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The Oregon Administrative Rules contain OARs filed through June 15, 2014
 
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DEPARTMENT OF VETERANS' AFFAIRS

 

DIVISION 20

VETERANS' LOANS

274-020-0200

Definitions for OAR 274-020-0200 to 274-020-0450

As used in these regulations or any amendments to them, or any blank form, document, publication, or written instrument of any kind prescribed, provided, published, issued, or used by the director or any of his duly authorized agents or employees in connection with the administration of the provisions of Article XI A of the Oregon Constitution and ORS Chapter 407, providing for the loaning of money to qualified persons who served in the Armed Forces of the United States, unless otherwise required by context:

(1) "Armed Forces" means and includes:

(a) Army;

(b) Navy;

(c) Marines;

(d) Air Force;

(e) Coast Guard;

(f) WAC (Since July 1, 1943);

(g) Waves;

(h) Women Marines;

(i) WAFS;

(j) Spars;

(k) Women’s Air Force Service Pilots (WASP);

(l) Commissioned Officers of the Public Health Service. Service with Coast Guard between December 23, 1941, and November 10, 1943, inclusive. Service with the Army, Navy, Marine Corps, or Coast Guard between November 11, 1943, and July 28, 1945, inclusive. Eligible by executive order between July 29, 1945, and July 3, 1952, inclusive. Since July 3, 1952, when serving with the Armed Forces;

(m) Active service of commissioned officers of the National Oceanic and Atmospheric Administration or its predecessor organization, the Coast and Geodetic Survey, after July 29, 1945. Coast and Geodetic Survey officers while serving with the Army or Navy before July 29, 1945.

(2) "Active Duty" means that status in the Armed Forces in which the person on "active duty" is under the command of and subject to discipline and on active duty pay status in the respective branch of the Armed Forces in which the person is serving:

(a) Members of the reserve components; persons on a retired status from the Armed Forces; cadets at West Point, the United States Coast Guard Academy, the United States Air Force Academy, and Midshipmen at Annapolis, were on active duty only after reporting for active duty;

(b) Members of the National Guard were on active duty only after having entered active Federal Service for duty other than training.

(3) "Honorably Discharged" means that the official documents of discharge, service, or separation issued upon the termination of the veteran’s service with the Armed Forces are characterized as:

(a) "Honorable"; or

(b) "General” also known as “General Under Honorable Conditions".

(4) "Separated" means the termination of active duty with the Armed Forces.

(5) "Resident" or "Bona Fide Resident" means one who has domiciled within the state.

(6) "Domicile" means the legal residence of a veteran and consists of actual or inchoate residence in conjunction with the intention to maintain that residence, or the home of the veteran, where, when temporarily away, he has the intention of returning:

(a) Temporary absence from the state, such as vacation, military leave, or reasons of health, will not destroy the domicile;

(b) Temporary presence in the state without an intention to establish a permanent home will not support a domicile in the state;

(c) Domicile of an unemancipated minor shall be governed by his legal parent, (if the parents are divorced, the one having custody controls);

(d) Domicile of an emancipated minor shall be determined by choice.

(7) "Acquisition" means:

(a) The purchase and improvement of a home or farm; or

(b) The payment of the balance of a purchase price and interest on purchase contract of a home or farm and its improvements; or

(c) The refinancing of an existing purchase money security instrument on a home or farm or an instrument in the nature thereof, and the improvement of the property purchased; or

(d) Improvements of a home or farm.

(8) "Improvements" means any new construction, or any necessary or beneficial additions, alterations, or changes appurtenant to the house which add to the appraised value of the premises.

(9) "Security" means all of the real property, mobile home, or floating home that is to be acquired for a home and for which purpose the loan is requested.

(10) "Home" means any residential type structure, including outbuildings and the real property in connection with it, if any, including long term leaseholds, which is established, maintained, and used primarily as a principal residence by the veteran.

(11) "Farm" includes:

(a) "Home"; and

(b) A parcel of land being used to obtain a profit in money by utilizing accepted farming practices to raise crops or livestock or poultry or dairying or combinations thereof.

(12) "Security Instrument" means a mortgage, deed of trust, or similar document used to perfect the lien on the security by the Director of Veterans’ Affairs (ODVA). The lien will be a first lien on the home, except:

(a) As otherwise required by Oregon law, or allowed by Oregon law and approved in writing by ODVA; or

(b) When an ALTA mortgagee’s title insurance policy is in force insuring the state against the usual losses covered by an ALTA policy as well as any loss from any prior encumbrance, and the encumbrance is acceptable to both the veteran and ODVA.

(13) "Minor" means any single person under the age of 18 years, but any person shall be deemed to have arrived at the age of majority upon their marriage.

(14) "Transfer" means a change of ownership, either by operation of law, act of the parties, or both, such as deed, contract, certificate, court decree, property settlement, foreclosure, easement, condemnation, or adverse possession of the premises.

(15) "Lease" means the giving of possession and use of profits of secured property for a period of time in return for compensation.

(16) "Possession" means exclusive dominion and physical control of the secured property but occupancy is not necessary.

(17) "Lease Option" means a lease of real property with an option to purchase the property within a stipulated period of time.

(18) "Rent" means the giving of possession of secured property for occupancy for a specific period of time in return for a stipulated amount of compensation.

(19) "Underwriter/Designated Loan Officers" means those employees of the Department whose paramount responsibility shall be the approval or rejection of all applications for loans.

(20) "Department" means the Oregon Department of Veterans’ Affairs (ODVA).

(21) "Net Appraised Value" is also known as loan value," and both terms mean the lesser of the appraised value or the Purchase Price. The "appraised value" is the value established by an appraisal obtained by or at the direction of ODVA, or an appraisal approved by ODVA.

(22) "Loan to Value Ratio" is the loan amount or balance divided by the net appraised value.

(23) "Original Loan" means:

(a) The first loan the veteran receives; or

(b) The first loan based on a restored loan right.

(24) "Subsequent Loan" means any loan or loans granted after the original loan and are in these categories:

(a) Additional loan;

(b) Second loan; and

(c) Veterans' Home Improvement loan.

(25) "Veteran" means any person eligible to receive a loan under the provisions of Article XI A of the Oregon Constitution and sections (1) through (6) of this rule.

Stat. Auth.: ORS 406.030 & 407.115
Stats. Implemented: ORS 40
Hist.: DVA 22, f. 11-15-57, ef. 11-14-57; DVA 26, f. 12-13-60; DVA 29, f. 7-3-63, ef. 9-2-63; DVA 32, f. 12-2-65, ef. 10-25-65; DVA 33, f. 12-7-66, ef. 1-11-67; DVA 35, f. 12-19-68, ef. 1-11-69; DVA 38, f. 5-10-71, ef. 6-11-71; DVA 43, f. 3-2-73, ef. 3-29-73; DVA 45, f. & ef. 12-1-75; DVA 47, f. & ef. 4-20-76; DVA 48, f. & ef. 1-3-77; DVA 50, f. 11-16-77, ef. 12-1-77; DVA 1-1980, f. & ef. 1-15-80; DVA 4-1980, f. & ef. 12-1-80; DVA 3-1990, f. & cert. ef. 5-1-90; DVA 10-1995, f. 9-11-95, cert. ef. 9-22-95; DVA 12-1995, f. & cert. ef. 9-22-95; DVA 5-1997, f. & cert. ef. 10-22-97; DVA 2-2005, f. & cert. ef. 4-22-05; DVA 2-2013, f. & cert. ef. 7-8-13; DVA 4-2013(Temp), f. & cert. ef. 7-23-13 thru 1-19-14; Administrative correction, 2-24-14

274-020-0241

Authority to Protect the Security

At the discretion of the Director, funds can be disbursed to make repairs to correct a serious structural, safety, or sanitary deficiency discovered in a property that is security for a loan when it is determined such a disbursement is necessary to protect the interest of the state. This would occur when the following conditions exist:

(1) The present and probable future value of the property, without benefit of the needed repairs, is sufficiently low when compared to the existing loan balance that the state's investment would be threatened; and

(2) The current owner is the original veteran borrower who lacks the financial means to make the needed repairs or corrections in a timely manner; and the funds required, when added to the existing loan balance, would exceed the maximum loan right or percentage of loan limitations; or

(3) The current owner is a transferee who lacks the financial means to make repairs or corrections in a timely manner.

Stat. Auth.: ORS 406
Stats. Implemented: ORS 407.115, ORS 407.131, ORS 407.135 & ORS 407.145
Hist.: DVA 5-1980, f. & ef. 12-1-80

274-020-0260

Who May Apply for Loan

(1) A loan shall be made only to an individual veteran as defined in OAR 274-020-0200.

(2) Joint loans or loans to a cooperative shall not be valid.

Stat. Auth.: ORS 406
Stats. Implemented: ORS 406.030, ORS 407.115, ORS 407.125
Hist.: DVA 22, f. 11-15-57, ef. 11-14-57; DVA 32, f. 12-2-65, ef. 10-15-65; DVA 42, f. 3-2-73, ef. 3-20-73; DVA 7-2001, f. & cert. ef. 10-29-01

274-020-0265

Evidence Required to Establish Eligibility

The applicant shall submit to the Director the following evidence to establish eligibility:

(1) Evidence of separation such as a photostat of Discharge or a Certificate of Satisfactory Service and a photostat of Notice or Report of Separation, Transfer, or Discharge.

(2) Certificate of Service and Casualty Report when applicant is the unremarried spouse of a person who died on active duty.

(3) Proof of Oregon residence.

(4) Proof of any change in name since discharge:

(a) Where legally changed, proof shall be by a certified copy of the Court Order, or a marriage certificate, or a divorce decree;

(b) Where not legally changed, proof shall be by an affidavit from the veteran and affidavits from at least two disinterested persons.

Stat. Auth.: ORS 406
Stats. Implemented: ORS 406.030, 407.075, 407.115 & 407.125
Hist.: DVA 22, f. 11-15-57, ef. 11-14-57; DVA 1-1980, f. & ef. 1-15-80; DVA 4-2013(Temp), f. & cert. ef. 7-23-13 thru 1-19-14; Administrative correction, 2-24-14

274-020-0266

Eligibility to Apply

Eligibility to apply for a loan under this division is subject to the eligibility criteria of Article X1-A of the Oregon Constitution and qualification under the Internal Revenue Code as a qualified veteran. The acceptance of an application and granting of a loan is further subject to the provisions of ORS chapter 407, OAR division 020, 025, 045, other applicable law, and the policies and procedures of the Oregon Department of Veterans' Affairs (ODVA), and at the discretion of the director of ODVA.

[Publications: The publication(s) referenced in this rule is available from the agency.]

Stat. Auth.: ORS 406
Stats. Implemented: ORS 407
Hist.: DVA 2-2001, f. & cert. ef. 5-23-01

274-020-0270

Forms and Signature

(1) Application for a loan from the state shall be made to the Director on forms provided by the Director.

(2) Applicants shall complete the appropriate department form to establish eligibility and shall sign their name as it appears on the discharge, unless their name has changed since discharge, in which case they shall use their present name.

Stat. Auth.: ORS 406 & ORS 407
Stats. Implemented: ORS 406.030, ORS 407.075, ORS 407.115 & ORS 407.125
Hist.: DVA 22, f. 11-15-57, ef. 11-14-57; DVA 48, f. & ef. 1-3-77; DVA 2-1985, f. 2-26-85, ef. 3-1-85

274-020-0280

Number of Applications Permitted

(1) A veteran may have only one application for a loan pending at any time.

(2) A veteran may make application for another loan if conditions exist which entitle him to another loan.

(3) A veteran may make an application for an additional loan if he presently has a state loan.

(4) A veteran may make application for an advance for improvements provided the security for the loan is the primary residence.

Stat. Auth.: ORS 406
Stats. Implemented: ORS 407.205
Hist.: DVA 29, f. 7-3-63, ef. 9-2-63; DVA 32, f. 12-2-65, ef. 10-25-65; DVA 1-1980, f. & ef. 1-15-80; DVA 4-2013(Temp), f. & cert. ef. 7-23-13 thru 1-19-14; Suspended by DVA 11-2013(Temp), f. & cert. ef. 11-15-13 thru 1-19-14

274-020-0285

Additional Loans

A veteran may receive this type of subsequent loan to replace an existing home unit on the existing ODVA security with a new home unit when the total funds do not exceed statutory limits.

