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

 

DIVISION 25

VETERANS' LOAN PROGRAM 1990

274-025-0010

Purpose and Objectives

OAR chapter 274, division 025, is established to administer and enforce ORS 407.075 through 407.595. These rules, together with the Loan Origination Guide/Mortgage Broker Loan Origination Guide, shall implement the Veterans' Loan Program 1990. The program's objective is to provide funds to finance owner-occupied, residential housing for qualified veterans in the State of Oregon, thereby encouraging home ownership of residential housing by such veterans. Where context allows, the provisions of OAR chapter 274, divisions 020, 021, and 022, apply equally to the loans originated after April 1, 1990. Selected words and terms as used in OAR chapter 274, division 025, are defined as follows:

(1) "Acquisition" means the purchase of a home.

(2) "Agreement" means the contract between the ODVA and the approved lender, setting forth the terms and conditions under which program loans made by the approved lender will be purchased by the ODVA

(3) "ALTA Mortgagee's Title Insurance" means a title insurance policy issued in American Land Title Insurance form by a title insurer licensed by the State of Oregon

(4) "Approved Lender" means any "Lending Institution" as defined in ORS 407.177(8) that has entered into an agreement with ODVA to originate residential loans acceptable to ODVA or to act as a conduit for the origination of residential loans acceptable to ODVA. In determining whether or not to contract with a Lending Institution, ODVA may consider factors including, but not limited to the following:

(a) ODVA's need for additional Approved Lenders, either on a statewide basis or in a specific geographical area.

(b) Whether or not the Lending Institution has had any complaints filed against it or against any of its employees, agents, officers, directors, owners, or affiliates through the Consumer and Business Services Department of the State of Oregon, through any other regulatory agency or otherwise.

(c) Whether or not representatives of the Lending Institution have attended any ODVA-sponsored training.

(d) The reputation of the Lending Institution, including its employees, agents, officers, directors, owners or affiliates.

(e) The number and experience of Lending Institution employees and other personnel available to originate loans or to act as a conduit for the origination of residential loans acceptable to ODVA.

(f) Status and character of the institution's loan policies and procedures.

(g) The financial capability of the Lending Institution to originate loans or to act as a conduit for the origination of loans.

(h) The Lending Institution's qualification as a loan originator or a seller/servicer for the Federal National Mortgage Association, the Federal Home Loan Mortgage Association, or the United States Department of Veterans' Affairs.

(i) Whether or not the deposits of the Lending Institution are insured by FDIC or some other federal agency or corporation.

(j) The experience, efficiency and performance of the Lending Institution in the area of residential lending and any other area of the Lending Institution's business.

(k) The willingness and commitment of the Lending Institution to accept and to fulfill the terms of an ODVA proposed contract.

(l) The result of any references which are checked as part of the application process

(5) "Commitment" means a promise made by the ODVA to an Approved Lender, evidenced by a written commitment letter, setting forth the terms upon which the ODVA will purchase or accept by underwriting and closing a specific program loan made or processed by the Approved Lender pursuant to a commitment request, or commitments to make an individual loan to a qualified veteran.

(6) "Commitment Request" means a verbal or written request from an Approved Lender to the ODVA to purchase or accept for underwriting and closing a specific program loan.

(7) "Home" means any house or dwelling, including outbuildings, and the real property in connection with it, where the veteran has, or will, establish domicile.

(8) "Lending Institution" means an entity which is licensed, or otherwise legally authorized, to conduct business in the State of Oregon exclusively or in part as a mortgage lender or a conduit for mortgage loans and that, in the judgment of ODVA, is capable of meeting the needs of ODVA in carrying out the purposes of ORS Chapter 407. In determining whether or not an entity that is licensed, or otherwise legally authorized, to conduct business in Oregon exclusively or in part as a mortgage lender or a conduit for mortgage loans is capable of meeting the needs of ODVA in carrying out the purposes of ORS Chapter 407, ODVA may consider factors including, but not limited to the following:

(a) Whether or not the entity qualifies as a "Banking Institution" or similar entity including, but, not limited to an "Extranational Institution," a "Federal Bank," a "Federal Savings Bank," or a "Financial Institution" under ORS 706.005, 706.008, 707.744, or 723.042.

