
(Member)
'(Member)
(Member)
Date
(Designated agency)
-
By
(Authorized signature)
•
INSTRUCTIONS—Continued
I I I . R e f e r e n c e is made to the f o l l o w i n g sections o f the regulations f o r guidance in connection with applications f o r ( a ) purchase of a f a r m
(4124-4132);
(ft) new construction
indebtedness, taxes, special assessments ( 4 1 0 4 - 4 1 0 7 ) ;
(4132);
(c)
repairs, alterations, improvements,
delinquent
( d ) purchase of personal p r o p e r t y ( 4 1 0 4 ) ; ( e ) t w o o r more
borrowers (4122).
I V . I f the loan is f o r a n y o f the purposes in p a r a g r a p h I I I ( c ) above (section 501 ( b ) of the act) and is to be secured b y a
j u n i o r lien because o f existing prior liens, attach a signed memorandum stating with respect to such p r i o r liens;
(a)
date, original amount, and unpaid balance of l o a n ; ( 6 ) amounts and f r e q u e n c y o f payments required and per-
m i t t e d ; ( c ) r a t e o f interest; ( d ) whether any payments are past due and the amounts t h e r e o f ; ( e ) whether any taxes,
special assessments, o r insurance premiums are due but unpaid and the amounts; ( / ) date of most recent appraisal of
the p r o p e r t y and value therein stated; (g)
date and nature o f default, if any.
V . T h e veteran should have read F o r m 1824, " E x p l a n a t i o n of F a r m Loan G u a r a n t y , " b e f o r e signing application.
V I . Permissible loan charges, see regulations, section 4116.
V I I . I f the l o a n is not to be secured b y a " m o r t g a g e , " see regulations, section 4124, p a r a g r a p h 5.
V I I I . A n o t a r y ' s certificate is n o t required on the application.
Nevertheless, it must be remembered that Federal statutes
p r o v i d e severe penalties, including f o r f e i t u r e s , fines, and imprisonment f o r f r a u d on the p a r t of the applicant and also
a s to a n y person w h o shall " k n o w i n g l y make o r cause
to be made, o r conspire, combine, aid or assist in, agree to,
a r r a n g e f o r , o r in a n y wise p r o c u r e the m a k i n g o r presentation o f a f a l s e o r fraudulent affidavit, declaration, certificate, statement, voucher, o r paper, o r w r i t i n g p u r p o r t i n g to be such," concerning any application f o r the g u a r a n t y of a
loan b y the A d m i n i s t r a t o r (38 U . S. Code 697, 7 1 5 , 4 5 0 , 4 5 1 , 454a, 556a; 18 U . S. Code 8 0 ) .
O . 8 . GOVERNMENT P R I N T I N G O F F I C E
.„... ,
10—4.J400-1
Dec. '44—750M
V E T E R A N S ADMINISTRATION
F i n a n c e F o r m 1842b
VETERANS
No. L-B
ADMINISTRATION
APPLICATION FOR FARM LOAN G U A R A N T Y
State
._.„.;
Number L. F.
( W h e r e property is located)
(Lender)
2.
(Exactly as will appear on note)
( T o be filled"in b y W A ' ) "
...
(Borrower—Veteran)
( R . F . D., city, county)
(Exactly as will appear un note'and'montage)
(Street number, city, county)
(State)
(State)
INSTRUCTIONS
(Read
I.
LOAN
G U A R A N T Y CERTIFICATE
(Form
carefully
before
beginning
to fill ouf this
form)
1821).
Fill in all spaces at top o f the f o r m , e x c e p t the " L . F . " number. A l s o complete p a r t I I , " D e s c r i p t i o n o f P r o p e r t y
T o Be M o r t g a g e d , " in such m a n n e r that all required i n f o r m a t i o n will be duplicated by a c a r b o n impression in the
p r o p e r spaces on p a g e 1 o f the application.
I f it is n e c e s s a r y t o continue the p r o p e r t y description on the reverse side
o f the certificate, use space on p a g e 2 o f the application f o r the c a r b o n impression t h e r e o f . T h e certificate m a y be
s e p a r a t e d f r o m the a p p l i c a t i o n a l o n g the p e r f o r a t e d line at the b o t t o m o f the page. Submit it t o the a g e n c y with the
a p p l i c a t i o n and o t h e r p a p e r s .
( S e e regulations, sec. 4 1 2 5 . )
N o c o p y o f the certificate o t h e r than the o r i g i n a l is
n e c e s s a r y . I t w i l l b e s i g n e d a n d r e t u r n e d t o the lender b y the V e t e r a n s A d m i n i s t r a t i o n if the a p p l i c a t i o n is a p p r o v e d .
II.
A P P L I C A T I O N FOR F A R M L O A N G U A R A N T Y
(Form
1822).
( а ) T h i s f o r m is to be executed in duplicate ( u s e F o r m 1822 a ) . T h e duplicate c o p y does not h a v e the certificate
attached and w i l l be retained b y the lender. T h e o r i g i n a l signed c o p y will be p e r m a n e n t l y retained b y the V e t e r a n s
A d m i n i s t r a t i o n a n d should be sent t o the a g e n c y w i t h o t h e r p a p e r s .
( S e e regulations, sec. 4125.)
( б ) E v e r y question m u s t be answered.
applicable.
P l a c e a c h e c k m a r k ( V ) in space f o r a n s w e r t o a n y question t h a t is not
( c ) I f the loan is to be secured b y personal p r o p e r t y , b u t exceeds $1,000, a n s w e r question 16 ( o ) w i t h respect to
the land o n w h i c h i t is t o be used, n o t w i t h s t a n d i n g the land is not described o n p a g e 1 and is n o t t o be encumbered.
(See
3.
continuance
o f instructions,
page
4)
Description of Property To Be "Mortgaged"
(Lot and block, section and townahip. land lot and land district, etc.. and surveyor - ! field notes where appropriate, and any other language proper to
complete description. Include description of personal property, if any. Describe fully. Show serial numbers, if available, or any other means of
identification)
P r e m i s e s identified a s
nearest hlRhway.
( N a m e o f place, i f a n y , and R. F. D .
A l s o number o r name o f
Street and number in city, etc.)
(City, town." villaae)
( C o u n t y , parish)
(State, district, territory)
\
(If more space is needed,
continue
carbon
copy
of description
on
reverse)
(Continue
legal
description
if necessary
In the space
below)
III
Certification by Borrower and Lender
A . W e h e r e b y w a r r a n t that ( 1 ) the undersigned borrower named on the reverse hereof executed the note, the f a c e amount
o f which is $
consisting o f $
the regulations; ( 2 ) it is dated the
principal and $
interest a s defined in
day o f
19
; ( 3 ) b o r r o w e r ( s ) and m o r t -
g a g o r ( s ) delivered it together with the " m o r t g a g e " (as defined in the regulations) bearing the same date, and executed
t o secure p a y m e n t o f said n o t e ; ( 4 ) said note and m o r t g a g e are in the f o r m and type contemplated in the application
of the undersigned pursuant to which this loan g u a r a n t y certificate was issued; and ( 5 ) the principal stated above has
been paid to, o r according to the directions o f , the undersigned b o r r o w e r ( s ) .
B . T h e undersigned lender w a r r a n t s that ( 1 ) the same " m o r t g a g e , " duly executed and witnessed, acknowledged, o r proved
as provided b y l a w , w a s p r o p e r l y filed, o r filed f o r r e c o r d , i f and as provided b y law on the
of
, 19
, at
M ; and w a s given file N o
day
b y the recorder
o r other p r o p e r offioial; ( 2 ) that it covers the property described on the reverse hereof, which is the same property
described, o r otherwise identified, o r r e f e r r e d to, in the above-mentioned application f o r guaranty, and in this loang u a r a n t y certificate, o r in the application to amend l o a n - g u a r a n t y certificate, if any, applicable to such l o a n ; ( 3 ) that
n o lien superior t o said " m o r t g a g e " h a s intervened since the date o f said application unless the application indicates it
is f o r a loan t o b e secured by a second lien as prescribed b y the regulations; and ( 4 ) i f the approved application f o r g u a r anty related t o a loan wholly o r p a r t l y to be secured b y a hypothecation o r a pledge o f personal property, such hypothecation o r pledge has become effective b y appropriate delivery to the lender and no superior lien has intervened since date of
application.
(If a corjioration)
(All signatures
Mr.
Mrs.
Miss
Date
,—
must be in ink)
( Lender (s))
CORPORATE
SEAL
By
(Secretary)
( T i t l e ( p r e s i d e n t , v i c e p r e s i d e n t , etc.))
Mr.
Mrs.
Miss
Date
NOTE l . - I f
Mr.
Mrs.
Misa
-
the note U unsecured, references to " m o r t g a g e " In paragraph. " A "
(Borrower(a))
and " B "
above are inapplicable.
(See regulations, sec. 4108.
" " ' N O T E 2 . — I f the local law provide, for filing only, not recording, chattel mortgage, or-similar instrument., paragraph " B " above
to bo completed.
It refers not only to the county recorder or clerk, but also the State
motor-vehicle mortgage record., and to other similar officials. State or county.
commissioner
of
See section 4133 of regulations.
Dec '44—7G0M
U. » • GOVERNMENT P R I N T I N G O F F I C E
10
12465-1
»•
motor vehicle, or other officials who keep
UNITED STATES OF AMERICA
VETERANS ADMINISTRATION
GUARANTY
OF
LOANS
R E G U L A T I O N S U N D E R T I T L E III
( H o m e s and Farms and Farm Equipment)
S E R V I C E M E N ' S R E A D J U S T M E N T A C T OF 1944
( P u b l i c L a w 346—78th C o n g . , Ch. 268, 2d Sess.; 5 8 Statutes a t L a r g e 284; 38 U. S. C o d e 693 et seq.)