Stat. Auth.: ORS 406
Stats. Implemented: ORS 407.205 & 407.265
Hist.: DVA 22, f. 11-15-57, ef. 11-14-57; DVA 29, f. 7-3-63, ef. 9-2-63; DVA 42, f. 3-2-73, ef. 3-20-73; DVA 5-1997, f. & cert. ef. 10-22-97; DVA 4-2013(Temp), f. & cert. ef. 7-23-13 thru 1-19-14; Administrative correction, 2-24-14

274-020-0290

Second Loans

Before a second loan may be granted:

(1) The repayment shall have been satisfactory; and

(2) The amount shall be limited to the balance of the original or restored loan right.

Stat. Auth.: ORS 406
Stats. Implemented: ORS 407.205 & 407.265
Hist.: DVA 22, f. 11-15-57, ef. 11-14-57; DVA 29, f. 7-3-63, ef. 9-2-63; DVA 36, f. 7-25-69, ef. 8-25-69; DVA 42, f. 3-2-73, ef. 3-20-73; DVA 45, f. & ef. 12-1-75; DVA 4-2013(Temp), f. & cert. ef. 7-23-13 thru 1-19-14; Suspended by DVA 11-2013(Temp), f. & cert. ef. 11-15-13 thru 1-19-14; Administrative correction, 2-24-14

274-020-0295

Modification of Application

An application may be modified such as to the amount of the loan requested, legal description, amount of security or plans and specifications, but the modification must be requested in writing by the veteran and shall be subject to the approval of the Director.

Stat. Auth.: ORS 406
Stats. Implemented: ORS 407.205, ORS 407.225 & ORS 407.265
Hist.: DVA 22, f. 11-15-57, ef. 11-14-57

274-020-0300

Cancellation of Application

(1) An applicant may cancel his application for a state veterans' loan at any time prior to receipt of the loan proceeds.

(2) The Director may cancel any application if the applicant fails to comply with any of the conditions pertaining to the loan.

(3) The Director may destroy any application 25 months after the veteran applicant is notified of action taken on an application (whether credit was approved or adverse action was taken).

Stat. Auth.: ORS 183, ORS 406.030, ORS 407.115, ORS 407.135, ORS 407.145, ORS 407.275, ORS 407.305 & ORS 407.375
Stats. Implemented: ORS 406.030, ORS 407.115, ORS 407.265 & ORS 407.385
Hist.: DVA 22, f. 11-15-57, ef. 11-14-57; DVA 21-1982, f. & ef. 9-15-82; DVA 5-1993, f. 3-16-93, cert. ef. 3-21-93; DVA 7-2001, f. & cert. ef. 10-29-01

274-020-0305

Filing Period

An applicant may file to secure a veterans' loan at any time after separation from the service, even though he has re-enlisted and is not separated at the time of application.

Stat. Auth.: ORS 406
Stats. Implemented: ORS 407.115, ORS 407.125 & ORS 407.205
Hist.: DVA 22, f. 11-15-57, ef. 11-14-57; DVA 26, f. 12-13-60; DVA 35, f. 12-19-68, ef. 1-11-69

274-020-0310

Evidence of Acquisition

An applicant shall be required to furnish any of the following items applicable:

(1) A copy of the earnest money receipt or sales agreement, signed by all the parties if acquisition is by purchase.

(2) A copy of the contract of sale signed by all parties.

(3) A copy of the mortgage showing the recording data.

(4) Evidence of debt from F.H.A. Title 1 loan.

(5) Evidence of personal obligation incurred in acquiring the home.

Stat. Auth.: ORS 406
Stats. Implemented: ORS 407.115, ORS 407.155 & ORS 407.205
Hist.: DVA 22, f. 11-15-57, ef. 11-14-57

274-020-0315

Evidence of Construction

An applicant shall submit complete plans, specifications, and cost estimates in applications for construction or improvements.

Stat. Auth.: ORS 406
Stats. Implemented: ORS 407.115, ORS 407.225 & ORS 407.265
Hist.: DVA 22, f. 11-15-57, ef. 11-14-57

274-020-0322

Requirements for Farm Applicants

(1) Must complete the Department's farm income, experience, and expense form.

(2) Must have capital or an equivalent line of credit to cover development costs and one year's operating cost.

(3) Must show, to the satisfaction of the Director, that the farm portion of the loan security is capable of producing an annual income that will repay the loan allocated to the farm land and farm buildings.

Stat. Auth.: ORS 406 & ORS 407
Stats. Implemented: ORS 407.205, ORS 407.265 & ORS 407.385
Hist.: DVA 20-1982, f. & ef. 9-15-82

274-020-0325

Security for the Loan

(1) The home or farm offered as security shall be owned in fee simple by the veteran at the time the loan is closed.

(2) The state shall have the first lien at the time of making the loan except in those cases noted in OAR 274-020-0200(12).

(3) The security shall consist of real or personal property and the security instrument shall include all property to be acquired as a home but more than one parcel of real property may be included in the security.

(4) All security must be improved to supply a home for the applicant, and it must be in existence at the time the loan is closed.

Stat. Auth.: ORS 406
Stats. Implemented: ORS 407.155 & ORS 407.225
Hist.: DVA 22, f. 11-15-57, ef. 11-14-57; DVA 45, f. & ef. 12-1-75; DVA 7-2001, f. & cert. ef. 10-29-01

274-020-0330

Legal Description of Property Offered as Security

(1) Property offered as security must have an adequate legal description from which the boundaries of the property may be located.

(2) The Director may require a survey to ascertain the boundary lines and location of all permanent improvements on the property.

Stat. Auth.: ORS 406
Stats. Implemented: ORS 407.225
Hist.: DVA 22, f. 11-15-57, ef. 11-14-57

274-020-0335

Appraisal of Property

(1) An appraisal shall be made to assist in establishing the loan value only after a complete application has been received.

(2) On farms, the loan value allowable on the principal home unit portion of the property shall not exceed the amount needed for a maximum home loan.

Stat. Auth.: ORS 406.030, ORS 407.115 & ORS 407.225(3)
Stats. Implemented: ORS 407.115 & ORS 407.225
Hist.: DVA 22, f. 11-15-57, ef. 11-14-57; DVA 3-1980, f. & ef. 7-1-80; DVA 3-1990, f. & cert. ef. 5-1-90

274-020-0340

Terms of Loan

(1) The loan value (net appraised value) shall be used as the basis for determining the maximum loan, subject to statutory limitations. Under the provisions of ORS 407.225(3), the maximum loan on a home which is real property may not exceed 100 percent of the loan value (net appraised value), but may be a lesser amount as determined from time-to-time by the Director of Veterans' Affairs, (Director):

(a) On farms, the maximum original loan allowable for acquisition of the principal home unit portion of the property shall not exceed the maximum home loan, whether it be for purchase, refinance, construction, improvements, or a combination of these; and the maximum additional loan or advance for improvements to the principal home shall not exceed the difference between the maximum home loan and that portion of the original loan granted on the principal home unit, except advances for protection of security improvements, taxes, and insurance premiums;

(b) Loans shall be made in multiples of $1.

(2) The Director shall determine the period and amount of repayment based on the age, condition, location, and useful life of the security, but the maximum period of repayment shall not exceed statutory limits.

(3) The borrower shall timely pay all property taxes and other assessments that may or do become a lien against the loan security.

(4) The borrower shall carry fire and extended coverage insurance on the security. The Director also may require that hazards other than fire be covered. All premiums and charges for said coverage shall be paid timely by the borrower:

(a) The Director may determine the form and amount of insurance coverage for the security;

(b) All insurance money shall be payable to the State of Oregon, Director of Veterans' Affairs, by endorsement of the Director-approved mortgagee clause;

(c) The Director may enter into agreements with companies engaged in the business of providing insurance management programs which, among other things, assure the Director that the required insurance is kept in force. Where the borrower fails or refuses to keep the property adequately insured, the Director may pay the premium charged by the company providing the insurance management service, and any payment of premium so made shall be added to the amount due from the borrower and shall bear interest at the same rate as the principal indebtedness. The loan payment may be increased to repay the money advanced to pay the insurance premium and accrued interest, over a period of 12 months;

(d) In case of loss, the Director shall determine the disposition of any and all funds received under the insurance policies.

(5) On all loans made on or after June 1, 1990, or as otherwise agreed to by the borrower and the Director, the Director may collect in advance from said borrowers together with their payments required under section (2) of this rule, sufficient amounts to pay property taxes, insurance premiums, and other charges related to the security. Such additional amounts collected by the Director shall be held in escrow pending payment of the obligations for which they are collected and interest on said amounts shall be paid to the borrower in the manner and at the rate of interest described in ORS 86.245(1).

(6) Property taxes, insurance premiums, and other charges may be paid by the Director from funds collected from the borrower for those purposes. The Director, in the absence of funds collected from the borrower (or if such funds are insufficient in amount), may, at his option, elect to pay property taxes, insurance premiums, and other charges from the Oregon War Veteran's Bond Sinking Account. Any amount paid by the Director from the Oregon War Veteran's Bond Sinking Account may be added to and become part of the loan principal and shall bear interest at the same rate as the balance of the principal indebtedness. On loans made after June 1, 1991, excluding qualified loan assumptions, the Director will not add amounts advanced for payment of property taxes or insurance premiums to the principal balance of the loan. On these loans, any amount advanced will be entered as a negative balance in the escrow account.

(7) The borrower's loan payment may be increased to repay the money advanced from the Oregon War Veteran's Bond Sinking Account to pay the property taxes, insurance premiums, and other charges against the security, together with interest thereon, within a maximum period of 12 months or such shorter time as established by the Director.

Stat. Auth.: ORS 291.021, 406.030, 407.115, 407.169, 407.179, 407.179, 407.181, 407.225(3) & 407.275
Stats. Implemented: ORS 407
Hist.: DVA 22, f. 11-15-57, ef. 11-14-57; DVA 29, f. 7-3-63, ef. 9-2-63; DVA 32, f. 12-2-65, ef. 10-25-65; DVA 42, f. 3-2-73, ef. 3-20-73; DVA 45, f. & ef. 12-1-75; DVA 1-1980, f. & ef. 1-15-80; DVA 3-1980, f. & ef. 7-1-80; DVA 6-1983, f. & ef. 5-3-83; DVA 3-1985, f. 2-26-85, ef. 3-1-85; DVA 3-1987, f. & ef. 5-1-87; DVA 3-1990, f. & cert. ef. 5-1-90; DVA 1-1992, f. & cert. ef. 1-2-92; DVA 7-1993, f. 5-18-93, cert. ef. 5-21-93; DVA 3-2003(Temp), f. & cert. ef. 4-7-03 thru 10-3-03; DVA 11-2003, f. & cert. ef. 9-23-03; DVA 8-2005, f. & cert. ef. 12-27-05; DVA 3-2007, f. & cert. ef. 9-25-07

274-020-0341

Interest

(1) The Director, with the advice of the Advisory Committee, will prescribe interest rates for loans to be funded by the Oregon Department of Veterans' Affairs pursuant to this division. In prescribing interest rates, the Department will consider the following factors:

(a) The current value of funds;

(b) The solvency of the Department's Loan Program; and

(c) The rates' effect on Veterans.

(2) In prescribing interest rates, the Department also may consider factors including, but not limited to the following:

(a) The projected value of funds;

(b) Any Federal tax law restrictions;

(c) Actual or projected conventional mortgage rates;

(d) The availability of funds;

(e) Actual or projected loan demand;

(f) The loan purpose; and

(g) The source(s) of funds.

(3) The Director may prescribe rates of interest of up to two percent per annum more than the applicable basic rate determined under Subsections (1) and (2) above for loans used to acquire mobile homes and houseboats if, upon consideration of the factors described in Subsection (1) above, the Director determines that there is an economic need for such higher rate of interest.

(4) The Director periodically may change the prescribed rate of interest on a funded loan consistent with ORS 407.325 (2) and applicable loan documents. In changing a prescribed rate of interest, the Director may exceed the limits in ORS 407.325 (2) if the Director determines, in the Director's sole discretion, that such a change reduces the probability that invoking the provisions of section 4, Article XI-A of the Oregon Constitution will become necessary.

(5) The Director periodically may change the prescribed rate of interest on a loan to be funded by the Oregon Department of Veterans' Affairs to reflect reconsideration of, or changes in, factors considered under Subsections (1) and (2) above, or in consideration of additional factors.