(b) Whether or not the entity qualifies as a "mortgage broker" under ORS 59.840 through 59.980 for a period of three years.

(c) Whether or not the representatives of the entity have attended any ODVA-sponsored training.

(d) The reputation of the entity or of any of its employees, agents, officers, directors, affiliates or owners.

(e) The financial capability of the entity to originate loans or to act as a conduit for the origination of loans.

(f) The entity's qualification as a loan originator or a seller/servicer for the Federal National Mortgage Association, the Federal Home Loan Mortgage Association, or the United States Department of Veterans Affairs.

(g) The experience, efficiency, and performance of the entity in the areas of residential lending and any other area of the entity's business

(9) "Loan Origination Guide/Mortgage Loan Origination Guide" means the manual containing the origination instructions for the Veterans' Loan Program 1990, and any subsequent changes as they are effected.

(10) "ODVA" means the Oregon Department of Veterans' Affairs acting by and through the Director as defined in ORS 406.020.

(11)(a) "Qualified Insurer" means private mortgage insurance company licensed to do business in Oregon and with which ODVA has agreed to accept mortgage insurance coverage.

(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.

(12) "Security" means all of the real property that is to be acquired for a home and for which purpose the program loan is requested.

(13) "Security Instrument" means a mortgage, deed of trust, or similar document used to perfect the lien on the security by the 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.

(14) "Veteran" means any eligible veteran as described in OAR 274-020-0200 through 274-020-0200(6)(d).

(15) "Veterans' Loan Program 1990" means all home loans originated after April 1, 1990, but excluding financed contract sales of ODVA owned properties.

[Publications: Publications referenced are available from the agency.]

Stat. Auth.: ORS 291.021, 406.030, 407.115, 407.177, 407.179, 407.181, 407.275
Stats. Implemented: ORS 407
Hist.: DVA 2-1992, f. & cert. ef. 1-2-92; DVA 11-1992(Temp), f. & cert. ef. 8-17-92; DVA 4-1993, f. & cert. ef. 1-4-93; DVA 1-1995(Temp), f. & cert. ef. 3-17-95; DVA 8-1995, f. & cert. ef. 7-21-95; DVA 4-2000, f. & cert. ef. 4-24-00; DVA 3-2007, f. & cert. ef. 9-25-07

274-025-0020

Approved Lenders

(1) Any lending institution, as defined in ORS 407.177(8) may apply to become an Approved Lender by submitting to the Director of Veterans' Affairs (director) information required by the Director which may include, but is not limited to the following for review:

(a) An application in the form prescribed by the Director, including a certificate of compliance with tax laws; and

(b) Its counsel's opinion regarding power and authority of the lending institution to enter into a purchase agreement with the director; and

(c) A list of authorized officers; and

(d) Its most recent, audited financial statements; and

(e) Financial Statement of Condition (Balance Sheet) for the last two fiscal years and Profit and Loss Statement; and

(f) Resumes of principal officers and key employees; and

(g) Company biography and background; and

(h) Signed and executed broker agreement; and

(i) Resolution of the Board of Directors/Certificate of Authorized Signatures; and

(j) Articles of Incorporation (if incorporated); and

(k) Signed Credit Release Authorization; and

(l) Applicable licenses as required by state and local law; and

(m) Explanation of Quality Control Procedures; and

(n) W-9; and,

(o) Any other documentation or information deemed necessary by the Director; and

(p) A credit report fee may be charged to the mortgage broker as part of the approved lender application process in an amount not to exceed the amount charged by the credit-reporting firm. Any funds not used or obligated for a credit report shall be refunded.

(2) A lending institution will qualify as an Approved Lender if the director determines that the applicant has the capability and resources to originate only or originate, underwrite and fund loans in a sound and professional manner. The director shall consider such factors as those itemized in 274-025-010(4)(a) through (l).

(3) To become an Approved Lender, a lending institution shall enter into an agreement with the Director, providing for the manner and terms of the sale or processing of loans. This agreement shall bein the standard form prescribed by the Director. Approved Lenders shall carry out such agreement in accordance with the procedures set forth in the agreement, the rules, and the Loan Origination Guide/Mortgage Brokers Loan Origination Guide. The Director may revise such procedures from time to time. The Director may terminate its agreement with an Approved Lender at any time on the terms and conditions stated in such agreement, the rules, or the Loan Origination Guide/Mortgage Brokers Loan Origination Guide.