NOTE: Changes in and a d d i t i o n s t o t h e regulations u n d e r Tit!e III governing t h e G u a r a n t y of H o m e Loans (§§ 36.4000 t o 36.4049), a n d
G u a r a n t y o f Loans o n F a r m s and F a r m E q u i p m e n t (§§36.4100 t o 36.4151).)
PART
36—REGULATIONS
MEN'S READJUSTMENT
UNDER
A C T OF
GUARANTY OF LOANS
SERVICE19441
(HOME)
T h e f o l l o w i n g c h a n g e s are m a d e to t h e
regulations governing the guaranty of
loans under Title III of the Servicemen's
R e a d j u s t m e n t A c t o f 1944:
1. P a r a g r a p h <v) is a d d e d t o § 36.4000,
as follows:
§ 36.4000. Definitions.
* • *
(v) "Interest" means the c o m p e n s a t i o n fixed b y law. or by t h e parties t o a
c o n t r a c t , f o r t h e use or detention o f , or
f o r b e a r a n c e with respect t o m o n e y , i r r e s p e c t i v e of t h e n a m e applied t o s u c h
compensation.
2. I n
§ 36.4012, p a r a g r a p h
a m e n d e d t o read as f o l l o w s :
<b)
is
§ 36.4012 Repayment
provisions.
* * *
( b ) If the mortgagor consents the
m o r t g a g e m a y p r o v i d e that e a c h m o n t h l y
o r o t h e r p e r i o d i c a l p a y m e n t shall i n c l u d e
in a d d i t i o n t o the p r o p e r a m o u n t to be
c r e d i t e d t o principal a n d interest a p r o p o r t i o n a t e p a r t of t h e e s t i m a t e d a m o u n t s
required a n n u a l l y f o r all taxes, g r o u n d
r e n t s if a n y , special assessments if a n y ,
a n d fire a n d o t h e r h a z a r d i n s u r a n c e p r e miums. Such provisions may direct the
method
of
crediting the
additional
a m o u n t s i n c l u d e d in t h e periodical p a y m e n t s f o r t h e purposes stated in this
paragraph.
3. P a r a s i a p h <i) is a d d e d t o § 36.4025,
as follows:
§ 36.4025
(i) W h e n
copy (both
Application
Certificate,
Papers required.
• • •
a p p l i c a b l e , t h e original a n d
s i g n e d ) of F o r m No. 1862.
to Amend Loan Guaranty
(see § 36.4031 ( c ) a n d ( d > ) .
4. P a r a g r a p h ( c ) is a d d e d t o § 36.4027.
as follows:
§ 36.4027 Administrator's
action
on
application.
* • •
( c ) ( 1 ) If f o r a n y reason t h e loan
t r a n s a c t i o n is n o t c o n c l u d e d a n d t h e
s a m e or a n o t h e r l e n d e r t h e r e a f t e r wishes
t o c o n s i d e r m a k i n g a loan o n t h e s a m e
s e c u r i t y d e s c r i b e d in t h e original a p p l i c a t i o n , a s u p p l e m e n t a l a p p l i c a t i o n , if t h e
' A s printed in the FEDERAL REGISTER Volume 9, Number 256, Washington, Saturday
December 23, 1944.
8250110—«
s a m e l e n d e r , or a new a p p l i c a t i o n if a
d i f f e r e n t lender, m a y be submitted. If
a c c o m p a n y i n g it is a s t a t e m e n t by t h e
b o r r o w e r a n d lender that t h e c o n d i t i o n
o f t h e security is substantially t h e same
as w h e n t h e appraisal report was -made,
t h e s u p p l e m e n t a l or new application m a y
be a p p r o v e d w i t h o u t a n e w appraisal, if
t h e s u p p l e m e n t a l or new a p p l i c a t i o n
shall h a v e b e e n received b y t h e A d m i n istrator w i t h i n three m o n t h s f r o m t h e
date o f t h e appraisal report.
( 2 ) W i t h o u t r e f e r e n c e to t h e t i m e limit
stated in s u b p a r a g r a p h (1) of this s e c tion, a c o p y of t h e appraisal r e p o r t will
b e supplied w i t h o u t c o s t t o a prospective
new l e n d e r or t o t h e original p r o p o s e d
l e n d e r a t t h e c u r r e n t l y prescribed price
for a copy.
5. I n § 36.4028 t h e existing text is
d e s i g n a t e d ( a ) a n d p a r a g r a p h s <b) a n d
( c ) a r e a d d e d as f o l l o w s :
§ 36.4028
anty.
(a)
Execution
• * *
and form oj
guar-
( b ) T h e w o r d p r i n c i p a l as used in t h e
L o a n G u a r a n t y Certificate a n d t h e c e r tification o n t h e reverse t h e r e o f m e a n s
t h e a m o u n t o f m o n e y actually disbursed
t o or f o r t h e a c c o u n t of t h e b o r r o w e r .
( c ) T h e certification by borrower and
l e n d e r in p a r a g r a p h I I I B (3) of t h e L o a n
Guaranty
Certificate as printed
in
§ 36.4028 shall b e d e e m e d t o b e c o r r e c t ,
notwithstanding that the guaranteed
loan is s e c u r e d b y a s e c o n d lien, i f , but
o n l y i f , s u c h is permissible u n d e r t h e
r e g u l a t i o n s a n d t h e f a c t s of t h e case, a n d
if t h e a p p l i c a t i o n f o r g u a r a n t y indicates
t h a t t h e l o a n is t o b e secured b y a s e c o n d
lien.
6. In § 36.4031, p a r a g r a p h ( a ) ( 1 ) is
amended and paragraphs (c) and (d)
are a d d e d , as f o l l o w s :
§ 36.4031
(a)
• •
•
Guaranty
when
effective.
(1) T h e disbursement of the amount
n a m e d i n s u c h r e p o r t as t h e p r i n c i p a l of
t h e l o a n has b e e n c o m p l e t e d b y t h e
lender, which a m o u n t m a y be n o t more
t h a n 3 % i n e x c e s s o f t h e a m o u n t of t h e
p r o p o s e d l o a n as stated i n t h e original
application for guaranty, without c o m p l y i n g with t h e p r o c e d u r e stated in p a r a g r a p h s ( c ) a n d ( d ) o f this s e c t i o n .
•
•
•
•
•
( c ) If t h e t r a n s a c t i o n t o b e c l o s e d is
essentially t h e s a m e as i n d i c a t e d in t h e
original a p p l i c a t i o n e x c e p t t h a t :
( 1 ) T h e a m o u n t of t h e loan a c t u a l l y
t o be m a d e is m o r e t h a n 1 0 3 % o f t h e
a m o u n t stated in t h e a p p l i c a t i o n , o r
(2) Personal p r o p e r t y t o b e a c q u i r e d
differs f r o m t h a t described but is f o r
t h e s a m e use or p u r p o s e a n d substantially
similar in kind, quality a n d value. F o r m
1862, A p p l i c a t i o n t o A m e n d L o a n G u a r a n t y Certificate, w i l l - b e c o m p l e t e d a n d
signed in duplicate.
( d ) T h e l e n d e r will f o r w a r d t h e o r i g inal a n d c o p y of F o r m 1862, A p p l i c a t i o n
to A m e n d L o a n G u a r a n t y Certificate, t o
t h e " A g e n c y " , w h i c h will r e c o m m e n d a p proval or disapproval a n d f o r w a r d b o t h
t o t h e V e t e r a n s A d m i n i s t r a t i o n office
w h i c h issued t h e L o a n G u a r a n t y C e r tificate.
S u c h office will
determine
whether to approve the Application t o
A m e n d L o a n G u a r a n t y Certificate. S u c h
d e t e r m i n a t i o n will be based o n t h e o r i g inal application, t h e e v i d e n c e s u b m i t t e d
in or with t h e original a p p l i c a t i o n , t h e
application to amend, the r e c o m m e n d a t i o n of t h e A g e n c y , and such o t h e r e v i d e n c e , if a n y , as it c o n s i d e r s n e c e s s a r y .
N o t i c e of action will be given as in t h e
case of original applications. I f a p proved s u c h a p p r o v a l will be a p p r o p r i ately i n d i c a t e d o n t h e o r i g i n a l , a n d s u c h
original, duly e x e c u t e d b y t h e V e t e r a n s
A d m i n i s t r a t i o n will b e f o r w a r d e d t o t h e
lender. I t m a y b e a t t a c h e d t o t h e o r i g inal L o a n G u a r a n t y Certificate t o e v i d e n c e a m e n d m e n t thereof as reflected b y
such "rider".
7. In § 36.4032, p a r a g r a p h s ( a ) , ( b )
( 3 ) , ( e ) , and (g) are amended, and p a r a g r a p h ( i ) is a d d e d , as f o l l o w s :
§ 3 6 4 0 3 2 Construction
loans,
(a)
U p o n t h e s u b m i s s i o n t o an a g e n c y o f a n
application made pursuant to section
501 ( a ) o r 505 ( a ) of t h e a c t f o r t h e
g u a r a n t y o f a loan f o r t h e c o n s t r u c t i o n
of a dwelling o n u n i m p r o v e d p r o p e r t y
o w n e d b y t h e veteran, or u n d e r s e c t i o n
501 ( b ) f o r c o n s t r u c t i o n involving a l t e r ations or improvements, the guaranty
will b e issued t o b e c o m e effective o n l y
upon completion of the construction
p r o j e c t , a n d u p o n f u l f i l l m e n t of t h e s a m e
r e q u i r e m e n t s o f this p a r t as a r e a p p l i c a b l e t o t h e g u a r a n t y o f loans f o r t h e
2
acquisition o f h o m e s other t h a n by c o n struction.