(6) The Director may apply different rates of interest to different loans, depending upon factors including, but not limited to the following:

(a) The time of an initial loan or commitment to fund a loan;

(b) The initial rate of interest on a loan;

(c) The type of loan;

(d) The status of the borrower;

(e) The status of the loan security;

(f) The perceived risk associated with the loan;

(g) Whether or not the department agreed to maintain an interest rate commitment within a certain range or for a certain time; and

(h) Whether or not the applicant abandoned a previous loan application or loan commitment.

(7) The Department will endeavor to record prescribed interest rates as reasonably as it is practical for the Department to do so, in its Tables and Codes Manual. This manual will generally be available for viewing at the Oregon Department of Veterans' Affairs, 700 Summer Street NE, Salem, Oregon, during regular business hours.

Stat. Auth.: ORS 406.030, 407.115, 407.325 & 407.327
Stats. Implemented: ORS 407.325 & 407.327
Hist.: DVA 40, f. 5-27-71, ef. 5-27-71; DVA 45, f. & ef. 12-1-75; DVA 49, f. & ef. 6-1-77; DVA 50, f. 11-16-77, ef. 12-1-77; DVA 2-1978, f. & ef. 12-1-78; DVA 1-1979, f. & ef. 12-5-79; DVA 4-1980, f. & ef. 12-1-80; DVA 6-1980(Temp), f. 12-19-80, ef. 1-1-81; DVA 1-1981, f. 3-1-81, ef. 4-1-81; DVA 2-1981(Temp), f. 3-11-81, ef. 4-1-81; DVA 4-1981, f. & ef. 4-16-81; DVA 5-1981(Temp), f. & ef. 8-10-81; DVA 7-1981, f. 10-30-81, ef. 11-1-81; DVA 8-1981, f. 10-30-81, ef. 12-1-81; DVA 10-1981(Temp), f. & ef. 12-22-81; DVA 3-1982(Temp), f. & ef. 2-3-82; DVA 11-1982, f. 4-23-82, ef. 1-1-83; DVA 15-1982, f. & ef. 6-1-82; DVA 27-1982(Temp), f. & ef. 10-15-82; DVA 5-1983, f. & ef. 2-15-83; DVA 10-1985, f. 8-23-85, ef. 1-1-86; DVA 6-1992(Temp), f. & cert. ef. 4-15-92; DVA 9-1992, f. & cert. ef. 8-3-92, DVA 10-1992(Temp), f. & cert. ef. 8-17-92; DVA 1-1993, f. & cert. ef. 1-4-93; DVA 6-1993(Temp), f. 3-30-93, cert. ef. 4-1-93; DVA 8-1993, f. 7-30-93, cert. ef. 9-27-93; DVA 10-1993(Temp), f. 10-18-93, cert. ef. 11-1-93; DVA 1-1994, f. 1-10-94, cert. ef. 2-1-94; DVA 2-1994(Temp), f. & cert. ef. 4-15-94; DVA 4-1994, f. & cert. ef. 6-22-94; DVA 5-1994(Temp), f. 9-15-94, cert. ef. 9-20-94; DVA 6-1994(Temp), f. 11-15-94, cert. ef. 11-18-94; DVA 2-1995, f. & cert. ef. 3-23-95; DVA 3-1995(Temp), f. & cert. ef. 5-11-95; DVA 4-1995(Temp), f. & cert. 5-18-95; DVA 6-1995(Temp), f. 6-23-95, cert. ef. 6-26-96; DVA 13-1995, f. & cert. ef. 10-23-95; DVA 14-1995(Temp), f. 10-30-95, cert. ef. 11-1-95; DVA -1996, f. & cert. ef. 3-22-96; DVA 1-1997(Temp), f. 2-4-97, cert. ef. 2-7-97; DVA 3-1997, f. & cert. ef. 6-25-97; DVA 5-1997, f. & cert. ef. 10-22-97; DVA 2-1998(Temp), f. 1-26-98, cert. ef. 2-2-98 thru 7-31-98; DVA 6-1998, f. & cert. ef. 6-23-98; DVA 8-1998(Temp), f. 7-28-98, cert. ef. 8-1-98 thru 1-27-99; DVA 1-1999, f. & cert. ef. 1-22-99; DVA 2-1999, f. & cert. ef. 9-22-99; DVA 4-1999(Temp), f. 12-14-99, cert. ef. 12-16-99 thru 6-12-00; DVA 2-2000(Temp), f. 3-30-00, f. 3-31-00 thru 6-12-00; DVA 6-2000, f. & cert. ef. 5-23-00; DVA 7-2000(Temp), 6-12-00 thru 12-9-00; DVA 8-2000(Temp), f. 7-14-00, cert. ef. 7-17-00 thru 12-9-00; DVA 9-2000(Temp), f. 9-8-00, cert. ef. 9-11-00 thru 12-9-00; DVA 10-2000, f. 12-5-00, cert. ef. 12-10-00; DVA 6-2001(Temp), f. 9-7-01, cert. ef. 9-10-01 thru 3-8-02; DVA 2-2002, f. & cert. ef. 2-22-02; DVA 3-2002(Temp), f. 3-29-02, cert. ef. 4-1-02 thru 9-27-02; DVA 5-2002(Temp), f. 6-26-02, cert. ef. 6-27-02 thru 9-27-02; DVA 6-2002, f. & cert. ef. 9-24-02; DVA 8-2002(Temp), f. 9-25-02, cert. ef. 9-26-02 thru 3-24-03; DVA 1-2003(Temp), f. 1-17-03, cert. ef. 1-21-03 thru 3-24-03; DVA 2-2003, f,& cert. ef. 3-24-03; DVA 4-2003(Temp), f. 4-18-03, cert. ef. 4-21-03 thru 10-17-03; DVA 6-2003(Temp), f. 7-24-03, cert. ef. 7-25-03 thru 10-17-03; DVA 7-2003(Temp), f. 7-31-03, cert. ef. 8-1-03 thru 10-17-03; DVA 8-2003(Temp), f. 8-14-03, cert. ef. 8-15-03 thru 10-17-03; DVA 10-2003, f. & cert. ef. 9-23-03; DVA 13-2003(Temp), f. & cert. ef. 10-8-03 thru 4-5-04; DVA 2-2004(Temp), f. 1-21-04, cert. ef. 1-22-04 thru 4-5-04; DVA 4-2004, f. 3-25-04, cert. ef. 3-26-04; DVA 5-2004(Temp), f. 4-6-04, cert. ef. 4-8-04 thru 10-4-04; DVA 7-2004(Temp), f. 4-28-04, cert. ef. 4-29-04 thru 10-4-04; DVA 8-2004(Temp), f. 5-10-04, cert. ef. 5-11-04 thru 10-4-04; DVA 9-2004(Temp), f. 8-5-04 cert. ef. 8-6-04 thru 10-4-04; DVA 10-2004(Temp), f. 8-18-04 cert. ef. 8-19-04 thru 10-4-04; DVA 12-2004, f. & cert. ef. 9-22-04; DVA 1-2005(Temp), f. 4-7-05, cert. ef. 4-8-05 thru 10-3-05; DVA 3-2005, f. & cert. ef. 4-22-05

274-020-0342

Interest Rate on Assumptions by Eligible Veterans

(1) Effective February 3, 1982, a veteran eligible for a loan under ORS 407.075 to 407.595 and Article XI-A of the Oregon Constitution who assumes a loan, previously made by the Director, assumes at one of the following rates:

(a) If the previous loan was a fixed interest rate loan made to a veteran before May 27, 1971, the assumption will be at the fixed rate;

(b) If the previous loan was a variable rate loan made to a veteran on or after May 27, 1971, the assumption will be at the rate of the previous loan, and will remain variable, with the limitation that the rate will not decrease and will not increase more than an additional one percent or exceed the current veteran's rate at the time of transfer;

(c) If the previous loan had been transferred to one other than the original borrower, the surviving spouse, unremarried former spouse, surviving child or stepchild of the original borrower, or other eligible veteran assuming pursuant to ORS 407.305, the assumption rate to the veteran will be at the rate of the transferred loan, and will not become variable until a subsequent transfer.

(2) Effective September 28, 1987, a veteran eligible for a loan under ORS 407.075 to 407.595 and Article XI-A of the Oregon Constitution who assumes a loan, previously made by the Director, assumes at 10.5 percent variable or at the existing rate on the loan, whichever is higher.

Stat. Auth.: ORS 406 & ORS 407
Stats. Implemented: ORS 407.285 - ORS 407.335
Hist.: DVA 6-1982(Temp), f. & ef. 3-11-82; DVA 10-1982, f. & ef. 4-15-82; DVA 24-1982, f. & ef. 10-1-82; DVA 6-1987, f. 9-24-87, ef. 9-28-87

274-020-0343

Interest Rates on Loans Secured by Property Transferred to Non-Veterans

(1) Effective February 3, 1982, the interest rate on all loans secured by property transferred before February 3, 1982 will not change on the first transfer on or after February 3, 1982, but on any subsequent transfer the interest rate will be as provided by this rule and will be variable, with the limitation that the rate will not decrease and will not increase more than an additional one percent, except as provided under ORS 407.335(4).

(2) Subject to the conditions and limitations of section (1) of this rule, the interest rate on real property loans, when the property securing the loan is transferred to someone other than those entitled to the veteran's interest rate, shall be:

(a) Through August 21, 1969, 5 percent;

(b) Effective August 22, 1969, 6.2 percent;

(c) Effective September 4, 1969, 7.9 percent;

(d) Effective December 10, 1969, 8.1 percent;

(e) Effective April 8, 1970, 7.8 percent;

(f) Effective August 19, 1970, 7.4 percent;

(g) Effective January 6, 1971, 6.4 percent;

(h) Effective May 27, 1971, 7 percent;

(i) Effective June 1, 1977, 8 percent;

(j) Effective December 1, 1977, 8.8 percent;

(k) Effective December 1, 1978, 9.8 percent;

(l) Effective December 1, 1979, 11 percent;

(m) Effective December 1, 1980, 13 percent;

(n) Effective December 1, 1981, 17 percent;

(o) Effective February 3, 1982, 12 percent;

(p) Effective October 15, 1982, 11.5 percent;

(q) Effective January 1, 1985, 11.52 percent;

(r) Effective January 1, 1986, 9.86 percent, or one percent higher than the rate on the original note, whichever is higher. "The rate on the original note" shall be the rate stated as such on the note;

(s) Effective January 1, 1987, 8.59 percent, or one percent higher than the rate on the original note, whichever is higher;

(t) Effective September 1, 1987, 10.75 percent, or the rate existing on the loan immediately prior to the transfer, whichever is higher.

(3) Subject to the conditions and limitations of section (1) of this rule, the interest rate on personal property loans, when the property securing the loan is transferred to someone other than those entitled to the veteran's interest rate, shall be:

(a) Effective May 30, 1975, 9 percent. Personal property included leaseholds until leaseholds were defined as real property on October 4, 1977. On or after October 4, 1977, the interest rate on leaseholds is the real property interest rate;

(b) Effective December 1, 1977, 9.8 percent;

(c) Effective December 1, 1978, 10.8 percent;

(d) Effective December 1, 1979, 12 percent;

(e) Effective December 1, 1980, 14 percent;

(f) Effective December 1, 1981, 18 percent;

(g) Effective February 3, 1982, 12 percent;

(h) Effective December 1, 1982, 12.5 percent;

(i) Effective January 1, 1985, 11.52 percent;

(j) Effective January 1, 1986, 9.86 percent, or one percent higher than the rate on the original note, whichever is higher. "The rate on the original note" shall be the rate stated as such on the note;

(k) Effective January 1, 1987, 8.59 percent, or one percent higher than the rate on the original note, whichever is higher;

(l) Effective September 1, 1987, 10.75 percent, or the rate existing on the loan immediately prior to the transfer, whichever is higher.

(4) This rule does not apply to transfers to the surviving spouse, unremarried former spouse, surviving child, or stepchild of the original borrower, who are entitled to the veteran's interest rate.