[Publications: Publications referenced are available from the agency.]

Stat. Auth.: ORS 291.021, 406.030, 407.115, 407.177, 407.179, 407.181 & 407.275
Stats. Implemented: ORS 407.125, 407.177, 407.205 & 407.275
Hist.: DVA 2-1992, f. & cert. ef. 1-2-92; DVA 7-1993, f. 5-18-93, cert. ef. 5-21-93; DVA 1-1995(Temp), f. & cert. ef. 3-17-95; DVA 8-1995, f. & cert. ef. 7-21-95; DVA 4-2000, f. & cert. ef. 4-24-00; DVA 3-2007, f. & cert. ef. 9-25-07

274-025-0030

Loan Requirements

(1) To be eligible for purchase or underwriting and closing by the ODVA pursuant to a commitment to an approved lender, a program loan shall be made or processed by the approved lender during the period of that commitment. The loan shall comply with the terms of such commitment, the requirements set forth in the agreement between ODVA and the approved lender, and the conditions set forth in the rules and the Loan Origination Guide/Mortgage Brokers Loan Origination Guide.

(2) Each Approved Lender shall make loans for single-family dwellings.

(3) Each program loan shall have a final maturity of at least 15 and not more than 40 years from the date of its mailing.

(4) Each program loan shall be secured by a first lien security instrument as defined or allowed pursuant to OAR 274-025-0010(11) and granted by the veteran on a home which is being financed. The veteran shall hold title to the home in fee simple.

(5) No program loan shall be made to refinance an existing loan, unless such loan was a temporary loan for the construction or rehabilitation of a home or other temporary initial financing. If a program loan is made to refinance such a loan, the approved lender shall certify to the ODVA that construction or rehabilitation has been satisfactorily completed before the delivery of the program loan for purchase.

(6) Each program loan shall be executed on forms approved by the ODVA. Such forms shall prescribe program loan requirements regarding insurance, escrow payments, late charges, defaults, and similar matters.

(7) The ODVA shall require that program loans be subject to acceleration at the option of the ODVA if at any time the veteran does not reside in the home as his/her primary residence, or if the veteran is determined to have been ineligible at the time the program loan was made.

(8) The interest rate on each program loan shall be at the rate stated in the applicable commitment issued by the ODVA.

[Publications: Publications referenced are available from the agency.]

Stat. Auth.: ORS 406.030, 407.115, 407.177, 407.179 & 407.181
Stats. Implemented:
Hist.: DVA 2-1992, f. & cert. ef. 1-2-92; DVA 4-2000, f. & cert. ef. 4-24-00; DVA 4-2008, f. & cert. ef. 2-22-08

274-025-0040

Reservations of Funds and Commitments

(1) Under the Veterans' Loan Program 1990, the Oregon Department of Veterans' Affairs (ODVA) reserves funds for individual loans in the name of the veteran upon request from an Approved Lender or from authorized ODVA staff. ODVA may solicit applications and accept loan fund reservations from Approved Lender(s) subject to the terms of the appropriate agreements, and the rate and availability of funds.

(2) ODVA will reserve funds for applications at the time of:

(a) Acceptance of application for processing by ODVA; or

(b) A verbal or written request from an Approved Lender that an application for funding is being processed.

(3) Effective September 10, 2001, when ODVA reserves funds, an interest rate will be committed to this reservation and will be effective for a period of 60 days. The loan must be closed before the end of 60 days or the committed interest rate will expire. If the reservation is reissued, it will bear an interest rate at the "higher of" the expired/cancelled rate or the then-current interest rate at the time of reissue. This shall be called the "higher of" rate. If a veteran withdraws an application and subsequently re-applies for a loan on the same security, the "higher of" rule will apply for a period of 120 days from the date of withdrawal.

(4) If the loan is not presented to ODVA for purchase with all documentation in place within 90 calendars days of the final HUD-1 settlement date, ODVA may charge the Approved Lender a penalty fee of one basis point of the loan amount per calendar day, until the loan is approved for purchase.