(b)
* • •
( 3 ) T h e r e is issued by t h e A d m i n i s t r a t o r F o r m 1863, A p p r o v a l of Escrow
C e r t i f i c a t e , w h i c h m a y be attached t o
t h e l o a n g u a r a n t y certificate.
•
»
•
•
•
(e) Except where the construction
shall h a v e b e e n i n s p e c t e d a n d a p p r o v e d
a n d c o m p l e t i o n certified b y a Federal
A g e n c y m a k i n g or guaranteeing or i n suring t h e p r i n c i p a l loan on such p r o p e r t y , as c o n t e m p l a t e d by section 505 ( a )
o f t h e act, t h e L o a n G u a r a n t y Certific a t e shall b e c o m e effective u p o n the c o n d i t i o n , in a d d i t i o n t o t h o s e set f o r t h in
§ 36.4030, t h a t t h e r e b e supplied t o t h e
A d m i n i s t r a t o r a s t a t e m e n t b y an a p praiser o n F o r m 1803 ( a ) , S t a t e m e n t b y
A p p r a i s e r o n C o m p l e t i o n of New C o n struction,
(1) H e has i n s p e c t e d t h e c o n s t r u c t i o n ,
repairs, alterations, or i m p r o v e m e n t s .
(2) T h e s a m e h a v e been c o n s t r u c t e d
a n d c o m p l e t e d in substantial c o n f o r m i t y
w i t h t h e c o n t r a c t , t h e plans a n d s p e c i f i c a t i o n s (if a n y ) , a n d any authorized
c h a n g e s t h e r e i n (if a n y ) , p e r m i t t e d b y
t h e s e r e g u l a t i o n s , o r , in t h o s e cases e m b r a c e d i n § 36.4024 ( c ) o r § 36.4024 ( e )
t h e r e a r e n o plans a n d specifications,
within good building practices.
( 3 ) T h e i n c r e a s e d value of t h e p r o p erty as c o m p l e t e d a n d w h i c h will be e n c u m b e r e d is substantially in a c c o r d with
his e s t i m a t e .
•
•
•
•
•
( g ) U p o n c o m p l i a n c e with t h e r e quirements of
this section
and
of
§§ 36.4030 a n d 36.4031 relating to the
g u a r a n t y b e c o m i n g effective in o t h e r
t h a n c o n s t r u c t i o n loan cases, said L o a n
G u a r a n t y C e r t i f i c a t e shall b e c o m e e f f e c tive as originally executed ( a n d subject
t o § 36.4031), or as a m e n d e d pursuant
t o a p p r o v a l of a p p l i c a t i o n t h e r e f o r o n
F o r m 1862, A p p l i c a t i o n to A m e n d L o a n
G u a r a n t y C e r t i f i c a t e . ( S e e § 36.4031 ' C )
and (d).)
•
•
•
*
•
( i ) M i n o r c h a n g e s m a y be m a d e in t h e
p l a n s a n d s p e c i f i c a t i o n s or substitution
o f m a t e r i a l o f substantially equal q u a l i t y o r value, as t h e c r e d i t o r , t h e debtor,
and the builder (contractor) may agree
if s a m e are n o t o f a m a j o r c h a r a c t e r a n d
in t h e a g g r e g a t e d o n o t i n c r e a s e or d e c r e a s e t h e c o s t m o r e than five p e r c e n t u m
o f t h e c o n t r a c t price. T h i s d o e s n o t
modify
the provisions
of
§ 36 4031.
C h a n g e s o r substitutions o t h e r t h a n as
h e r e i n stated m u s t h a v e t h e approval of
the Administrator.
8. P a r a g r a p h
(a)
of
§ 36.4033
is
amended, and paragraphs (e) and ( f )
a r e a d d e d as f o l l o w s :
§ 36.4023
anteed.
•
Losses
• •
which
are not
guar-
( a ) T h e a c c e p t a n c e by t h e m o r t g a g e e
o f a m o r t g a g e on any p r o p e r t y , title t o
w h i c h is n o t m e r c h a n t a b l e ;
•
•
•
•
•
(e) A release b y t h e c r e d i t o r of t h e lien
o n a n y of t h e real or personal p r o p e r t y
securing t h e g u a r a n t e e d l o a n , or any
p a r t t h e r e o f , unless t h e A d m i n i s t r a t o r
c o n s e n t s in writing. S u c h c o n s e n t m a y
be g r a n t e d if t h e d e b t is a p p r o p r i a t e l y
reduced or o n s u c h o t h e r t e r m s as t h e
Administrator may determine:
Provided,
however. T h a t if t h e land is s o u g h t b y a
public a u t h o r i t y f o r h i g h w a y o r o t h e r
purposes, c o n s e n t is h e r e b y given f o r t h e
creditor t o release w i t h o u t c o n s i d e r a tion o r f o r s u c h c o n s i d e r a t i o n as h e
deems p r o p e r a n d w i t h o u t r e f e r e n c e t o
the A d m i n i s t r a t o r , t h e creditor's lien on
land w i t h o u t a n y buildings t h e r e o n if
the land so released does n o t exceed five
p e r c e n t of t h e a c r e a g e e n c u m b e r e d a n d
does n o t e x c e e d $200 in value. T h e s a m e
c o n s e n t is h e r e b y given w h e n t h e release,
e a s e m e n t g r a n t , o r o t h e r Instrument is
s o u g h t b y a public or private a g e n c y , or
person, f o r t h e p u r p o s e of pipe line, telep h o n e , t e l e g r a p h or e l e c t r i c transmission
lines; Provided, however, T h a t w h e n s u c h
releases, o r g r a n t s b y t h e lender f o r any
o n e or m o r e o f t h e p u r p o s e s stated in
this p a r a g r a p h , or otherwise, with o r
w i t h o u t specific c o n s e n t by the A d m i n i s trator, shall h a v e decreased t h e security
as m u c h as five p e r c e n t i n a c r e a g e , or
$200 in value, n o f u r t h e r releases shall
b e executed, w i t h o u t c o n s e n t of t h e A d ministrator. If release of lien is executed
c o n t r a r y t o t h e p r o v i s i o n s of these r e g u lations t h e a m o u n t of the g u a r a n t y will
be reduced p r o p o r t i o n a t e l y in t h e s a m e
m a n n e r as if t h e value of t h e released
p r o p e r t y w e r e applied as a c r e d i t o n t h e
u n p a i d b a l a n c e of t h e l o a n . T h e p r o visions of this p a r a g r a p h will n o t b e c o n strued t o a f f e c t t h e g u a r a n t y in t h e event
of a n y g r a n t o f title o r e a s e m e n t t h a t
leaves u n a f f e c t e d t h e lien o n t h e p r o p erty affected t h e r e b y ; o r
( f ) Sale b y reason of f o r e c l o s u r e of a
superior lien if t h e h o l d e r o f t h e g u a r a n teed l o a n secured by a s u b o r d i n a t e lien
has k n o w l e d g e of s u c h f o r e c l o s u r e sale
as m u c h a s 10 d a y s p r i o r t h e r e t o a n d
fails t o n o t i f y t h e A d m i n i s t r a t o r o f t h e
time and place thereof.
9. S e c t i o n 36.4040 is a m e n d e d t o read
as f o l l o w s :
§ 36.4040 Filing elairn under
guaranty.
C l a i m under t h e g u a r a n t y m a y b e m a d e
o n F o r m 1864, C l a i m u n d e r t h e G u a r a n t y .
S u b j e c t t o t h e l i m i t a t i o n t h a t t h e total
a m o u n t p a y a b l e u n d e r t h e g u a r a n t y shall
in n o event e x c e e d t h e original a m o u n t
thereof, the amount payable under the
g u a r a n t y shall be t h e p e r c e n t a g e of t h e
indebtedness originally g u a r a n t e e d a p plied t o t h e indebtedness (as defined in
§ 3 6 4 0 0 0 ( m ) ) , c o m p u t e d as of t h e date
o f t h e c l a i m , a n d reduced by a n y p a y m e n t s t h e r e t o f o r e m a d e b y t h e United
States p u r s u a n t t o t h e g u a r a n t y .
1 0 . In § 3 6 . 4 0 4 1 , t h e t e x t i m m e d i a t e l y
p r e c e d i n g p a r a g r a p h ( a ) is a m e n d e d t o
read as f o l l o w s :
Options available to Admin§ 36.4041
istrator.
U p o n receipt of c l a i m u n d e r t h e
g u a r a n t y , or n o t i c e o f intention t o f o r e close, t h e Administrator shall h a v e t h e
following options:
1 1 . Sections 3 6 . 4 0 5 0 and
a m e n d e d t o read as f o l l o w s :
are
36.4051
§ 36.4050
Forms, construction
to be
placed on reference
to. All r e f e r e n c e s in
t h e regulations t o F o r m 1800, C e r t i f i c a t i o n o f Eligibility, or to other f o r m n u m bers shall be construed to include any
revision of t h e same f o r m s , identified by
t h e s a m e , or by different numbers.
§ 36.4051
Disqualified
lenders
and
bidders.
Except under unusual c i r c u m stances and u p o n prior approval by the
A d m i n i s t r a t o r an application f o r g u a r anty of a loan will not be a p p r o v e d if
t h e lender is k n o w n t o be an employee
of t h e Veterans Administration or of the
A g e n c y ; and "without such approval, an
e m p l o y e e of either m a y not bid at a f o r e closure sale of the security f o r a g u a r a n teed l o a n .
(58 Stat. 284)
I SEAL]
FRANK
Administrator
DECEMBER
20,
T.
HINES,
of Veterans
Affairs.
1944.
|P. R. Doc. 44-19315; Filed, Dec. 21, 1944:
3:57 p. ra.|
PART
36—REGULATIONS
MEN'S READJUSTMENT
GUARANTY
OF
LOANS
ON
UNDER
SERVICE-
ACT
1944
OF
FARMS
AND
1
FARM
EQUIPMENT
S e c t i o n 3 6 . 4 1 2 8 ( b ) is a m e n d e d to read
ao f o l l o w s :
§ 36.4128
Execution and form of guaranty.