Stat. Auth.: ORS 406 & ORS 407
Stats. Implemented: ORS 407.275 & ORS 407.335
Hist.: DVA 6-1982(Temp), f. & ef. 3-11-82; DVA 10-1982, f. & ef. 4-15-82; DVA 27-1982(Temp), f. & ef. 10-15-82; DVA 24-1982, f. & ef. 10-1-82; DVA 5-1983, f. & ef. 2-15-83; DVA 12-1984, f. 12-17-84, ef. 1-1-85; DVA 13-1985(Temp), f. 12-16-85, ef. 1-1-86; DVA 14-1985(Temp), f. 12-30-85, ef. 1-1-86; DVA 5-1986, f. 3-10-86, ef. 4-1-86; DVA 10-1986(Temp), f. 12-8-86, ef. 1-1-87; DVA 2-1987, f. & ef. 4-15-87; DVA 5-1987, f. & ef. 9-1-87

274-020-0344

Fixed Interest Rate

(1) Subject to the provisions of this rule, effective June 1, 1989, borrowers with ODVA loans being charged 7.2 percent variable interest may convert the loan to a fixed interest rate.

(2) Subject to the provisions of this rule, effective February 1, 1990, borrowers with ODVA loans being charged 7.7 percent variable interest may convert the loan to a fixed interest rate.

(3) The following loans do not qualify for the interest rate conversion:

(a) Accounts with 12 or less monthly payments, or one annual payment remaining before the loan will be paid in full;

(b) Accounts of borrowers in bankruptcy;

(c) Accounts in foreclosure;

(d) Accounts two or more months delinquent;

(e) Accounts coded as questionable loans (propriety of loan being investigated);

(f) Loans, any portion of which is being charged an interest rate other than 7.2 percent or 7.7 percent (composite interest rate).

(4) Accounts on semi-annual or annual payment schedules can convert to a fixed interest rate. If the holder of a loan with semi-annual or annual payments would like a fixed interest rate loan, all provisions of this rule will apply, except sections (7) and (8) of this rule. Matters covered by sections (7) and (8) of this rule will be negotiated with the borrower.

(5) The remaining term on loans converted to a fixed interest rate will be shortened. The shorter term will be arrived at by using the current retirement date, or the remaining term on loans paying off earlier than the retirement date (larger than required payments were made), and deducting ten percent:

(a) The maximum term on loans converting to a fixed interest rate shall be 40 years;

(b) The fixed interest rate available will be based upon the remaining term of the loan (after shortening the term as provided above) and shall be as follows: Remaining Term On Loans Being Charged 7.2% Interest -- Fixed Interest Rate:

(A) 5 years or less -- 7.3%;

(B) 5 years 1 month to 9 years 11 months -- 7.4%;

(C) 10 years to 14 years 11 months -- 7.5%;

(D) 15 years to 19 years 11 months -- 7.6%;

(E) 20 years to 24 years11 months -- 7.7%;

(F) 25 years or more -- 7.8%.

(c) Loans Being Charged 7.7% Interest -- Fixed Interest Rate: All Loans -- 7.8%.

(6) In order to convert a 7.2 or a 7.7 percent variable interest rate loan to a fixed interest rate loan, the borrower must agree to the following:

(a) Each year ODVA may adjust the payment on principal and interest to an amount that will cause the loan to pay in full by its retirement date. The payments on principal and interest will not be reduced to an amount lower than the amount established at the time of conversion to a fixed interest rate;

(b) If ownership of the property securing the ODVA loan is transferred, or ownership of any portion of the property securing the loan is transferred, the interest rate on the loan will be as provided by ORS 407.275(2), the due date on the loan will be the due date on the latest Note and Mortgage, Trust Deed, or Security Agreement, and the agreement allowing ODVA to annually adjust the payment on the loan to assure proper amortization will terminate.

(7) The procedure for implementing the interest rate conversion on loans being charged 7.2 percent variable interest rate shall be as follows:

(a) Whether the account qualifies for interest rate conversion will be determined by the status of the account on June 1, 1989, if payments are due on the first day of the month or June 15, 1989, if payments are due on the 15th day of the month;

(b) Borrowers desiring to make the interest rate conversion must notify ODVA in writing, by either mailing a post card furnished by ODVA, or by other written notification:

(A) By June 30, 1989, if payments are due on the 1st day of the month;

(B) By July 14, 1989, if payments are due on the 15th day of the month.

(c) Interest owing on June 1, 1989, or June 15, 1989 (as applicable) shall be added to the balance of the loan on August 1, 1989, or August 15, 1989 (as applicable);

(d) Any "paid ahead" or "delinquency" existing on the loan on June 1, 1989, or June 15, 1989, (as applicable), will be eliminated;

(e) The new terms of the loan shall be effective August 1, 1989, or August 15, 1989, (as applicable) and the new payments will begin September 1, 1989, or September 15, 1989 (as applicable).

(8) The procedure for implementing the interest rate conversion on loans being charged 7.7 percent variable interest shall be as follows:

(a) Whether the account qualifies for interest rate conversion will be determined by the status of the account on February 1, 1990, if payments are due on the 1st day of the month or March 15, 1990, if payments are due on the 15th day of the month;

(b) Borrowers desiring to make the interest rate conversion must notify ODVA in writing, by either mailing a postcard furnished by ODVA, or by other written notification:

(A) By February 23, 1990, if payments are due on the 1st day of the month;

(B) By April 9, 1990, if payments are due on the 15th day of the month.

(c) Any "paid ahead" or "delinquency" existing on the loan on February 1, 1990, or March 15, 1990 (as applicable), will be eliminated;

(d) The new terms of the loan shall be effective April 1, 1990, or May 15, 1990 (as applicable) and the new payments will begin May 1, 1990, or June 15, 1990 (as applicable).

(9) This rule does not apply to contracts for the purchase of State-owned property.

Stat. Auth.: ORS 406.030, ORS 407.115 & ORS 407.327
Stats. Implemented: ORS 407.327
Hist.: DVA 1-1989, f. & cert. ef. 6-1-89; DVA 1-1990, f. & cert. ef. 1-2-90

274-020-0345

Approval of the Loan

The approval of any loan shall be dependent upon the following:

(1) The veteran applicant must meet current industry standards determined by the Department to be applicable to the proposed loan. Applicable industry standards may include, but are not limited to:

(a) Local lending practices;

(b) FannieMae and other lending organization standards; and

(c) Federal and state legal requirements.

(2) The veteran applicant may be required to have an equity in the property.

(3) Secondary financing may be permitted.

(4) Construction shall meet the minimum standards set by federal, state and local laws.

(5) A performance bond may be required for new construction.

(6) Inspections to prove the premises safe, sanitary, and structurally sound may be required, and the loan may be refused if the construction is inferior.

(7) The security shall be served by adequate means of legal and physical access and shall have an acceptable potable water supply.

Stat. Auth.: ORS 183, 406.030, 407.115, 407.135, 407.145, 407.275, 407.305 & 407.375
Stats. Implemented: ORS 407.115, 407.125 & 407.225
Hist.: DVA 22, f. 11-15-57, ef. 11-14-57; DVA 32, f. 12-2-65, ef. 10-25-65; DVA 50, f. 11-16-77, ef. 12-1-77; DVA 2-1978, f. & ef. 12-1-78; DVA 7-1982, f. & ef. 3-15-82; DVA 3-1991, f. 5-30-91, cert. ef. 6-3-91; DVA 5-1993, f. 3-16-93, cert. ef. 3-21-93; DVA 7-1995, f. & cert. ef. 7-21-95; DVA 4-2005(Temp), f. & cert. ef. 6-3-05 thru 11-30-05; DVA 5-2005, f. & cert. ef. 7-22-05; DVA 6-2005, f. & cert. ef. 10-24-05

274-020-0348

Grounds for Refusing to Make a Loan

The Director may refuse to make a loan to any applicant if he finds any of the following:

(1) Prior loan experience with an applicant was unsatisfactory, including, but not limited to, late payment or nonpayment on loan and impairment of security.

(2) The applicant did not disclose all debts or obligations as required under the terms of the loan credit application.

(3) The applicant has a negative cash flow.

(4) The applicant has declared bankruptcy within the last three years unless:

(a) The applicant or the applicant’s spouse has been regularly employed, other than self-employed, since the discharge; and

(b) The applicant has established credit since the bankruptcy and made timely and satisfactory payments on obligations; and

(c) The bankruptcy was caused by circumstances beyond the applicant’s control, such as uninsured medical expense, layoff, strike, or divorce.

(5) The applicant has declared bankruptcy between three and five years prior to application for a loan, unless: The applicant has reestablished credit since the bankruptcy.

(6) Business bankruptcies will not be grounds for refusing to make a loan if:

(a) The applicant was self-employed and the bankruptcy was not due to misconduct; and

(b) There is no evidence of derogatory credit information prior to the self-employment or after the bankruptcy; and

(c) The applicant has subsequently obtained a permanent position with reliable income.

(7) Chapter 13 bankruptcies will not be grounds for refusing to make a loan if: The applicant has made satisfactory payment of at least three-fourths of the total payments due the trustee.

(8) The applicant’s ability to repay the loan is insufficient, as determined by the Department of Veterans’ Affairs (Department) by applying relevant industry standards.

(9) The applicant is an unsatisfactory credit risk, as determined by the underwriting analysis of the credit rating agency selected by the Director. In that case, the Director shall advise the applicant of his refusal on this basis and supply to the applicant the name and address of any consumer reporting agency which provided the Director with information on the applicant. If the applicant requests in writing within 60 days after being notified of the refusal, the Director shall provide the applicant with the name of any person other than a consumer reporting agency who provided information which was, wholly or in part, a basis of such refusal.

(10) The applicant is involved in the following type of transactions:

(a) The purchase of property from a spouse where the amount which the applicant seeks to borrow from the Department exceeds the unpaid balance on loans used to acquire or improve the property;

(b) The purchase from a corporation wholly or substantially owned by the applicant;

(c) The purchase of property indirectly owned by the applicant.

(11) The applicant has or has had any interest, within the past three years, either title or contractual, in the property being purchased, except it will not be grounds for refusing to make a loan:

(a) If the applicant is purchasing a one-half interest from a divorced spouse. The sum shall be stated in the divorce decree;

(b) If the applicant acquired an interest in property by inheritance and is purchasing the interest which co-heirs have in the same property;

(c) If the application is for an improvement or additional loan;

(d) If the application is for a rehabilitation loan or a loan to pay off a bridge loan. A “bridge loan” is temporary financing obtained for the purpose of financing the purchase of a home pending the sale of a home owned by the borrower and listed with a real estate broker or advertised for sale;

(e) If the application is for a loan to pay off an interim loan whose term does not exceed 24 months (not renewable);

(f) If the application is for a loan to pay off a construction period loan obtained not more than 24 months, and the construction was completed not more than 18 months, before submitting an application to the Director;

(g) If the application is for amount spent on the purchase of, or the value of, land only (whichever is less) and construction commences within 24 months of land acquisition and the loan is funded within 18 months of the start of construction.

(12) The applicant does not meet the applicable underwriting or industry property standards as determined by the Department.

(13) Effective with applications received after May 15, 1984, except for farm loans and loans for multi-family dwellings, if the applicant will use the property offered as security for the loan for a purpose that would jeopardize the tax-exempt status of interest to holders of Bonds issued by the Director of Veterans’ Affairs:

(a) Specifically excluded uses are:

(A) As an investment;

(B) As a recreational home;

(C) As a principal place of business for any trade or business of the applicant.

(b) Examples of excluded uses (if a portion of the property is used regularly and exclusively in connection with a trade or business) are:

(A) Using any portion of the residence as a place to meet patients, clients, or customers in the normal course of business;

(B) Storage of inventory in a separate and identifiable fixed location and kept for the wholesale or retail selling of products as a part of the applicant’s trade or business which would entitle the applicant to a “Business Use of the Home” income tax deduction;

(C) Providing care for children, for the elderly, or for handicapped persons, if the nature and character of the care entitles the property owner to a “Business Use of the Home” income tax deduction.

(c) Any use of a residence which does not qualify for a “Business Use of the Home” income tax deduction shall not be considered as a use in a trade or business. Examples of such permitted uses are:

(A) Storage of inventory for the benefit of an employer or in conduct of a direct selling business, if the use is not exclusive of any personal use of that part of the residence;

(B) Babysitting, if the nature and character of the babysitting does not entitle the property owner to a “Business Use of the Home” income tax deduction;

(C) Engaging in person-to-person sales of consumer products to customers in the home, such as Tupperware, Amway, Avon, wicker, crystal, or similar products;

(D) Foster home established by Court Order, or designated by a Government Agency with jurisdiction to make such a designation;

(E) Using part of the residence to write legal briefs, prepare tax returns, read financial periodicals and reports, clip bond coupons, or engage in similar work, if the use is not exclusive of any personal use of that part of the residence.