Example: $150,000 loan closed and presented for purchase 120 calendar days after final HUD-1 settlement date. The penalty fee charged and deducted from the amount due to the Approved Lender is calculated as follows: $150,000 x .01% x 30 days = $450.

(5) The commitment letter to the Approved Lender will contain the following information:

(a) The dollar amount of the commitment;

(b) The interest rate for the loan;

(c) The term of the loan;

(d) The mortgage insurance or guarantee required, if any;

(e) The period of time during which the ODVA will purchase the loan;

(f) The veteran who will be the borrower;

(g) The property identification (i.e., property address);

(h) Any additional information or conditions the ODVA considers appropriate in the commitment.

(6) The ODVA will promptly notify approved lenders when it will not accept a commitment request, for whatever reasons.

Stat. Auth.: ORS 406.030, ORS 407.115, ORS 407.177, ORS 407.179 & ORS 407.181
Stats. Implemented: ORS 407.177, ORS 407.179 & ORS 407.181
Hist.: DVA 2-1992, f. & cert. ef. 1-2-92; DVA 4-2000, f. & cert. ef. 4-24-00; 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

274-025-0050

Title Insurance

Each loan shall be covered by a title insurance policy issued in American Land Title Association (ALTA) form by a title insurer licensed by the State of Oregon. Such policy shall be in an amount at least equal to the outstanding principal balance of the program loan. The benefits of the policy shall run to the ODVA as either named insured or assignee. The policy shall not be subject to any exceptions or conditions other than those previously approved by the ODVA.

Stat. Auth.: ORS 406.030, ORS 407.115, ORS 407.177, ORS 407.179 & ORS 407.181
Stats. Implemented: ORS 407.115, ORS 407.177, ORS 407.179 & ORS 407.181
Hist.: DVA 2-1992, f. & cert. ef. 1-2-92

274-025-0060

Hazard Insurance

The home securing a program loan shall be covered by hazard insurance, which meets the requirements of the rules and the Loan Origination Guide/Mortgage Brokers Loan Origination Guide. Such hazard insurance shall be in effect prior to purchase or funding of the program loan, and shall remain in effect for the term of the program loan. The ODVA shall be named as the mortgagee insured.

[Publications: The publication(s) referred to or incorporated by reference in this rule are available from the agency.]

Stat. Auth.: ORS 406.030, ORS 407.115, ORS 407.177, ORS 407.179 & ORS 407.181
Stats. Implemented: ORS 407.155, ORS 407.165 & ORS 407.169
Hist.: DVA 2-1992, f. & cert. ef. 1-2-92; DVA 4-2000, f. & cert. ef. 4-24-00

274-025-0070

Flood Insurance

(1) Beginning September 1, 1995, the Director of the Oregon Department of Veterans' Affairs (Department) shall require that the location of the security on all loan applications received by the Department be reviewed and a determination made as to whether flood insurance will be required as a condition of the loan.

(2) A flood determination fee will be charged to the borrower equal to the amount charged by the flood determination reporting company at the time the application is submitted.

(3) All flood determinations are to be provided for the duration of the loan while it exists in the Department's portfolio (more commonly referred to as life-of-loan tracking).

(4) The flood determination company must meet the qualifications as determined by the Department by applying relevant industry standards.

(5) Based on the determination that the security for the loan is located in an area classified as a special flood hazard area, the director shall require the borrower to purchase flood insurance as a requirement of the loan.

(6) If following loan closing, it is determined that the security is located within a flood hazard area as defined by the National Flood Insurance Reform Act of 1994 (42 USCS 3701-4370a), the borrower may be required to purchase flood hazard insurance at no cost to the Department. If flood hazard insurance is not voluntarily acquired, the director may force place said insurance and:

(a) Disburse all costs associated with the acquisition of the coverage from the escrow account; or

(b) Add said cost to the balance of the loan and interest will be collected at the note rate; and

(c) Loan payments will be increased to repay the amount advanced.

Stat. Auth.: ORS 406.030, 407.115, 407.169, 407.177 & 407.275
Stats. Implemented: ORS 407.169, 407.177 & 407.275
Hist.: DVA 9-1995(Temp), f. 8-23-95, cert. ef. 9-1-95; DVA 2-1996, f. & cert. ef. 3-22-96; DVA 6-2005, f. & cert. ef. 10-24-05

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