* * •
( b ) T h e w o r d principal as used in t h e
L o a n G u a r a n t y Certificate and t h e c e r tification o n t h e reverse thereof m e a n s
t h e a m o u n t of m o n e y actually disbursed
t o or f o r t h e a c c o u n t of the b o r r o w e r .
(58 S t a t . 284)
[SEAL!
FRANK T .
HINES,
Administrator.
DECEMBER
IF
8,
1944.
R. Doc. 44-19316; Filed, Dec. 21, 1944;
3:57 p. m.|
1 As printed In the F E D E R A L R E G I S T E R , Volume 9, Number 256, Washington, Saturday,
December 23, 1944.
UNITED STATES OF A M E R I C A
VETERANS
ADMINISTRATION
HANDBOOK FOR LENDERS
HOME
LOANS
Servicemen's Readjustment A c t of 1944
(NOTE: This pamphlet covers matters of policy and
procedure which should be followed in connection
with loans to veterans subject to guaranty pursuant
to the provisions of the Act.)
\
Nothing herein* contained shall be construed to modify, revise, or
otherwise alter any of the Regulations of the Administrator of Veterans' Affairs which are promulgated by him under the "Servicemen's
Readjustment Act of 1944" (Public Law 346—78th Congress).
http://fraser.stlouisfed.org/
/
Federal Reserve Bank of St. Louis
FRANK T . HINES,
Administrator of Veterans' Affairs.
(H)
INDEX
Par.
Par.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
Policy.
Regulations.
T h e Veteran.
Veteran's E l i g i b i l i t y :
( а ) Determination.
( б ) Identity.
( c ) Legal Disability.
Eligible Lenders.
H o m e Defined.
T h e Application.
Credit R e p o r t :
( а ) Form.
( б ) Substance.
( c ) Confidential I n f o r m a t i o n .
Appraisal Report.
Insurance Requirements.
L o a n Closing Statement.
T h e Mortgage.
The Guaranty:
( a ) Limitations.
(&) Decrease o r Increase.
( c ) Advances.
( d ) Losses Not Guaranteed.
( e ) T r a n s f e r o f Title.
( f ) Nature.
The L o a n :
( a ) Purpose.
(&) Security,
( c ) Amount.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
( i n )
( d ) Term.
( e ) Interest.
( f ) Repayment.
(ff) Prepayment.
( h ) Charges.
( i ) Refinancing.
Designated Agencies.
Loan P r o c e d u r e :
(a) Existing Construction.
(&) N e w Construction.
( c ) Construction Loan Charges.
Records.
Default:
( a ) Forebearanee.
(ft) Optional Notice.
( c ) Notice Required.
(d) D e l i v e r y of Notice.
Filing o f Claim.
Legal A c t i o n :
(a) Notices Required.
( b ) Death of Veteran.
Death or Insolvency of Lender.
Subrogation.
Administrator's Options.
T w o or M o r e Applicants.
( а ) Veterans.
( б ) Husband and W i f e .
( c ) Veterans and Nonveterans.
Regional Offices of Veterans Administration.
HANDBOOK FOR LENDERS
HOME LOANS
1. POLICY.
It was the clear intent of Congress that all eligible veterans should
have available to them the full benefits of Title III. It is the duty
and the desire of the Administrator of Veterans' Affairs to give effect
to this intent in such a manner that, while following the provisions
of the Act, a minimum of delay or difficulty will be encountered by any
applicant. The Administrator feels justified in depending upon the
support and wholehearted cooperation of all who are in any manner
connected with home, farm, 01* business financing to the end that this
task, which should be undertaken as a privilege, will be so performed
as to gratify all concerned.
2. REGULATIONS.
Before commencing any lending operations under the Act, all
lenders should familiarize themselves with the Regulations of the
Administrator of Veterans' Affairs. Copies of these, as well as copies
of the approved forms mentioned therein, may be had upon application
to the nearest ofice of the Veterans Administration.
3. THE V E T E R A N .
It is a responsibility and duty of the lenders to make certain that
all veterans with whom they have dealings fully understand their
rights and privileges under the Act and how to proceed to make
application for a guaranteed loan. Many lenders will have prepared
special facilities for such information and advice including printed
pamphlets or booklets for the guidance of uninformed veterans, based
on the Administrator's Regulations. In any event, lenders should
have on hand a supply of Finance Form 1804 entitled "Explanation
of Home Loan Guaranty" which has been prepared by the Veterans
Administration and which Regulations require the veteran to read
before he makes application for a guaranteed loan. At the time of
making application therefore the veteran should have read this form
and should present his Certificate of Discharge or his Notice of
Separation, or both.
4. V E T E R A N ' S ELIGIBILITY. Form 1800.
(a) Determination.—The determination of eligibility of the veteran
requires the Veterans Administration to inspect original records in
the possession of the veteran or in lieu therof to refer to records in the
files of the Veterans Administration or in the files of the Service departments (War Department, Navy Department, Marine Corps, or Coast
Guard).
It is recommended that lenders endeavor to have the veteran where
practicable furnish the lender with evidence of eligibility in the form
of discharge or separation papers or certificate in lieu of lost or destroyed discharge, or properly authenticated photo copies of discharge
(1)
or separation papers to be dispatched to the Veterans Administration
together with Form 1800 properly completed.
A photo copy of discharge or separation papers furnished to the
veteran by the Service department may be considered to be properly
authenticated if such photo copy is issued under the seal of the Service department. Photo copies of original discharge or separation
papers prepared by persons or agencies other than Service departments may be considered to be properly authenticated if such copies
are certified by and bear the seal of a Notary Public or other officer
authorized by law to administer oaths or take acknowledgments.
Statement should be placed on the request for Certification of Eligibility (Form 1800) outlining the type of evidence submitted, if such
action is taken, and also a statement of the " C " number of the applicant, if a " C " number was assigned by the Veterans Administration
and this number is known to the applicant. A "C" number is a Veteran Administration file number which is assigned by the Veterans
Administration to applications for pension and for certain other
benefits.
Form 1800 filled in and any supporting documents should be forwarded to the Regional Office or Combined Facility of the Veterans
Administration located in the State in which the veteran resides. Certificates of Eligibility for residents of the State of Delaware should
be forwarded to the Philadelphia, Pa., Regional Office. For residents
of Alaska forward to Seattle, Wash. For residents of Puerto Rico
forward to New York City, N. Y.
#
A discharge or other evidence of eligibility which is submitted with
a request for Certification of Eligibility will be returned by the Veterans Administration with the Certification of Eligibility to the lender
who shall return such evidence to the applicant.
If the guaranty to be requested in this form is less than the maximum
of $2,000, the amount should be determined with sufficient care to insure
that it will be ample to cover the lender's requirements when the loan
is closed. The amount requested here will be set aside by the Administrator for the loan in question and may not later be increased if the
veteran has used the remainder of his guaranty for some other purpose. One copy of the form will be returned to the lender after the
Administrator has completed it. The form will then show: (a)
whether the veteran is eligible under the Act, (b) the amount of
guaranty reserved, (c) the name and address of the appraiser to be
used, and (d) the name and address of the agency to whom the application and other papers should be sent. (See par. 16 (a).)
If the status of the veteran is such as to make him eligible for a
guaranteed loan in accordance with the Act and the Regulations, the
maximum amount of the guaranty to which he is entitled will be $2,000
less any portion thereof which may have been utilized by him as the
result of previous applications. Lenders ordinarily should await the
return of this information from the Veterans Administration before
proceeding further with the application. There will be cases, however, where the veteran is known to the lender or where the lender
has otherwise sufficient reason to believe that the veteran is entitled
to a guaranty in the amount requested. In that event the lender may
decide to proceed without awaiting confirmation, but Form 1800 must
be transmitted in all cases.
3
(b) Identity.—Form 1800 should not be considered to establish the
identity of the veteran. Identification is the responsibility of the
lender who must sign a statement on the application form to the effect
that he has satisfied himself on this point.
(c) Legal Disability.—Lenders should familiarize themselves with
State laws governing contracts entered into with minors, persons of
unsound mind, and persons under other forms of "legal disability."
Loans to such persons cannot be guaranteed by the Administrator
unless the contract between the borrower and the lender is binding
on both according to State law and the mortgage has the legal effect
intended. This applies also to loans sought or obtained by guardians,
conservators, or other fiduciaries. The Act does not modify State
laws which are applicable in such cases.
5. E L I G I B L E
LENDERS.
The Regulations define eligible lenders in accordance with section
500 (c)' of the Act, as "persons, firms, associations, corporations, and
governmental agencies and corporations, either State or Federal."
Evidence satisfactory to the Administrator may be required to show
that a lender is equipped to maintain adequate records (see par. 17)
and to properly service guaranteed loans.
6. HOME DEFINED.
A "home" is defined in the Regulations as—
Any dwelling consisting of not more than four family units,
or any combination dwelling and business property, the primary
use of which is occupation by the veteran as his home.
7. THE APPLICATION. Form 1802.
Lenders can be of material assistance to the veteran in completing
his "Application for a Home Loan Guaranty." All questions should
be answered as completely as possible. It will be observed that the
original application form (white) has the Loan Guaranty Certificate
(Form 1801) attached to it. The duplicate application (yellow)
which is the copy to be retained by the lender, has no Certificate attached to it. Full instructions for completing both Forms 1801 and
1802 are printed on the application beginning on page 1 thereof.
It is important to note that these instructions provide that the
lender is not to fill in any of the blanks in paragraph I. The Veterans Administration will fill in such blanks. The lender will fill in
all the spaces above paragraph I except the " L " number. The lender
also will fill in the property description in paragraph I I on the Loan
Guaranty Certificate, being certain that a carbon impression thereof
appears in paragraph 3, page 1, of the application form.