Stat. Auth.: ORS 183, 286, 406.030, 407.115, 407.135, 407.145, 407.275, 407.305 & 407.375
Stats. Implemented: ORS 407.115, 407.125, 407.179 & 407.225
Hist.: DVA 7-1982, f. & ef. 3-15-82; DVA 8-1983, f. & ef. 6-1-83; DVA 3-1984, f. 5-2-84, ef. 5-15-84; DVA 6-1984, f. 7-25-84, ef. 8-1-84; DVA 3-1991, f. 5-30-91, cert. ef. 6-3-91; DVA 5-1993, f. 3-16-93, cert. ef. 3-21-93; DVA 7-1995, f. & cert. ef. 7-21-95; DVA 8-2001, f. & cert. ef. 11-23-01; DVA 6-2005, f. & cert. ef. 10-24-05; DVA 4-2013(Temp), f. & cert. ef. 7-23-13 thru 1-19-14; Administrative correction, 2-24-14

274-020-0349

Loan Funding

(1) Funding by Oregon Department of Veterans' Affairs (ODVA) of any loan is subject to the discretion of the Director of Veterans' Affairs. In determining whether or not to fund any loan, the director may consider factors, including, but not limited to the following:

(a) actual or projected cost of funds;

(b) any applicable federal tax or other law;

(c) availability and source of lendable funds;

(d) actual or projected conventional mortgage rates;

(e) actual or projected loan demand;

(f) loan purpose;

(g) eligibility of applicant;

(h) credit worthiness of applicant;

(i) adequacy of security for the loan.

(2) The director may from time to time establish priorities and other requirements with respect to the granting of loans under this Division.

Stat. Auth.: ORS 406
Stats. Implemented: ORS 407
Hist.: DVA 2-2001, f. & cert. ef. 5-23-01

274-020-0350

Evidence of Title

(1) The veteran shall furnish at his expense a mortgagee's title policy for the amount of the loan, a title company lien search, or a certificate of title.

(2) The title policy, or other reports, shall show that the state has a first lien except in the case of:

(a) Property taxes not payable;

(b) A lien of a bonded irrigation or drainage district, in which case all due assessments must be paid;

(c) A public improvement lien, bonded or being collected by the County Tax Collector in which case all due assessments must be paid;

(d) A lien for Reclamation Service of the United States Government, in which case all due assessments must be paid;

(e) A Mortgagee's Title Insurance policy insuring the state against loss from any prior encumbrance, but the encumbrance must be acceptable to the veteran mortgagor.

(3) All water stock shall be endorsed to, and deposited with, the Director to be held by the state until its interest terminates.

Stat. Auth.: ORS 406
Stats. Implemented: ORS 406.030, ORS 407.115 & ORS 407.225
Hist.: DVA 22, f. 11-15-57, ef. 11-14-57; DVA 45, f. & ef. 12-1-75

274-020-0355

Escrow Closing of Loans

(1) All loans made by the Director of Veterans' Affairs (except for protection of security loans) shall be closed by persons or firms licensed to engage in the escrow business under the Oregon Escrow Law (ORS 696.505 to 696.590), or an attorney at law rendering services in the performance of duties as attorney at law. This rule shall be effective on all loan applications received after May 31, 1984:

(a) The types of loans requiring escrow closing are:

(A) Original;

(B) Additional;

(C) Dual (Loans having notes with different due dates);

(D) Improvement;

(E) Assumption of existing.

(b) A loan for protection of security does not require escrow closing;

(c) (For contract sales of State-owned property, see OAR 274-21-010.)

(2) The escrow agent or attorney for closing the loan will be selected by the borrower and the borrower shall pay all escrow fees.

(3) Escrow closing shall not be waived except when in the Director's opinion, requiring escrow closing would cause an undue hardship.

Stat. Auth.: ORS 406 & 407
Stats. Implemented: ORS 407
Hist.: DVA 22, f. 11-15-57, ef. 11-14-57; DVA 29, f. 7-3-63, ef. 9-2-63; DVA 34, f. 8-18-67, ef. 9-11-67; DVA 37, f. 4-6-70, ef. 4-25-70; DVA 42, f. 3-2-73, ef. 3-20-73; DVA 1-1984, f. & ef. 5-3-84; DVA 3-2007, f. & cert. ef. 9-25-07

274-020-0360

Disbursement of Loan Funds

(1) When a veteran is purchasing or refinancing, the loan funds may be disbursed when the loan is closed.

(2) When construction or improvement is involved and the property complies with the definition of a home, the loan funds may be disbursed after the loan is closed, but disbursement is limited to the maximum percentage permitted by statute of the net appraised value.

Stat. Auth.: ORS 406
Stats. Implemented: ORS 407.125 & 407.165
Hist.: DVA 22, f. 11-15-57, ef. 11-14-57; DVA 39, f. 5-27-71, ef. 6-25-71; DVA 2-1978, f. & ef. 12-1-78

274-020-0375

Lost, Stolen, or Destroyed Warrants or Checks

If loan proceeds in the form of a warrant or check issued by the Director are lost, stolen, or destroyed before negotiation, the payee may obtain payment by filing with the Director evidence that value has not been received.

Stat. Auth.: ORS 406
Stats. Implemented: ORS 407.115 & 407.495
Hist.: DVA 22, f. 11-15-57, ef. 11-14-57; DVA 21-1982, f. & ef. 9-15-82

274-020-0380

Transfer of Ownership

(1) The director shall be notified in writing of any transfer of ownership or the right to possess property that is used as security for a loan with the Oregon Department of Veterans' Affairs (ODVA).

(2) The interest rate on any outstanding obligation will be adjusted at the time of the transfer as provided by ORS 407.335.

(3) The following are conditions which constitute a transfer of an ownership interest or the right to possess the loan security:

(a) A borrower takes title to the property with a person other than his or her legal spouse;

(b) Contract of sale;

(c) Any deed transfer;

(d) Any other indenture that purports to convey or transfer any portion of equitable title except for the following:

(A) Deed to create a life estate retained by the eligible veteran mortgagor; or

(B) Deed to a government entity for public use as noted in ORS 407.275(2).

(4) Other types of transactions that may provide for an automatic adjustment in interest rate include:

(a) A purchase option that extends for a period of 12 months and 32 days, or more;

(b) A lease that extends for more than the following periods:

(A) 60 months for farms of 20 acres or more;

(B) 12 months and 32 days for all properties other than farms of 20 acres or more.

(c) A purchase option with a consideration of three percent or more of the stated purchase price.

(5) An assumption by an eligible veteran may be approved at the rate set under ORS 407.305 under the following conditions:

(a) The applicant uses his or her entitlement to make application to the Department for the assumption; and

(b) Meets the requirements for a new loan; and

(c) Executes an assumption agreement which will release the original veteran borrower from personal liability.

(6) The director will not enter into an assumption agreement with a person (or persons) acquiring an ownership interest in ODVA security whereby the existing debtor is relieved of further liability on the debt, unless the new owner (or owners) meets current industry standards determined by the Department to be applicable to the proposed assumption. Applicable industry standards may include, but are not limited to, local lending practices, FannieMae and other lending organization standards, and Federal and state legal requirements. The director may on an individual case and with good and sufficient reason documented in the loan file enter into an assumption agreement which does not meet applicable underwriting requirements or industry property standards, if the director decides it is in the best interest of the Department to do so.

(7) The director will not consent to the assignment of a Land Sale Contract whereby the present purchaser is relieved of further liability on the contract, unless the assignee meets current industry standards determined by the Department to be applicable to the proposed assignment. Applicable industry standards may include, but are not limited to, local lending practices, FannieMae and other lending organization standards, and Federal and state legal requirements. The director may on an individual case and with good and sufficient reason documented in the file consent to an assignment which does not meet applicable underwriting requirements or industry property standards, if the director decides it is in the best interest of the Department to do so.

Stat. Auth.: ORS 406.030, 407.115, 407.275, 407.305 & 407.335
Stats. Implemented: 407.275, 407.335
Hist.: DVA 22, f. 11-15-57, ef. 11-14-57; DVA 32, f. 12-2-65, ef. 10-25-65; DVA 36, f. 7-25-69, ef. 8-25-69; DVA 39, f. 5-27-71, ef. 6-25-71; DVA 45, f. & ef. 12-1-75; DVA 2-1982(Temp), f. & ef. 1-21-82; DVA 17-1982, f. & ef. 7-1-82; DVA 25-1982, f. & ef. 10-1-82; DVA 28-1982, f. 12-30-82, ef. 1-1-83; DVA 5-1989, f. & cert. ef. 11-15-89; DVA 3-1991, f. 5-30-91, cert. ef. 6-3-91; DVA 5-1993, f. 3-16-93, cert. ef. 3-21-93; DVA 7-1995, f. & cert. ef. 7-21-95; DVA 10-1995, f. 9-11-95, cert. ef. 9-22-95; DVA 12-1995, f. & cert. ef. 9-22-95; DVA 6-2005, f. & cert. ef. 10-24-05; DVA 3-2007, f. & cert. ef. 9-25-07

274-020-0381

Rental

The Director may approve the rental of a security, defined as a first lien interest of a home or farm, that has been occupied by the veteran as long as the rental shall not affect the tax exempt status of bonds issued by the Department. The Director, when determining whether to approve the rental of a home or farm that serves as security for a Department Loan, may consider the following factors including but not limited to the following:

(1) The effect on the tax-exempt status of bonds issued under Article XI-A of the Oregon Constitution.

(2) Whether the home or farm was and is appropriately used as the principal residence of the borrower(s).

(3) The financial integrity of the loan program.

(4) Any potential decrease in the value of the security.

(5) The impact on remedies available under the loan documents.

(6) Whether or not there has been or will be any material change in the borrower's/spouse's employment.

(7) The dissolution or annulment of the borrower's marriage.

(8) A significant geographical relocation by the borrower.

(9) Any unusual hardship for the borrower(s).

(10) The borrower(s) ability to maintain the home or farm as his or her principal residence.

Stat. Auth.: ORS 406.030, ORS 407.115, & ORS 407.385
Stats. Implemented: 407.385
Hist.: DVA 1-2000, f. & cert. ef. 1-24-00

274-020-0382

Interest Rate Payable When Property Transferred Back to Original Borrower

The interest rate on a loan secured by property transferred back to the original borrower depends upon whether the original borrower has an outstanding loan, with the interest rate under ORS 407.325 (Rate of Interest Payable by Applicant) at the time of the transfer, and whether the home will be used as the original borrower's principal residence:

(1) If the original borrower does not have an outstanding loan with the interest rate under ORS 407.325 at the time of the transfer, and the home will be used as the original borrower's principal residence, the interest rate will be the rate charged on the loan when made and as periodically adjusted under the "variable" provision of ORS 407.325.

(2) If the original borrower has an outstanding loan with the interest rate under ORS 407.325 at the time of the transfer, or said borrower will not use the home as the borrower's principal residence, the interest rate will be the rate under ORS 407.335 (Rate of Interest Payable by Transferee).

Stat. Auth.: ORS 406 & ORS 407
Stats. Implemented: ORS 407.275, ORS 407.325 & ORS 407.335
Hist.: DVA 5-1985, f. 2-26-85, ef. 3-1-85

274-020-0385

Modification of Mortgage

(1) A request for modification of a mortgage must be made in writing by the borrower.

(2) The borrower and the Director shall agree in writing to the terms of the modification, and it shall be recorded in the mortgage records in the county where the security is located.

Stat. Auth.: ORS 406
Stats. Implemented: ORS 407.115 & ORS 407.155
Hist.: DVA 22, f. 11-15-57, ef. 11-14-57

274-020-0386

Temporary Reduction of Payments

(1) In the event a veteran is unable to make required loan payments due to loss of income because of illness, injury, death, involuntary job loss, or economic stress due to factors beyond the veteran's control, the veteran may apply for a temporary reduction of payments, provided that:

(a) The veteran is the original borrower or one who assumed the loan pursuant to ORS 407.305 (formerly 407.063);

(b) The veteran is residing in the property used as security for the loan at the time he or she requests the payment reduction;

(c) The veteran must request the loan reduction by writing to the Director of Veterans' Affairs, c/o Collection Unit, 700 Summer Street, N.E., Salem, OR 97310. The written request must contain a statement describing the reason for the request, current income, source of income, and must be accompanied by a copy of the veteran's previous two years' federal income tax returns;

(d) The veteran must furnish any other documentation requested by the director relating to the reason for request.