The guaranty is so worded that if the amount of the loan determined at the time of closing the loan does not exceed the amount of
the loan applied for by more than 3 percent no supplemental application is necessary (see sees. 4031 and 4032 of the Regulations). Minor
variations in amount of loan applied for and the amount necessary to
close the loan frequently occur as a result of a change in the amount
of taxes or estimated expenses. This 3 percent should provide an adequate margin for such variations. If the finally determined loan
amount is less than the amount applied for no supplemental applica-
tion is required. This is because of the per centum limitation provided in the guaranty.
In any event the Veterans Administration will adjust the veterans
record of available guaranty from the loan closing statement so that
the veteran will not be penalized in the event the required amount of
guaranty is less than reflected upon this application.
Certain information of probable value was sacrificed in the application for the sake of brevity and simplicity but some or all of it may
be required when, as and if Form 1802 is revised. Meanwhile it
would be helpful to the prompt and definite establishment of the
veteran's credit standing if lenders would attach to each application
the veteran's answers to some additional questions in substantially the
following form:
Present
(a)
(b)
(c)
(6?)
status:
Period of residence in the city or town
Nature of business
Name of immediate superior
Property owned by veteran and/or spouse, if married:
Type and location
Estimated value
$
$
$
(e) Debts owing by veteran and/or spouse, if married, showing: (1) type of obligation; (2) name of creditor; (3)
amount owing; (4) repayment periods; and (5) repayment amounts required.
( / ) State any physical disability or handicap.
Preservice status:
(a) Home address at time of induction or enlistment:
No. and Street
b)
c)
e)
/)
City. Town
County. Parish
{g) Name of immediate superior
(h) Annual income: Salary $
8.
State, District. Territory
Period of residence in that city or town
Occupation then
(d) Period so employed
Nature of business
Name and address of employer
CREDIT
Other $
REPORT.
{a) Form.—Regardless of information to be furnished as a personal statement by the veteran in his application, a credit report should
be forwarded to the agency with other papers as provided in par. 16
(a). The regulations define credit report to mean—
The report submitted by any credit reporting agency of at least
5 years' experience with facilities for national coverage, approved
5
by the Administrator, or any other form of report acceptable to
the Administrator for the purpose of determining the applicant's
credit standing.
(b) Substance.—As is customary with lenders, it is required by the
Act and the Regulations that the present and anticipated income and
expenses of a borrower—in this case the veteran—are such as to indicate the probability of his maintaining current payments on the loan,
taxes, assessments, and insurance. All other matters affecting the
veteran's credit standing should receive due consideration.
(e) Confidential 'Information^—In the foreword to the regulations
it is stated:
* * * The completed application and other papers submitted
should be carefully examined by the applicants * * *.
The purpose of such statement was to assure that applicants would
have a full and complete knowledge of the transaction to which they
were a party. However it was not intended that any credit report be
submitted for the applicant's perusal or that any other confidential
information be disclosed to the applicant. In such cases as it may be
the creditor's usual practice to charge the borrower for a credit report,
such item on the loan closing statement Form 1806 shall not state the
name of the credit reporting agency but only "Credit Report $_
"
9. A P P R A I S A L REPORT. Form 1803.
The appraiser designated by the Administrator in Form 1800 "Certification of Eligibility" should be notified by the lender when the
appraisal is to be made. His report should be included with other
papers sent to the agency as shown in paragraph 16 (a).
10. INSURANCE REQUIREMENTS.
All insurance carriers must be licensed to do business in the State
wherein the property is situated. The veteran must be given freedom
in procuring acceptable insurance through any authorized insurance
agent or broker that he may select.
The Administrator of Veterans' Affairs has established minimum
insurance requirements for protection against fire and other hazards
which it is customary to insure in certain areas and communities.
Therefore, considerable responsibility rests with the creditor and the
veteran to see that their interests are adequately protected.
Th% minimum requirement is that all buildings the value of which
• enter into the appraisal forming the basis for the loan must be insured in an amount at least equal to the amount by which the loan
exceeds the value of the encumbered land plus the value of those
improvements which are not insurable.
For example:
Insurable improvements valued at
Land valued at
:
_
Uninsurable improvements valued at—
Total value of property.
Amount of loan
Amouat of guaranty—*.
622369°—45
2
'i!
_
.____.
___
__
$5, 000
500
200
5,700
3,000
1, 500
.
6
The amount of minimum insurance required would be calculated
as follows:
Amount of loan
$3,000
$500
Less: Value of land
200
700
Uninsurable improvements.
Minimum insurance required
2,300
This amount of insurance would be insufficient protection against a
total loss of the insurable improvements and it would not protect
the veteran's equity in the property.
The complete protection of partial losses where policies are subject to a coinsurance clause requires greater coverage. For instance,
an 80 percent coinsurance clause applied to the above example would
require $4,000 coverage (80 percent of the insurable improvements)
to receive full payment of a loss of say $3,000. If only $2,300 insurance were carried with this clause applicable, then a $3,000 loss
would result in the payment not of $2,300 but of only $1,725 or
23/40ths of the loss sustained.
Lenders should consult and advise with the veteran regarding the
amounts and kinds of insurance to protect the veteran's interest in
* a property. The amount and kind of insurance, when determined,
are to be set forth in Form 1802, Application for a Home Loan
Guaranty.
At the time of approving the application for a home loan guaranty,
the Administrator may waive all or part of the insurance requirements
if in the application it is satisfactorily shown that (a) it is impossible
or impractical to obtain the insurance; (5) such insurance is not customarily required by prudent lenders in the community; or (c) the
lender is willing to make the loan without coverage on one or more of
the buildings or in reduced amount or without certain coverage.
The procuring of insurance of the amount and coverage stated in
the approved application constitutes conclusive evidence of waiver by
the Administrator, of insurance in excess of the amount stated in or in
connection with the application and also all hazards not mentioned
therein as hazards to be covered.
Lenders must see that the insurance stated in the approved application is maintained in force either in that amount or in the amount
of the unpaid indebtedness, whichever is smaller.
If the Administrator has waived the insurance under which a loss is
sustained, there is no reduction in the amount of the guaranty. Otherwise, and for the sole purpose of determining the amount payable
upon a claim under the guaranty, the unpaid balance of the loan will
be deemed to have been reduced by the amount of the uninsured loss.
In no event, however, will such balance be reduced below the value
of the land plus other property remaining subject to the mortgage.
If the lender fails to require a provision in the insurance contract
giving the lender the right to any loss payments, the amount payable
under the guaranty will be reduced as in the previous paragraph
under uninsured losses, despite a waiver by the Administrator, unless
the property damage has been restored.
If stated insurance later becomes unavailable, due notice thereof
must be given by the lender to the Administrator for his determination of either granting a waiver or declaring the loan in default.
.
11. LOAN CLOSING S T A T E M E N T . Form 1806.
This form should be sent to the agency with other papers (see par.
16 (a)) when it has been prepared to include in column I I I thereof
estimates of all amounts to be disbursed by the lender for account of
the veteran. It will subsequently be returned to the lender for completion in connection with closing the loan. At that time column IV
should be filled in to show amounts actually disbursed and, on the
reverse, the "Report of Closing Loan" executed in accordance with
regulations, section 4031, to make the guaranty effective. The form
should be returned to the Administrator for his files within 2 months
after the loan is closed.
12. T H E MORTGAGE.
A mortgage is defined in the Regulations as—
An applicable type of security instrument commonly used or
legally available to secure loans or the unpaid portion of the
purchase price of real or personal property in a State, District,
Territory, or possession of the United States of America in
which the property is situated. It includes, for example, deeds
of trust, security deeds, escrow instruments, real estate mortgages, conditional sales agreements, chattel mortgages, etc.
Each loan guaranteed in whole or in part by the Administrator must
be evidenced by a note or notes secured by a mortgage except when the
principal amount of the loan does not exceed $500, in which case the
lender may not require a mortgage.
13. THE GUARANTY.
Form 1801.
{a) Limitations.—The aggregate amount which may be guaranteed
by the Administrator for any one veteran cannot exceed $2,000 whether
there be one or more loans under the categories of home, farm, or
business as provided for in the Act. Once extended to a veteran, the
amount guaranteed is never reinstated or again made available to him
for any reason. However, the Administrator may extend his guaranty to apply on another loan obtained for refinancing in accordance
with section 4042 of the regulations (see par. 23 of this handbook).
The guaranty cannot exceed 50 percent of a loan or loans for any of
the purposes specified in sections 501, 502, or 503 of the Act.
Section 505 (a) of the Act provides that when the principal loan—
* * * for any of the purposes stated in section 501, 502, or
503, is approved by a Federal agency to be made or guaranteed
or insured by it pursuant to applicable law and regulations, and
the veteran is in need of a second loan to cover the remainder
of the purchase price or cost, or a part thereof, * * *
the Administrator may guarantee the full amount of the second loan,
provided:
(1) It does not exceed 20 per centum of the purchase price or
cost.
(2) The amount guaranteed together with all other guarantees
for the same veteran does not exceed $2,000.
(3) The loan conforms to all other applicable requirements of
the regulations.
(6) Decrease or Increase.—The amount of the guaranty decreases
pro rata with any decrease in the unpaid balance of the loan. In other
words, as periodical payments are received and credited so as to reduce
the loan balance, then a proportionate reduction takes place in the
amount guaranteed so that the percentage relationship remains constant. For example: A $3,000 loan, of which $1,500 or 50 percent
was originally guaranteed, has been reduced through curtailments to
$2,000. Thus the loan balance has declined $1,000, or one-third of the
original loan and, therefore, the guaranty is reduced $500, or one-third
of the original guaranty. The loan balance, therefore, becomes $2,000,
and the guaranty is reduced to $1,000, or 50 percent, which is the same
percentage originally guaranteed.