(2) In determining the amount and term for reducing loan payments, the director shall consider the value of the security, the balance owing on the loan, the total assets of the borrower, past payment record of the borrower, and any other matters related to financial hardship to the borrower and the financial position of the loan program:

(a) Monthly loan payments may not be reduced to an amount less than the monthly loan cancellation life insurance premiums;

(b) The director may recapture the reduced portion of the monthly payment and any other accrued delinquency by whatever repayment methods are appropriate to individual circum-stances;

(c) The terms and conditions of the payment reduction and repayment must be agreed upon, in writing, and approved by both the veteran and the director;

(d) The veteran may be required to submit information periodically regarding his income and financial affairs in order to reevaluate the necessity of continuing the reduction in payments. Following such reevaluation, the loan payment reduction may be modified by the director;

(e) The veteran must continue to reside in the loan security.

(3) A veteran whose loan is in foreclosure is not eligible under this program.

(4) Temporary reduction of loan payments is a benefit to be extended only in an extreme emergency and is not to be abused.

(5) Because of the effect of these reductions on the solvency of the loan program as a whole, on the probable financial position of the program in the future, on the condition of the tax-exempt bond market, and on other borrowers in the program, the director has determined that the maximum number of borrowers that can be accommodated under this program is approximately one percent of the total outstanding borrowers. Therefore, at any time, the director will enter into agreements as provided in subsection (2)(c) of this rule with no more than one percent of the total loan portfolio, the number to be specified by the director.

Stat. Auth.: ORS 406.030, ORS 407.095 & ORS 407.115
Stats. Implemented: ORS 406.030, ORS 407.095 & ORS 407.115
Hist.: DVA 4-1982(Temp), f. & ef. 2-9-82; DVA 18-1982, f. & ef. 8-2-82; DVA 7-1996, f. & cert. ef. 7-22-96

274-020-0387

Reamortization of Loans

The Director of Veterans' Affairs may adjust payments and other terms of the loan under the following conditions:

(1) Tax adjustments.

(2) A change in the interest rate.

(3) A change in the insurance premiums.

(4) Errors or omissions on the operative loan documents.

(5) When the balance of the loan will not amortize within the terms of the security document.

(6) Any expenditure or advance of funds as provided under ORS 407.135 (formerly 407.080), 407.145(2) (formerly 407.090(2)), and the security document.

Stat. Auth.: ORS 406 & 407
Stats. Implemented: ORS 407.095, 407.135 & 407.145
Hist.: DVA 9-1982(Temp), f & ef. 4-9-82; DVA 12-1982, f. & ef. 5-17-82; DVA 7-1996, f. & cert. ef. 7-22-96; DVA 2-2005, f. & cert. ef. 4-22-05

274-020-0388

Property Tax Amortization and Escrow Accounting

(1) Except as otherwise provided herein, payments required on all loans shall include an amount, which represents advances, for taxes paid by the Director of Veterans' Affairs (director) on the security:

(a) The amounts shall be determined each year by dividing the amount advanced by the number of loan payments due during the year, increased to the next whole dollar;

(b) The amounts so determined shall be added to and become part of the loan payment unless full payment of the advance is made pursuant to subsection (c) or (d) of this section;

(c) As soon as possible after taxes are paid on November 15th of each year, the director may notify each borrower by mail of the amount of the tax advance. If full payment of the tax advance is made to the director, the amount determined in subsection (a) of this section shall be deleted from the loan payments. Upon such payment the borrower shall be credited with prior loan payments made to the extent of the amounts contained therein that represent repayment of the tax advance;

(d) If for any reason the taxes cannot be paid on November 15th, the director will send the notice as provided in subsection (c) of this section as soon as possible after the taxes are paid;

(e) Effective with taxes paid in November of 1990 (1990-91 taxes) through November of 2003 (2003-2004 taxes), the director generally did not advance funds for the payment of taxes on property that was security for a loan being charged less than seven percent interest unless an escrow account had been established on the loan for the payment of taxes. The interest rate charged was the "loan rate" or "composite rate" where more than one loan (with different interest rates) is secured by the property;

(f) Effective with taxes (including delinquent taxes) to be paid in November of 2004 (2004-2005 taxes), the director may approve a borrower's request to advance funds for the payment of taxes on property that is security for a loan unless an escrow account had been established on the loan for the payment of taxes. The interest rate being charged is the "loan rate" or "composite rate" where more than one loan (with different interest rates) is secured by the property;

(g) Notwithstanding the provisions of subsection (1)(e) and (1)(f) of this rule, the director may advance funds for the payment of taxes on property that is security for a loan under the provisions of the Servicemembers Civil Relief Act. In addition, the director may advance funds to pay property taxes if sufficient funds are not available in the escrow account, by overdrawing the escrow account balance.

(2) The director may allow owners of the security to directly pay the taxes and hazard insurance due on the security, subject to the following conditions:

(a) For existing accounts or qualified assumptions of existing accounts, the owner of the property must make written application to the director on a form prescribed by the director. Said application also must conform with the following:

(A) The application must be submitted by September 1st of the year application is made;

(B) At the time of application, payments on the loan must be current and the applicant's credit history must be satisfactory as determined by the director at his sole discretion and,

(C) The loan balance, including any accruals, at the time of application must not be more than 80 percent of the "real market value" of the security as shown by the county tax assessor.

(D) If a request is approved, any funds the director holds in an applicable escrow account, which are not scheduled for disbursement will be returned to the borrower and the borrower will be responsible for any future disbursements.

(b) For new loan applications, the applicant must make written request to the director. Said application also must conform with the following:

(A) The loan-to-value ratio must be 80 percent or less of the net appraised value;

(B) The loan must have no restrictions by virtue of mortgage insurance that the lender pay taxes and insurance.

(3) All applications, for permission to pay taxes and hazard insurance directly, will receive a written approval or disapproval from the director. If the application is approved, the applicant will be advised of the date when the director will discontinue making disbursements, if applicable and the date the loan payment will be adjusted, if necessary.

(4) The director may revoke any permission granted concerning the payment of taxes and hazard insurance on the security by giving the owner of the security 30 days written notice of the revocation, except as otherwise provided herein. If the director advances funds to pay unpaid taxes or hazard insurance, any advance by the director for such a shortage or deficiency also will constitute immediate revocation by the director of permission for the owner to pay directly any taxes and hazard insurance due on the security, and the account will revert to the last signed agreement between the director and borrower for the payment of taxes, hazard insurance and other obligations. Any advances by the director, including any interest and fee, shall be paid back within the remaining payment/escrow year. The borrower may not change this obligation without prior written approval from the director.

(5) Sections (1), (2), (3) and (4) of this rule are not applicable to payments made under contracts for the purchase of state-owned property. Contract purchaser(s) may prepay the current year's property taxes in a lump sum and have the tax portion removed from the following year's payment(s).

(6) Monthly simple interest home improvement loans are handled as follows:

(a) If the borrower has an existing account with ODVA the taxes will continue to be paid per the terms of that account;

(b) When an existing account is paid in full and the loan-to-value ratio (LTV) is 80 percent or less of the net appraised value, the borrower may at the director's discretion pay their own taxes directly to the county and the borrower may at the director's discretion pay their own hazard insurance;

(c) If the borrower does not have an existing account and the LTV is greater than 80 percent, the borrower must pay their taxes and hazard into an escrow account as part of their standard payment.

(7) Pursuant to the provisions of ORS 407.169, beginning November 1, 1990, escrow accounts are available for the prepayment of estimated property taxes and insurance. All borrowers with loans, and all purchasers buying property from the director on a land sale contract, based on a daily simple interest calculation, may make prepayments of estimated property taxes into an escrow account, subject to the following conditions:

(a) The owner of the property must make written application to the director on a form prescribed by the director;

(b) Applicants will have the option of either repaying the previous year's tax advance as provided by section (1) of this rule, or of permitting said tax advance to remain part of the principal balance on the loan with the payments of said loan adjusted to repay the tax advance with interest over the remaining life of the loan.

(8) On monthly simple interest loans with escrow accounts, the required escrow payment may be based, inter alia, on the preceding year's disbursements for such items as property taxes, fire and extended coverage premiums, other required insurance premiums, condominium/homeowners dues, and bancrofted amounts. In cases of un-assessed new construction, the estimate may be based, inter alia, on the assessment of comparable residential property in the market area.

(9) The director will pay interest on the escrow account as provided by ORS 86.245(1).

(10) Effective May 24, 1995, all escrow accounts on monthly simple interest loans and tax escrows on daily simple interest loans will be administered in the following manner:

(a) The director may require a cushion that shall be no greater than 1/6 of the estimated total annual disbursements from the escrow account. Estimated disbursements may be modified by an amount not exceeding the most recent year's change in the national Consumer Price Index for all urban consumers (CPI, all items);

(b) At the end of an escrow account computation year, an aggregate analysis will be completed on each escrow account to determine the borrower's escrow account payment(s) for the new payment year. The borrower will be notified of any shortage, deficiency, or surplus in the escrow account and the amount of escrow account payment to be included in the loan payment;

(c) If the loan is two months or more delinquent in payments an analyzes will not be done until the loan is brought current.

(d) If the analysis determines there is not sufficient money in the escrow account to pay the required disbursements, the shortage or deficiency may be advanced by the director. The required escrow payments on the loan will be increased to recover any interest, fee or advance by the director for such a shortage or deficiency, or the borrower may repay the advance, interest or fee in a lump sum;

(e) If the analysis determines there is a surplus in the escrow account equal to or greater than $25, the entire surplus shall be refunded to the borrower. If the surplus is less than $25, this amount will be retained in the escrow account and credited against the next year's escrow payments;

(f) A statement itemizing all escrow account activity, (annual escrow statement) will be provided to the borrower each year.

(11) The following definitions apply to section 10 above:

(a) "Aggregate analysis" -- to analyze the escrow account by calculating the sufficiency of escrow funds as a whole, as opposed to calculating components separately.

(b) "Cushion" -- funds that the director may require a borrower to pay into an escrow account to cover unanticipated disbursements or disbursements made before the borrower's payments are available in the account.

(c) "Deficiency" -- the amount of a negative balance in an escrow account.

(d) "Escrow account" -- any account that the director establishes or controls on behalf of a borrower to pay taxes, insurance premium, or other charges, as applicable.

(e) "Escrow account computation year" -- a 12-month period that the director establishes for the escrow account.

(f) "Shortage" -- an amount by which a current escrow account balance falls short of the target balance at the time of escrow analysis.

(g) "Surplus" -- an amount by which the current escrow account balance exceeds the target balance of the account.

(h) "Target balance" -- the estimated month end balance in an escrow account that is just sufficient to cover the remaining disbursements from the escrow account in the escrow account computation year, taking into account the remaining scheduled periodic payments, and a cushion.

Stat. Auth.: ORS 86.240, 86.245, 406.030, 407.115, 407.169 & 407.275
Stats. Implemented: ORS 406.030 & 407.275
Hist.: DVA 26-1982(Temp), f. & ef. 10-1-82; DVA 3-1983, f. 1-14-83, ef. 1-15-83 and Suspended by DVA 4-1983(Temp); DVA 4-1983(Temp), f. & ef. 2-1-83; DVA 10-1983, f. 9-8-83, ef. 2-1-84; DVA 13-1983, f. & ef. 11-1-83; DVA 10-1984, f. 10-8-84, ef. 10-15-84; DVA 9-1985, f. 6-20-85, ef. 7-1-85; DVA 2-1989, f. & cert. ef. 6-1-89; DVA 2-1990, f. & cert. ef. 2-1-90; DVA 1-1991, f. & cert. ef. 5-1-91; DVA 7-1993, f. 5-18-93, cert. ef. 5-21-93; DVA 5-1995, f. 5-23-95, cert. ef. 5-24-95; DVA 11-1995, f. 9-11-95, cert. ef. 9-22-95; DVA 12-1995, f. & cert. ef. 9-22-95; DVA 5-2001, f. & cert. ef. 7-23-01; DVA 1-2004(Temp), f. & cert. ef. 1-15-04 thru 7-13-04; DVA 3-2004, f. & cert. ef. 2-24-04; DVA 2-2005, f. & cert. ef. 4-22-05

274-020-0391

Discount for Early Payoff

(1) The balance on some loans and contracts may be discounted in consideration of the loan or contract being paid in full before its final payment date. The amount of the discount will be based upon a mathematical computation which uses a discount rate to compute the present value of the remaining scheduled payment stream of the loan or contract being considered for discount. The discounted amount may be further limited by a percentage based calculation determined by the Director. The Director will periodically fix the discount rate and the percentage based calculation, if any, taking into consideration:

(a) Market conditions (reinvestment opportunities);

(b) Financial statement conditions (health of programs);

(c) Cash flow conditions;

(d) Balance and term of the loan or contract being considered for discount.

(2) The loans and contracts that will be discounted and the discount rate will be periodically determined by the Director and the information will be available to all interested persons making inquiry to the Director. The amount of the discount quoted by the Director shall include a per diem amount that must be added to the quoted payoff amount in order to arrive at a payoff amount for a specific day. The quoted discount amount shall be honored for 30 days following the date of the quote.

(3) Any loan or contract that does not amortize on the agreed-to retirement date will be reamortized and a new payment determined prior to the computation of a discount amount. The reamortized payment amount will be used only for the purpose of calculating the amount of the discount.

(4) Discounts shall not be available on loans or contracts being paid in full by the proceeds from Loan Cancellation Life Insurance or hazard insurance.

(5) This rule does not apply to loans or contracts after a default of the loan or purchase agreement has occurred and settlement negotiations are in process.

(6) No discount shall be given where the loan or contract is being paid in full in connection with a change in ownership of the property securing the loan or the property being purchased on contract.

Stat. Auth.: ORS 291.021, ORS 406.030, ORS 407.115, ORS 407.169, ORS 407.177, ORS 407.179, ORS 407.181 & ORS 407.275
Stats. Implemented:
Hist.: DVA 2-1986(Temp), f. & ef. 2-13-86; DVA 8-1986, f. & ef. 8-18-86; DVA 7-1993, f. 5-18-93, cert. ef. 5-21-93

274-020-0395

Partial Release of Security

(1) A partial release of security may be granted when the borrower or the contract purchaser of a State-owned property submits a complete application for one and the Director determines that granting the requested release would not jeopardize the Department of Veterans' Affairs' security position.

(2) The remaining property must qualify as security for the loan or contract balance under the provisions of ORS 407.225(3) and OAR 274-020-0325 to 274-020-0340.

(3) Notwithstanding compliance with section (2) of this rule, the Director may require that the loan or contract balance be reduced as consideration for granting the requested release.

Stat. Auth.: ORS 406 & ORS 407
Stats. Implemented: ORS 407.115 & ORS 407.155
Hist.: DVA 22, f. 11-15-57, ef. 11-14-57; DVA 35, f. 12-19-68, ef. 1-11-69; DVA 39, f. 5-27-71, ef. 6-25-71; DVA 45, f. & ef. 12-1-75; DVA 8-1985, f. 6-12-85, ef. 7-1-85; DVA 12-1985, f. & ef. 12-5-85

274-020-0405

Confidential Nature of Information Submitted by the Borrower

Information submitted by the veteran in support of his application shall be considered confidential and shall not be disclosed to persons outside the department, unless permission is given by the veteran to release the information, or the information is requested by a public agency in the exercise of its official duty and only then at the discretion of the Director.

Stat. Auth.: ORS 406
Stats. Implemented: ORS 407.181 & ORS 407.201
Hist.: DVA 22, f. 11-15-57, ef. 11-14-57

274-020-0410

Confidential Nature of Information Procured by the Director

Information secured by the Director in connection with a veteran's application for a loan shall be considered confidential and shall not be disclosed to persons outside the employ of the department, unless such information is requested by a public agency in the exercise of its official duty, and only then the release shall be at the discretion of the Director.

Stat. Auth.: ORS 406
Stats. Implemented: ORS 192, ORS 406.030, ORS 407.115, ORS 407.181 & ORS 407.201
Hist.: DVA 22, f. 11-15-57, ef. 11-14-57

274-020-0411

Disclosure of Information and Fees

(1) Information in the custody of the Director of Veterans' Affairs (director) will be disclosed, or protected from disclosure, consistent with the provisions of ORS Chapter 192.

(2) Requests for information can be made verbally, but the director reserves the right to require the request to be in writing, signed and dated, naming or describing the information desired and the date the information is needed. A reasonable period of time must be allowed for the custodian of the records to locate and assemble the requested information. Restrictions may be placed upon where the information will be delivered or made available for inspection. The director shall designate a staff employee to be the department's records custodian, whose function is to perform the duties necessary to manage the department's records in accordance with all applicable laws. These duties may include, but are not limited to, certifying records to be true copies of the original documents on file in the custody of the director.

(3) Mailing lists of Oregon Department of Veterans' Affairs (ODVA) active account holders, and Vets News recipients, may be made available upon payment of the required fee. The mailing lists will not contain the names of persons who submit a written request for deletion of their name from the list on the basis that such disclosure would constitute an unreasonable invasion of privacy.

(4) The following information will not be disclosed except pursuant to an order issued by the director or by the Attorney General of the State of Oregon:

(a) Internal communications of an advisory nature preliminary to any final agency determination of policy or action;

(b) The name of a confidential informant or information submitted to the department in confidence where submission of the information was not required and the department has obliged itself in good faith not to disclose the information.

(5) The following information will not be disclosed except pursuant to an order issued by the Attorney General:

(a) Information relating to the appraisal of real and personal property prior to making a loan secured by that property;

(b) Information of a financial, medical, or personal nature relating to any individual, if such disclosure would constitute an unreasonable invasion of privacy.

(6) Fees will be charged to reimburse the department the cost of making information available or for producing copies of records:

(a) For mailing lists, the fee is derived from the actual production costs. The lists are available in alphabetical or zip code order;

(b) The director may require reimbursement for any additional costs actually incurred by the department;

(c) For all requests for copies of documents, the charge is based on the actual costs incurred for search of files and for documents provided;

(d) For necessary safeguard of documents where a requestor is allowed to research records on department premises, a staff employee, designated by the director, must be present. The fee to be charged for this service will be equal to the hourly pay of the employee designated. In appointing an employee to safeguard departmental records, the director shall consider whether the pay range of the designated employee is reasonable and appropriate, reflecting the technicality and sensitivity of the documents being researched;

(e) The director may waive the fees provided in subsections 6(a), 6(c) and 6(d) of this rule for city, county, state, and federal agencies, and for individuals obtaining information from their own files;

(f) The director may require payment of any and all fees identified in this section, in a form satisfactory to the director, prior to providing any disclosure of documents or information. Advance charges for anticipated labor expenses may be made by the director on an estimated basis.

(7) The purchase of a mailing list does not constitute permission to use ODVA's name in any marketing or advertising approach, whether expressly stated, inferred or implied.

Stat. Auth.: ORS 192, 406.030 & 407.115
Stats. Implemented: ORS 192, 406.030 & 407.115
Hist.: DVA 29-1982, f. 12-30-82, ef. 1-1-83; DVA 8-1984, f. 8-6-84, ef. 8-15-84; DVA 6-1986, f. & ef. 5-1-86; DVA 3-1988, f. 6-30-88, cert. ef. 7-1-88; DVA 6-1989, f. & cert. ef. 12-1-89; DVA 2-1993, f. & cert. ef. 1-4-93; DVA 8-1996, f. & cert. ef. 9-23-96; DVA 2-2005, f. & cert. ef. 4-22-05

274-020-0420

Director's Decisions Control in All Controversies

(1) The Director shall make all determinations as to the applicant's eligibility for a loan.

(2) The Director shall make all determinations, based upon data and information in the file, as to whether the property offered is acceptable security and whether or not a loan shall be made.

(3) The Director's decision shall be final in all matters pertaining to eligibility and the making of a loan.

Stat. Auth.: ORS 406
Stats. Implemented: ORS 406.030, ORS 407.115, ORS 407.125 & ORS 407.225
Hist.: DVA 22, f. 11-15-57, ef. 11-14-57; DVA 3-1981(Temp), f. 4-3-81, ef. 4-6-81; DVA 6-1981(Temp), f. & ef. 8-13-81; DVA 3-1988, f. 6-30-88, cert. ef. 7-1-88

274-020-0421

Review of Loan Determinations and Other Decisions

(1) Any person adversely affected by a decision of a DVA official may write a letter of complaint to the Director. The Director or other designated official shall prepare and deposit in the ordinary mail, or personally deliver, a written response within 30 days of receipt of the written complaint.

(2) If the Director, or other designated official supports the decision, a request may be made for an informal hearing with a designated official at the Salem Central Office of the DVA.

(3) A request for an informal hearing shall be addressed to the Director and shall state the nature of the adverse decision, the date of and the person making the decision, and how the person requesting the hearing is adversely affected. A request for an informal hearing must be received by the Director within 60 days of the date of mailing or personal delivery of the response, provided for by section (1) of this rule. If no letter of complaint was ever written, the requirement for a letter of complaint may be waived, and the request for an informal hearing considered if the request is received by the Director within 90 days of the date of the decision leading to the request for an informal hearing. Unless ODVA received written notice of a complaint, the right to a hearing (both informal and contested) shall expire 90 days after the date the complainant had actual knowledge of, or by the exercise of due care would have had knowledge of, the occurrence in dispute.

(4) Within 30 days from receipt of a request for an informal hearing, the Director shall, by mail, notify the person making the request of the action taken on the request which may be:

(a) Designating an official to conduct an informal hearing;

(b) Reversing or modifying the adverse decision;

(c) Denying the request.

(5) Any denial of a request for an informal hearing shall state the reason for the denial. A request for an informal hearing may be denied if the Director finds:

(a) Litigation involving the issue in dispute is pending or imminent;

(b) The person making the request is not the person who would directly benefit from a modification or reversal of the adverse decision (not the real party in interest);

(c) A modification or reversal of the decision would affect persons who would not be bound by the modification or reversal (the Director is lacking power to resolve the dispute);

(d) The request was not received by the Director within the time allowed by section (3) of this rule.

(6) If an official is designated to conduct an informal hearing, the person requesting the hearing shall be notified by mail of the name and title of the official designated and the time and place for the hearing. A time for the hearing must be scheduled within 60 days of the hearing request unless otherwise mutually agreed by the parties.

(7) After conducting an informal hearing, the designated official shall prepare and submit to the Director for approval a written decision. Within 30 days after conducting an informal hearing, a decision approved by the Director shall be mailed to the person for whom the hearing was conducted.

(8) A decision of the designated official, after approval by the Director, shall be final except when, as defined by ORS 183.310(2), a "Contested Case" exists.

(9) When a "Contested Case" exists, and a contested case hearing is desired, it must be requested in writing and the request received by the Director within 20 days of the date of the mailing of the decision of the designated official if an informal hearing has been held, or within 20 days of service of the notice in a contested case under ORS 183.415.

(10) Contested case hearings will be conducted in accordance with the provisions of ORS 183.413 to 183.470 and the Attorney General's Model Rules of Procedure, OAR 137-003-0001 to 137-003-0092

Stat. Auth.: ORS 183, ORS 406.030 & ORS 407.115
Stats. Implemented: ORS 183, ORS 406.030 & ORS 407.115
Hist.: DVA 6-1982(Temp), f. & ef. 3-11-82; DVA 10-1982, f. & ef. 4-15-82; DVA 1-1987, f. & ef. 3-16-87; DVA 6-1990, f. & cert. ef. 11-26-90

274-020-0430

Effect

These rules and regulations shall have the effect of law and shall be binding in all instances on persons making application for a loan under Article XI-A of the Oregon Constitution and ORS 407.075 to 407.595, but if any part of the regulations are found to be void or illegal, the illegality shall not affect the remaining provisions of the rules and regulations.

Stat. Auth.: ORS 406
Stats. Implemented: ORS 406 & 407
Hist.: DVA 22, f. 11-15-57, ef. 11-14-57; DVA 3-2007, f. & cert. ef. 9-25-07

274-020-0440

Fees

(1) The Director of Veterans' Affairs (director) imposes fees for the following:

(a) New Loan;

(b) Assumption by Eligible Veteran;

(c) Transfer of Ownership;

(d) Partial Release, Easement, and Modification of Mortgage;

(e) Timber Release;

(f) Firewood Release;

(g) Purchase of State Owned Property;

(h) Dishonored Check;

(i) Reissue of Stale, Lost, Destroyed or Missing Document;

(j) Mineral Rights and Geothermal Resource Rights Release;

(k) Veterans' Home Improvement Loan;

(l) Borrower requests to cancel private mortgage insurance; and

(m) Dishonored Electronic Funds Transfer.