The amount of the guaranty increases pro rata with any increase in
the unpaid principal balance of the loan. However, it should be noted
that (1) in no event can the amount payable under the guaranty of a
particular loan exceed the original amount guaranteed and (2) any
advances made to the veteran for taxes, assessments, insurance premiums, or emergency repairs necessary to protect the property may
not bear an annual interest rate in excess of 4 percent.
(c) Advances.—A
loan may conceivably be increased from time to
time by reason of advances as above mentioned. If the addition of
these amounts to the unpaid balance of the loan creates a total in excess
of the original amount of the loan (in part guaranteed) then no part
of such excess is guaranteed. For example: A $3,000 loan of which
$1,500 or 50 percent was originally guaranteed, has been reduced 10
percent through curtailments to $2,700 and there is a consequent
reduction of 10 percent in the guaranty to $1,350. It now appears
that a new roof costing $400 is necessary to protect the property.
The amount is advanced by the lender and added to the loan, making
the new balance $3,100 or $100 more than the original loan. The
first $300 of the advance is protected to the extent of $150 or 50 percent
by the guaranty which is increased to its original amount of $1,500.
The additional $100 of the advance, however, will not have the benefit
of the Administrator's guaranty.
In the event of advances having been made by the creditor he may,
by agreement with the debtor, apply the regular payments made by
the debtor on account of principal and interest to repayment of such
advances up to a period not exceeding 12 months. Such an arrangement, per se, shall not be considered a default although notice thereof
to the Administrator must be given within 1 month after the expiration of not to exceed 6 months from the date when payments to apply
against principal and interest were suspended (see par. 18 (<?)). To
illustrate: (1) An advance of $300 has been made by the creditor for
repairs. Regular monthly payments of principal and interest on the
original loan call for $50, which is all the creditor can afford to pay.
Application of 6 monthly payments of $50 will repay the advances
If payments by the debtor cease at this point and continue for 3 months
the creditor may make claim under the guaranty, and the total amount
delinquent is equivalent to 9 monthly installments. (2) In a similar
case where the regular payments are only $25 per month it would
require 12 months to repay the advances. Assuming once more that
payments ceased at the expiration of this period and were not resumed
9
for 3 months, then the creditor can file claim under the guaranty and
the total amount delinquent would be the equivalent of 15 months'
delinquency. (3) In the event such indulgence to repay advances has
been arranged, but default occurs in the interim through failure to
pay taxes or other such items and persists for 3 months, the creditor
may take action on the basis of such default as provided in the Regulations and irrespective of any indulgence granted in connection with
the repayment of advances.
The foregoing examples presuppose defaults in addition to the
indulgence granted under certain circumstances for the repayment of
advances. However, the debtor may be able to continue his regular
payments in which event the following will be applicable:
The repayment provisions on account of any advances may not
extend the date of the final maturity of the loan. This restriction
will create a situation whereby the loan remains in technical default
until such time as the equivalent of the amount advanced has been
repaid either by subsequent interim payments, or by a lump sum at
maturity.
For the objects stated in the Regulations section 4004, instead of
making an advance to be added to the existing loan as set forth above,
the lender and the veteran may decide to take care of the matter
by a second loan in the required amount. Such second loan may be
in part guaranteed by the Administrator provided: (1) the veteran
is entitled to a guaranty in the amount to be requested, and (2) the loan
complies in all respects to the applicable requirements of the regulations, sections 4004, 4005, and 4006.
(d) Losses Not Guaranteed.—"The guaranty shall not cover any
loss sustained by the creditor as the result o f :
(1-) The acceptance by the mortgagee of a 'mortgage' on any
property, title to which is not merchantable according
to customary practices in the community where the property is located ;
(2) Failure of the mortgagee to procure a duly recorded lien of
the dignity required by the regulations;
(3) Failure of the mortgagee to see that adequate insurance
protection, as required by the regulations, is kept in effect
with appropriate loss payable provisions, or
(4) A tax sale pursuant to execution, or otherwise as provided
by law, occasioned by nonpayment of taxes accruing
against the mortgaged property after the date of the
'mortgage' if 'mortgagee' fails to give notice to the Administrator of the delinquent taxes at least 1 month before
such sale."
(e) Transfer of Title.—If, after obtaining a guaranteed loan on his
property, the veteran conveys title to someone else, the contract or the
guaranty is not terminated or otherwise affected unless (1) the creditor
by express agreement releases or discharges the veteran in any manner
from his personal liability thereon; or (2) the personal liability of the
veteran is released by operation of law as a result of an alteration in the
original contract without permission of the Administrator by the indulgence of or agreement with the veteran's grantee.
10
(/) Nature.—To the extent prescribed by the Regulations, the obligation of the United States by reason of a guaranty of the Administrator of Veterans' Affairs is that of a guarantor, not an indemnitor.
In other words a lender is protected only to the extent of having
the payment of all or part of a loan, as the case may be, guaranteed
by the Government in the event such payment is not made according
to the contract through no fault of the lender. Indemnification
against ultimate net loss by the lender is not covered by the guaranty.
For example: A $3,000 loan of which $1,500 was originally guaranteed, has been reduced through curtailments to $2,000 and the guaranty has declined proportionately to $1,000. At this point there is a
default in payments which results in a claim by the lender to the
Administrator under the guaranty. Ultimately the property is sold
by the lender at foreclosure for $500, and the Administrator has paid
the claim of $1,000. The lender is not protected by the guaranty for
the resulting loss of $500, his position being as follows :
A m o u n t of original loan
V e t e r a n ' s p a y m e n t s on p r i n c i p a l
A d m i n i s t r a t o r ' s p a y m e n t of l e n d e r ' s
guaranty
P r o p e r t y sold f o r
!
$3, 000
$1, 000
claim
under
the
1,000
500
2,500
Net l o s s t o l e n d e r
500
It is entirely possible that circumstances will materially alter the case
and there will be no ultimate loss to the lender. Let us suppose that in
the above example the property sold for $2,500. Again using round
figures to make the position of all interested parties clear, we have the
following:
A m o u n t o f o r i g i n a l loan
1
V e t e r a n ' s p a y m e n t s on p r i n c i p a l
Administrator's payment of lender's claim
guaranty
P r o p e r t y sold f o r
under
the
Credit b a l a n c e .
Repayment to Administrator o f amount paid under his
guaranty
B a l a n c e d u e to v e t e r a n
;__
$1, 000
1, 000
2, 500
—
$3, 000
4, 500
1, 500
1, 000
500
1,500
14. T H E
LOAN.
(a) Purpose.—A loan may be guaranteed by the Administrator if
it is made to an eligible veteran for the purchase of a residential property or for the construction of a dwelling on unimproved property
owned by him to be occupied as his home. The loan may be for making
repairs, alterations, or improvements in, or to pay delinquent indebtedness, taxes, or special assessments on, a home already owned and occupied by the veteran.
(&) Security.—Wherever possible loans guaranteed under section
501 of the Act should be secured by a first mortgage on the property.
This will apply in all cases under section 501 (a) which is concerned
with the purchase or construction of a home.
Section 501 (b) applies to loans for repairs, delinquent indebtedness, etc. (see par. 14 ( « ) ) , and there may be existing liens on the
11
veteran's home, in which event, the proposed loan may be secured by
a junior lien. In all cases, before guaranty by the Administrator,
due consideration will be given to the amount, interest rate, and maturity of prior liens in order to determine that the veteran is not assuming too great a financial burden in comparison to his probable income.
Loans made in accordance with section 505 (a) of the Act will be
secured by junior liens on the property since secondary loans are
specifically provided for therein under certain conditions more fully
described elsewhere in the handbook. (See par. 13 (a).)
(c) Amount.—No restriction is placed on the amount of a loan or
loans other than the customary requirements including the ability
of the veteran to repay the debt.
(d) Term.—The term of a loan must not exceed 20 years but it may
be made for a shorter period if due consideration is given to such
matters as the amount of the loan, the amount of periodical payments,
the purpose of the loan, the character and condition of the property,
the wishes of the veteran, or other related factors used in prudent
mortgage loan practice.
All loans should be fully amortized in accordance with standard
practice, with the following exception: It may be a term loan maturing not later than 5 years from its date, if it, together with prior
liens—if any; does not exceed two-thirds of the reasonable normal
value of the property.
(e) Interest.—The rate of interest must not exceed 4 percent per
annum on any guaranteed loan. Secondary loans guaranteed under
section 505 of the Act are additionally limited to a rate of interest
not to exceed that on the primary loan by more than 1 percent per
annum. In other words, if the rate on the primary loan is 2i/2 percent per annum, then the rate on the secondary loan cannot be greater
than 3V2 percent per annum.
In all cases the Administrator will pay to the lender at the end of
the first year, one year's interest at the loan rate on the guaranteed
portion of the loan. For the first year, therefore, the veteran is
relieved of any interest payment on the amount guaranteed.
(/) Repayment.—Amortization payments may be monthly or at
other regular intervals not longer than annually. By agreement with
the veteran, lenders may provide for the collection of proportionate
amounts with each regular payment to care for taxes, ground rents,
special assessments, and fire and other hazard insurance premiums.
If such a provision is made, the lender and the veteran should agree
on the method of handling such additional payments. The note may
be credited as payments are received and charged upon disbursements
by the lender, or a separate trust account maj^ be used for the purpose.
In either case, the lender must apply the total payment to the several
items in the following order:
1. Taxes, special assessments, fire and other hazard insurance
premiums and ground rents (allocated among such items
as the lender elects).
2. Interest on the mortgage debt.
3. Principal of the mortgage debt.
(g) Prepayment.—The unpaid balance of an amortized loan may be
paid in whole or in part without premium or penalty at any time, and
instruments which evidence the debt must contain provisions therefor.
12
Similar provisions must be made with respect to a term loan which
may be prepaid in whole or in part upon at least a month's notice.
(h) Charges.—Neither the lender nor others may require the veteran
to pay a bonus, commission, application fee, or other such charges in
connection with his application for or the making of a guaranteed
loan. The lender may make the customary charges for such items as
credit report, appraisal, survey (if any), certificate of title, and for
recording or other such expenses incurred in connection with closing
the loan. (See par. 16 (c) for Construction Loan Charges.) These
charges may be added to the loan unless otherwise paid by the lender
or the veteran as they shall have agreed. Permission to include
appraisal and other items in the loan is not intended to alter any
existing practice of a lender to absorb such expenses.
(i) Refinancing.—A veteran is not eligible for a guaranteed loan
the proceeds of which are to be used to refinance another loan previously obtained by him and used for any of the purposes outlined in
paragraph 13 (a). This restriction applies only to guaranteed loans
sought for the same purpose as that for which the existing loan was
obtained and does not affect the veteran's eligibility with respect to
guaranteed loans for other purposes to which he may be entitled.
It is not contemplated that an eligible veteran shall be prevented
from obtaining a guaranteed loan for the purpose of either buying
or building a home merely because there is an existing mortgage or
other lien against the property, which debts are the obligations of
the present owner, and will not carry over to the property after conveyance. However, the guaranteed loan must comply in all respects
to the provisions of the Act and the Regulations, and must be in an
amount sufficient to satisfy all obligations then existing against the
property. Such a transaction would in effect be a sale for all cash
insofar as the present owner is concerned.
Nothing in the Regulations is intended to prevent assumption by
the veteran of an existing first mortgage, provided it otherwise meets
all the requirements of the Regulations at the time of purchase.'
15. D E S I G N A T E D
AGENCIES.
In accordance with the Act, the Administrator will have designated
certain agencies or he may act as his own agent to certify whether an
application meets the requirements of the Act and Regulations and
to recommend whether it should be approved. This designation will
be made by the Administrator on Form 1800, "Certification of Eligibility." It is to this agency that the lender should send all papers
listed in paragraph 16 (a).
16. L O A N
PROCEDURE.
(a) Existing Construction.—When the lender is ready to submit
the papers he should have in his possession the completed application,
the loan guaranty certificate, the credit and appraisal reports and a
certification of the veteran's eligibility. He should then forward to
the designated agency the following documents:
(1) Certification of eligibility. (Form 1800.)
(2) Loan guaranty certificate. (Form 1801.)
(3) Original application for guaranty signed by prospective
lender and borrower. (Form 1802.)
13
(4) The credit report.
(5) The appraisal report. (Form 1803.)
(6) Copy o± the "conditional sales agreement" if the loan is to
be predicated on such an instrument.
(7) Proposed loan closing statement of the estimated amounts
to be disbursed by the lender for the account of the borrower. (Form 1806.)
(8) 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 Regulations sec. 4015.)
After reviewing the documents the agency will forward them to
the regional office of the Veterans Administration with its recommendation. Upon receipt of the papers, the Administrator will determine whether to approve the application for guaranty.
If the application is disapproved, the Administrator will return all
papers to the lender except the original application and the appraisal
and credit reports together with a letter stating his reasons for disapproval. Copies of the letter will be sent to the veteran and to the
agency. In this event, any expenses thus far incurred in connection
with processing the loan must be borne by the lender or the borrower
as they shall have agreed. Within 1 month after receiving the notice
of denial either the lender or the veteran (or both) may appeal to
the Administrator for a review of his decision. This may be done by
letter or on any prescribed form.
If the application is approved by the Administrator he will so
notify the veteran and the agency. An appropriately executed contract of guaranty (Form 1801) and all other papers except the original application and the appraisal and credit reports will be returned
to the lender with instructions as to closing the loan in a manner to
make the guaranty effective.
The lender may now proceed to close the loan by securing a certificate of title, obtaining signatures and acknowledgments, disbursing
the funds as set forth on the loan closing statement and recording
all proper instruments. Within 2 months after closing the loan the
lender is required by Regulations to notify the Administrator by completing the report of closing the loan as provided on the reverse of
Form 1806 as follows:
1. The principal amount of the note evidencing the loan has been
disbursed.
2. The disbursements have been made for the purpose set forth
in the loan closing statement submitted to the Veterans
Administration and in accordance with the amounts therein estimated except as shown by the actual disbursement
in column IV on the reverse hereof.
3. The note and mortgage (or other security instrument) were
validly executed; and the latter was duly acknowledged,
witnessed, or pro\«ed, so that it was legally eligible for
recording; and was properly filed for record on the __ day
of
19 at
M. with the
Title of
14
Recording Official
for
District, County, Parish, Town, etc.
State of
His file number
4. The note was duly executed by the debtor and dated
day
of
19__ in the amount of $
bearing
interest at
% per annum.
was com5. The loan guaranty certificate number L
pleted and appropriately signed by the lender and the
borrower (veteran) as therein provided.
(6) New Construction.—The procedure to be followed for construction loans is essentially the same as that for other loans but with the
addition of certain steps which are set forth in the following paragraphs. One of the important points for the lender to note here is
that the Administrator's guaranty does not become effective until the
construction project has been completed.
In addition to the papers listed in paragraph 16 (a) above which
are to be forwarded to the agency, the lender must also submit the
following:
(1) Complete plans and specifications for the proposed construction.
(2) An estimate, prepared by a qualified appraiser of the fair
market value of the property on which the improvements
will be situated together with a separate estimate of the
increased value of the property which will result from
the improvements according to the plans and specifications.
(3) A copy of the agreement or agreements (which may be
unsigned) on which the proceeds of the proposed loan
will be disbursed.
The Agency and the Veterans Administration will proceed as in paragraph 16 (a) above but in addition the lender will be required to supply
Form 1803 (a) which is to be executed by the designated appraiser to
show that:
(a) He has inspected the building as constructed.
(b) The same has been constructed and completed in substantial conformity to the contract, plans and specifications
(if any).
(c) The increased value of the property as completed and which
will be encumbered is substantially in accord with his
estimate.
During the course of construction the Administrator may at his own
expense cause one or more inspections to be made of the progress and
quality of the work.
(c) Construction Loan Charges.—In addition to the loan charges
set forth in paragraph 13 (h), the lender may contract with the veteran
for the payment to the lender of a reasonable sum for the advance of
funds during construction and for the supervision or inspection of
the work.
17.
RECORDS.
The lender must maintain complete and adequate records of all payments received and all amounts disbursed with respect to loans in
15
whole or in part guaranteed. If he does not maintain such records
and a claim is filed under the guaranty, then it will be presumed that
all amounts due and payable according to the terms of the contract,
prior to the date of such claim, were received by the lender and the
burden of proof to the contrary will be upon the lender.
An annual report on the anniversary of the earliest unremedied
default must be submitted to the Administrator concerning any
guaranteed loan which is delinquent, showing amounts received or
disbursed, accrued interest, the unpaid principal balance, any other
items chargeable, the nature of any defaults not previously reported
and such additional information as may be from time to time requested
by the Administrator.
The Administrator has the right to inspect the lender's records and
all papers pertinent to the loan and guaranty at a reasonable time
and place. If permission is refused, he may exercise his right of subpoena therefor. If a lender fails to furnish information required by
the Regulations within 2 months after it is requested, the Administrator will be entitled to obtain the data otherwise, at the expense of
the lender plus $10 to cover estimated overhead.
18. DEFAULT.
{a) Forbearance.—It is the policy of the Administrator, and should
be that of the lender, to extend all possible forbearance in deserving
cases which have defaulted, to the end that the loan is again made
current and future defaults prevented. The waiving of any default
with the consent of the Administrator will not invalidate or otherwise
affect the guaranty. The lender's views on any forbearance which
should be extended to the veteran may be included with the Notice of
Default provided for in the following paragraphs.
{b) Optional Notice.—The lender may notify the Administrator of
a default at any time after it occurs. He may elect to assert his claim
under the guaranty if the default is not cured and has continued
for a period of (1) 3 months in the case of an amortized loan or
( 2 ) 1 month in the case of a term loan.
(c) Notice Required.—Failure of the veteran for a period of 6
months to pay any amount due for interest or principal, for the liquidation of advances or by reason of the indulgence referred to in a previous
paragraph, makes it necessary for the lender to submit the notice of
default within 30 days after the expiration of said 6 months. (See also
par. 13 (<?).)
(d) Delivery of Notice.—The lender should mail the notice by
registered mail or personally deliver it in exchange for a written
receipt to the Veterans Administration office at which the Application
for Guaranty was approved or, at the option of the lender, to the
Central Office of the Veterans Administration, Washington, D. C.
19. FILING OF CLAIM.
Form 1805.
The lender may file his claim under the guaranty in the notice of
default or, at his option, he may make the claim separately at that
time or at a later date. Also at that time or later, as he elects, the
lender may give the Administrator notice of his intention to foreclose the mortgage.
16
The amount to be claimed under the guaranty may be arrived at by
the lender in accordance with regulations, section 4040 as follows:
Subject to the limitation that the total amount payable under
the guaranty shall in no event exceed the original amount
thereof, the amount payable under the guaranty shall be the
percentage of the indebtedness originally guaranteed applied
to the indebtedness (as defined in sec. 4000 ( m ) ) , computed as
of the date of the claim, and reduced by any payments theretofore made by the United States pursuant to the guaranty.
20. L E G A L
ACTION.