(2) The fee will not be waived or reduced except when in the director's opinion, requiring the fee would cause an undue hardship. In the case of a dishonored check, the fee will be waived if the check was dishonored because of a bank error.

(3) Fee Schedule:

(a) New Loan:

(A) A credit report fee may be charged in an amount not to exceed the amount charged by the credit reporting firm. A credit report fee may be charged for each applicant unless a co applicant is the applicant's spouse;

(B) An appraisal report fee may be charged in an amount not to exceed the amount charged by the appraiser;

(C) In the event of cancellation of the application after acceptance for processing and collection of credit report and appraisal fees, any money not used or obligated for credit reports or appraisals shall be refunded;

(D) A loan fee shall be charged on a conventional loan not to exceed 2 percent of the loan amount;

(E) Flood determination fee for each loan may be charged in an amount not to exceed the amount charged by the flood determination company;

(F) A processing fee in the amount of $495 will be charged for processing, document preparation, or other services permitted by the director that are usual and customary in the mortgage industry.

(b) Assumption by an eligible veteran under ORS 407.305. Effective with applications received on or after July 1, 1985, the director shall charge a fee of 1.125 percent of the total of the unpaid balance plus any new funds loaned. The minimum service fee shall be $100;

(c) Transfer of Ownership:

(A) The fee for transfer shall be:

(i) Through June 30, 1985, 1 percent of the unpaid balance;

(ii) Effective July 1, 1985, 1.125 percent of the unpaid balance;

(iii) Effective May 1, 1992, $450.

(B) No fee will be charged when a transfer results from:

(i) Divorce;

(ii) Death;

(iii) Marriage;

(iv) Transfer of the interest of one or more current owners to the other owner or owners; or

(v) Transfer to a relocation company on an unrecorded contract.

(d) Partial Release, Easement, and Modification of Mortgage. The director will charge the following fees:

(A) $450 plus the cost of an appraisal for a partial release or modification of mortgage on an urban property. The appraisal fee will be refunded to the applicant if the request is withdrawn before the director is obligated to an appraiser for the cost of a property appraisal;

(B) $450 plus the cost of an appraisal for a partial release or modification of mortgage on a farm property. The appraisal fee will be refunded to the applicant if the request is withdrawn before the director is obligated to an appraiser for the cost of a property appraisal;

(C) $50 for consenting to an easement;

(D) $100 for partial release involving release of a mobile home which is to be replaced with another home;

(E) $1,100 for a partial release involving release of water rights. $1,000 of the $1,100 fee will be refunded if the request is withdrawn before the director is obligated to an appraiser for the cost of a property appraisal;

(F) $50 for processing request to relocate personal property mobile home;

(G) A larger fee may be charged in complex cases to cover extra processing costs; and

(H) A fee for the partial release of property to a government entity for public use as noted in ORS 407.275. This fee may be modified or waived at the discretion of the director.

(e) Timber Release:

(A) The director shall charge $200 for a release of more than 7,500 and less than 30,000 board feet of timber. No refund will be made after application. The director shall charge $1,200 for a release of 30,000 board feet or more of timber. $1,000 of the $1,200 fee will be refunded to the applicant if the request is withdrawn before the director is committed to an appraiser for the cost of a property appraisal. One release of up to and including 7,500 board feet of timber will be allowed each calendar year without a fee being charged;

(B) An increased fee may be charged in complex cases to cover extra costs.

(f) Firewood Release:

(A) The director shall charge $200 for a release of more than six and less than 20 cords of firewood. No refund will be made after application. The director shall charge $1,200 for a release of 20 cords or more of firewood. $1,000 of the $1,200 fee will be refunded to the applicant if the request is withdrawn before the director is committed to an appraiser for the cost of a property appraisal. One release of up to and including six cords of firewood, will be allowed each calendar year without a fee being charged;

(B) An increased fee may be charged in complex cases to cover extra costs.

(g) Purchase of State Owned Property:

(A) A credit report fee may be charged equal to the amount charged by the credit reporting firm. A credit report fee may be charged for each applicant unless a co applicant is the applicant's spouse;

(B) A fee of 1.125 percent shall be charged on the amount of the contract on all properties whether or not the purchaser is a veteran. The minimum fee will be $250. There will be no fee for a cash sale. If improvements in lieu of a cash down payment are part of the purchase agreement, a $50 fee will be charged for any necessary completion inspection(s) after the first one. The provisions of section (4) of this rule apply to any fee charged;

(C) In the event of cancellation of an offer after acceptance for processing by Loan Processing, but prior to approval, all of the earnest money deposit except $200 shall be refunded ($200 to be retained by the director). If an application is canceled after approval, the full amount of the earnest money deposit shall be retained by the director;

(D) Notwithstanding the provisions of paragraph (3)(g)(C) of this rule, the director may refund all of the earnest money deposit if cancellation of the application was necessitated by some unexpected event such as redemption of the property before closing, or the death, disappearance, serious injury, serious illness, job loss, or job transfer of one or more of the parties to the transaction. Parties to the transaction include members of the immediate family.

(h) Dishonored Check. Whenever a bank check issued in payment of an obligation due to the Director of Veterans' Affairs is dishonored by the bank upon which the check is drawn, a fee in the amount of $25 will be charged. If two dishonored checks are received from the same borrower within a 12 month period, the director may require this borrower to make all future payments by cash, money order, cashier's check or certified check;

(i) Reissue of Stale, Lost, Destroyed or Missing Document. Whenever a document issued by the director must be reissued because it has been outstanding too long without being used, or has been lost, destroyed or for some other reason is missing, a fee in the amount of $25 may be charged for this service. "Document" means deed, satisfaction of mortgage, satisfaction of judgment, request for reconveyance, reconveyance, assumption agreement, contract, partial release, modification of mortgage, escrow closing papers (or some other document substantially the same as the ones enumerated). This fee may be waived if there is good reason to believe that the person requesting the reissue was not responsible for the delay that caused the document to become stale or for the disappearance of the original issue;

(j) Release of Mineral Rights and Geothermal Resource Rights. The director may charge a fee of $150 for processing an application for release of mineral and geothermal resource rights. From this fee, ODVA will pay the cost of recording any document issued. An additional $100 may be charged if the nature of the application requires a review by the Division of State Lands to determine the mineral and geothermal resource potential. A check or money order in the amount of $100 made payable to the Division of State Lands will be required when the Division of State Lands review is necessary.

(k) Veterans' Home Improvement Loan:

(A) A credit report fee may be charged for residential mortgage credit reports in an amount not to exceed the amount charged by the credit reporting firm;

(B) An appraisal report fee may be charged in an amount not to exceed the amount charged by the appraiser;

(C) A flood determination fee may be charged in an amount not to exceed the amount charged by the flood determination company; and

(D) Any other fees, that may be incurred by ODVA, may be charged in an amount not to exceed the amount charged by the provider of the service.

(l) Borrower requests to cancel private mortgage insurance. The director may charge a $100 inspection fee. In the event a full appraisal is necessary to establish value, and it is requested by the borrower, the $100 inspection fee will be credited toward the cost of the appraisal.

(m) Dishonored Electronic Funds Transfer. Whenever an electronic funds transfer (also known as ACH) is authorized for payment of an obligation due to the Director of Veterans' Affairs and is dishonored by the bank upon which the funds transfer is drawn, a fee in the amount of $25 will be charged. If two dishonored electronic funds transfers are received from the same borrower within a 12 month period, the director may require this borrower to make all future payments by cash, money order, cashier's check or certified check.

(4) Fees will be collected in advance (except for dishonored checks and electronic funds transfers). Where the director was not made a party to a transaction requiring payment of a fee, and the fee was not paid, the fee is due on demand. If payment is not made after 30 days written notice, it may be added to the amount due on the loan. The fee for dishonored checks may be added to the amount due on the loan when the check is returned by the bank. Any fee added to the amount due on the loan shall bear interest at the same rate as on the principal indebtedness. "Loan" means "contract" where context requires.

Stat. Auth.: ORS 406.030, 407.115, 407.135, 407.145, 407.275 & 742.282
Stats. Implemented: 407.135, 407.145 & 407.275
Hist.: DVA 5-1982(Temp), f. & ef. 2-12-82; DVA 16-1982, f. & ef. 6-1-82; DVA 29-1982, f. 12-30-82, ef. 1-1-83; DVA 1-1983, f. 1-14-83, ef. 1-15-83; DVA 9-1983, f. & ef. 7-1-83; DVA 15-1983, f. 12-20-83, ef. 1-1-84; DVA 7-1984, f. 7-25-84, ef. 8-15-84; DVA 7-1985, f. 5-22-85, ef. 7-1-85; DVA 4-1988, f. & cert. ef. 8-15-88; DVA 3-1989, f. & cert. ef. 8-16-89; DVA 5-1990, f. 8-20-90, cert. ef. 10-1-90; DVA 5-1991, f. 7-23-91, cert. ef. 7-24-91; DVA 7-1991, f. 10-31-91, cert. ef. 11-1-91; DVA 7-1992, f. & cert. ef. 5-1-92; DVA 12-1992(Temp), f. & cert. ef. 8-19-92; DVA 3-1993, f. & cert. ef. 1-4-93; DVA 5-1993, f. 3-16-93, cert. ef. 3-21-93; DVA 7-1995, f. & cert. ef. 7-21-95; DVA 10-1995, f. 9-11-95, cert. ef. 9-22-95; DVA 12-1995, f. & cert. ef. 9-22-95; DVA 5-1997, f. & cert. ef. 10-22-97; DVA 1-1998(Temp), f. 1-26-98, cert. ef. 2-2-98 thru 7-31-98; DVA 7-1998, f. & cert. ef. 6-23-98; DVA 3-1999, f. & cert. ef. 9-22-99; DVA 6-2001(Temp), f. 9-7-01, cert. ef. 9-10-01 thru 3-8-02; DVA 2-2002, f. & cert. ef. 2-22-02; DVA 2-2005, f. & cert. ef. 4-22-05; DVA 3-2007, f. & cert. ef. 9-25-07; DVA 2-2012, f. & cert. ef. 6-25-12

274-020-0445

Assumption of Loan by Eligible Veteran

When a veteran who is eligible to assume a loan under the provisions of ORS 407.305 seeks to acquire property and wishes to assume liability on the loan, the Director of Veterans' Affairs will approve the assumption subject to the following conditions:

(1) The applicant must submit the same evidence of eligibility and the same application as if an application were being submitted for a loan.

(2) The provisions of ORS 407.225(3) do not apply except when additional funds are being requested. If additional funds are not being requested, the applicant may be permitted to assume a loan with a balance in excess of 97 percent of the appraised value on homes which are real property, 85 percent of the appraised value on homes which are not real property, and 90 percent of the appraised value on farms.

(3) Notwithstanding the provisions of OAR 274-20-440, if additional funds are not being requested, an appraisal fee will not be collected by the director, and no appraisal of the property will be made. If additional funds are being requested, the provisions of ORS 407.225(3) and OAR 274-20-440 shall apply, and an appraisal of the property will be made.

Stat. Auth.: ORS 406.030, 407.115, 407.225, 407.275 & 407.305
Stats. Implemented: Ch. 238 OL 1995, ORS 407.225 & 407.275
Hist.: DVA 9-1984, f. 8-6-84, ef. 8-15-84; DVA 10-1995, f. 9-11-95, cert. ef. 9-22-95; DV 12-1995, f. & cert. ef. 9-22-95; DVA 3-2003(Temp), f. & cert. ef. 4-7-03 thru 10-3-03; DVA 11-2003, f. & cert. ef. 9-23-03; DVA 3-2007, f. & cert. ef. 9-25-07

274-020-0450

Due on Sale

(1) By ORS 407.335(5) the Director has discretion to decide when a second sale or transfer of the property, or any part thereof, securing an ODVA loan, will cause the entire balance of the loan to be immediately due and payable.

(2) Effective with sales, or transfers of ownership, occurring after June 30, 1989, the Director will not declare the entire unpaid balance on any loan to be immediately due and payable because of a second sale, or transfer of ownership, of the property or any part thereof, securing the loan.

Stat. Auth.: ORS 406 & ORS 407
Stats. Implemented: ORS 407.335
Hist.: DVA 4-1989, f. & cert. ef. 10-4-89

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