(a) Notices Required.—Court action may not be started or notice of
sale given by a lender until at least 30 days after the Administrator
has received the notice of intention to foreclose the mortgage. However, if the proper protection of the lender's interests and those of the
Administrator require immediate legal action, the 30 days prior notice
may be waived provided the lender promptly advises the Administrator of the circumstances. Also, conditions may exist which justify the
appointment of a Receiver and this in itself will be sufficient excuse for
the lender to begin suit without giving the 30 days prior notice, provided the Receiver is actually appointed and the Administrator is
notified within 10 days of the lender's action.
When a lender begins suit or when he gives notice of a sale without
suit, he must so advise the Administrator within 10 days by registered
mail or personal delivery against receipt.
Similarly, the lender must give notice to the Administrator at least
30 days before a foreclosure sale or the cancellation of a sales contract. The Administrator may bid for the property at the time
and place of the sale on the same terms as other bidders, and he may
exercise any rights which the lender could exercise. These provisions
will apply either before or after payment of the guaranty.
(b) Death of the Veteran.—Necessary legal steps should be taken
by the lender to protect his own and the Administrator's interests in
the event of the death of the veteran or of any person who may be liable
on the note. In addition, the lender may in his discretion, proceed in
probate or otherwise, as may be permissible and feasible, or take any
other appropriate legal action against assets or persons which may be
available to other creditors of the deceased, in order to assert his
claim. The Administrator may at his option, immediately proceed
with respect to the protection of the lien or asserting claim, or as to both
remedies, and he may elect either to proceed in his own name or in the
name of the lender. On the other hand, at the direction of the Administrator, the lender must proceed in probate or otherwise and in that
event, the Administrator will appoint an attorney and make appropriate provisions for paying all costs and expenses.
21. D E A T H
OR I N S O L V E N C Y
OF
LENDER.
Immediately upon the death of a lender, whether his estate is solvent
or insolvent, all payments received from the veteran but not yet
credited to the note will be treated as a "set-off" and considered as
having been credited to the note as of the date of the last debit to the
veteran's account, thus reducing the unpaid balance of the loan. This
will include any payments by the veteran for taxes, insurance pre-
17
miums, etc., which may have been set up as a trust account or otherwise
in accordance with paragraph 14 ( / ) of this handbook, but any items
of this nature may be disbursed by the estate if they are due and
payable and the balance, if any, will then be considered as a credit to
the note. These provisions will also apply in the event of—
(a) Insolvency of the creditor,
(5) Initiation of any bankruptcy, reorganization, or liquidation proceedings of the creditor whether voluntary or
involuntary,
(c) The appointment of a Receiver for the creditor's property,
or in any case
(d) Upon the written request of the debtor if all accrued and
clue insurance premiums, taxes, and ground rents have
been paid and appropriate provisions made for future
accruals, and if a corporation,
(e) Dissolution of a corporation by expiration of its charter,
or forfeiture, or otherwise.
Any accumulated interest on payments received but not credited to
the note will be used to offset interest due on the note and any excess
credit of interest will be treated as an offset against any unpaid
advances and the unpaid balance of the loan.
22.
SUBROGATION.
The Act says, in part, at section 500 (b) —
No security for the guaranty of a loan shall be required except
the right to be subrogated to the lien rights of the holder of the
obligation which is guaranteed.
Subrogation means literally "to take the place of." When a loan is
made, the lender establishes certain rights which he may exercise
whenever the need arises, in order to protect his interest in the property
upon which he has made the loan. By reason of the payment of a
claim under his guaranty the Administrator will "inherit" a part of
those rights from the lender, and will "take the place of" the lender to
the extent of such payment. The lender's rights come first, however,
and any lien rights to which the Administrator may be subrogated
will take effect only after the lender has received the full amount
payable under his contract with the veteran. The rights of the Administrator will not be impaired even though a creditor partially or completely releases the debtor or the lien.
Upon request the lender must furnish the Administrator with written evidence of any payments received under the guaranty and of the
Administrator's resulting right of subrogation.
23. A D M I N I S T R A T O R ' S
OPTIONS.
When the Administrator has received a claim under the guaranty,
or notice of intention to foreclose he will have the following options:
(a) Pay the amount in default to the lender within 1 month
as a partial payment under the guaranty. In consideration of such payment the creditor must not exercise any
right he may have to terminate the loan on account of defaults which may have occurred previously. Unless the
18
creditor consents, this option may be exercised only once
and in an amount not to exceed 10 percent of the original
guaranty or the sum of 1 year's interest and principal
payments, whichever is less.
(b) Pay within 1 month the full amount due under the guaranty without requiring foreclosure or personal action.
(c) Pay an amount agreed upon with the creditor, not to exceed
the amount due under the guaranty with the requirement
that the lender institute appropriate foreclosure proceedings and to obtain a judgment against any or all persons
named by the Administrator at that time.
(d) If the creditor does not begin the appropriate legal action
referred to in (c) above within 2 months after notice to
institute such action, the Administrator may begin and
prosecute appropriate foreclosure proceedings either in
his own name on behalf of the United States, or in the
creditor's name. In this event, the Administrator will
pay all court costs and other expenses and provide the
legal services required.
When the Administrator has received from the lender a Notice of
Intention to Foreclose, he may arrange for a refinancing of the loan
which will prevent foreclosure. In this event he may allow his guaranty to apply to the loan which effected the refinancing.
24. T W O O R M O R E
APPLICANTS.
(a) Veterans.—When two or more eligible veterans make application for a guaranteed loan and there is no statement to the contrary,
it will be assumed that each veteran is applying for his proportionate
part of the amount to be guaranteed. For example: Four eligible
veterans sign an application for a guaranteed loan of $8,000 so that
they may together buy a four-family house which all will occupy as
their home. Although each veteran may be entitled to a guaranty of
$2,000, the Administrator may guarantee only up to 50 percent of the
loan in accordance with the limitation of the Act. Therefore, this loan
may be guaranteed to the extent of $4,000. and unless otherwise stated,
it will be assumed that each of the four veterans is applying for a
guaranty of $1,000. The application may request the $4,000 guaranty
divided between the veterans in any manner so long as no one veteran
applies for a guaranty in excess of $2,000, but the individual veteran's
interest in the property must support to the amount of any guaranty
given on his account.
(b) Husband and Wife.—If a husband and wife, both eligible veterans, make application and there is no statement to the contrary, it
will be assumed that the guaranty requested will be chargeable first
to the husband and if this is insufficient to cover the amount to be guaranteed, then the balance will be chargeable to the wife. For example:
An application is made by a husband and wife, both eligible veterans,
for a $6,000 loan, of which $3,000 is to be guaranteed. Although each
veteran may be entitled to the maximum guaranty of $2,000, the guaranty applied for cannot exceed 50 percent of the loan. To that extent,
the guaranty could be divided between husband and wife in any
manner they choose so long as it does not exceed $2,000 for either of
19
them, but the individual veteran's interest in the property must support the amount of any guaranty given on his or her account. In the
absence of any statement to the contrary, however, $2,000 will be
charged to the husband and $1,000 will be charged to the wife. This
would leave $1,000 of her guaranty available if she wishes to use it for
some other purpose. The wife will not be so charged if before approval she has stated in writing her unwillingness to be so charged.
In that event the guaranty will be limited to the amount then available
to the husband.
(c) Veterans and Nonveterans.—Where a veteran applies for a loan
with a nonveteran as a cotenant, the amount to be guaranteed shall be
computed in the same manner as would be the case where two veterans
are applying, except, however, that no guaranty will apply with respect
to the interest of the nonveteran.
25. R E G I O N A L O F F I C E S O F V E T E R A N S
ADMINISTRATION.
Following is a list of Regional Offices or combined facilities of the
Veterans Administration as of December 1, 1944.
•Albuquerque, N. Mex.
•Atlanta, Ga.
**1315 St. Paul St., Baltimore 2, Md.
•Batavia, N. Y.
•Bay Pines, Fla.
•Boise, Idaho.
•Brecksville, Ohio.
•Cheyenne, Wyo.
•Columbia, S. C.
•Dayton, Ohio.
•Dearborn, Mich.
••Old Custom House, Denver 2, Colo.
•Des Moines 10, Iowa.
•Fargo, N. Dak.
•Fayetteville, N. C.
•Fort Harrison, Mont.
•Hines, 111.
••Federal Bldg., Honolulu 1, Hawaii.
•Huntington 1, W. Va.
•Indianapolis 44, Ind.
••Federal Bldg., Jackson 107, Miss.
•Jefferson Barracks 23, Mo.
••1009 Wyandotte St., Kansas City 6, Mo.
•Lexington, Ky.
•Lincoln 1, Nebr.
••Federal Bldg., Little Rock, Ark.
•Los Angeles 25, Calif.
•Lyons, N. J.
••Federal Bldg., Manchester, N .H.
•Minneapolis 6, Minn.
•Montgomery 10, Ala.
•Murfreesboro, Tenn.
•Muskogee, Okla.
•Newington, Conn.
••333 St. Charles St., New Orleans 12,
La.
•*215 W. 24th St., New York 11, N. Y.
••New Custom House, Philadelphia 6,
Pa.
••1001 Liberty Ave., Pittsburgh 22, Pa.
•Portland 7, Ore.
••Federal Bldg., Providence 2, R. I.
•Reno, Nev.
•Roanoke 17, Va.
•707 Market St., St. Louis, Mo.
•Salt Lake City 3, Utah.
•San Francisco 21, Calif.
••Federal Office Bldg., Seattle 4, Wash.
••Sioux Falls, S. Dak.
•Togus, Me.
•Tucson, Ariz.
•Waco, Tex.
••300 Indiana Ave. NW., Washington
25, D. C.
•West Roxbury 32, Mass.
•White River Junction, Vt.
•Wichita 2, Kans.
•Wood, Wis.
•Combined facility.
••Regional office.
U. S . G O V E R N M E N T P R I N T I N G O F F I C E : 1945
@FedFRASER