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

 

DIVISION 45

POST VIETNAM ERA VETERANS' HOME LOAN PROGRAM

274-045-0001

Definitions for OAR 274-045-0001 to 274-045-0480

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) National Guard;

(g) Federal Reserve Forces;

(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 the United States Military Academy, and the United States Air Force Academy, and Midshipmen at the United States Naval Academy and the United States Coast Guard Academy, 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) "Acquisition" means:

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

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

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

(d) Improvements of a home.

(4) "Agreement" means the contract between the Oregon Department of Veterans’ Affairs (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.

(5) "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.

(6) "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.

(7) "Commitment" means a promise made by the ODVA to an Approved Lender or veteran, evidenced by a written commitment letter, setting forth the terms upon which the ODVA will purchase, originate, or accept by underwriting and closing a specific program loan made or processed by the Approved Lender or ODVA pursuant to a reservation of funds.

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

(9) "Director" means the Director of Veterans' Affairs for the State of Oregon.

(10) "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 or she 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.

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

(12) "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 one of the following:

(a) "Honorable"; or

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

(13) "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.

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

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

(16) "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 59.965 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.

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

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

(19) "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.

(20) "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.

(21) "ODVA" means the Oregon Department of Veterans' Affairs acting by and through the director as defined in ORS 407.085(2)(b).

(22) "Original Loan" means:

(a) The first loan the veteran receives; or

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

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

(24) "Post Vietnam Era Veterans’ Home Loan Program " means all home loans originated under this Division.

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

(26) "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.

(27) "Reservation of Funds" (Rate Lock) means the setting aside of specific funds at a designated interest rate for a specific period of time.

(28) "Resident" or "Bona Fide Resident" means one who has domiciled within the State.

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

(30) "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.

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

(32) "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.

(33) "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.

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

(35) "Veteran" means any eligible veteran as described in OAR 274-045-0001 through 274 045 0001(2)(b) eligible to receive a loan under the provisions of Article XI-A of the Oregon Constitution.

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

Stat. Auth.: ORS 406.030 & 407.115
Stats. Implemented: ORS 407
Hist.: DVA 2-2001, f. & cert. ef. 5-23-01; DVA 3-2001(Temp), f. & cert. ef. 6-15-01 thru 12-11-01; DVA 9-2001, f. & cert. ef. 11-23-01; DVA 2-2005, f. & cert. ef. 4-22-05; DVA 3-2007, f. & cert. ef. 9-25-07; 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

274-045-0005

Purpose and Objectives

OAR chapter 274, division 045, is established to administer and enforce ORS 407.075 through 407.595. These rules, together with the Post Vietnam Era Veterans' Home Loan Origination Guide/Mortgage Broker Loan Origination Guide, shall implement the Post Vietnam Era Veterans' Home Loan Program. 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.

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

Stat. Auth.: ORS 291.021, ORS 406.030, ORS 407.115, ORS 407.177, ORS 407.179, ORS 407.181 & ORS 407.275
Stats. Implemented: ORS 407
Hist.: DVA 2-2001, f. & cert. ef. 5-23-01

274-045-0010

Eligibility Requirements

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

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

Stat. Auth.: Or. Const Art. XI-A, ORS 183, ORS 406.030, ORS 407.115 & ORS 407.125
Stats. Implemented: ORS 407
Hist.: DVA 1-2001, f. & cert. ef. 3-20-01; DVA 2-2001, f. & cert. ef. 5-23-01

274-045-0015

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
Hist.: DVA 2-2001, f. & cert. ef. 5-23-01

274-045-0020

Who May Apply for Loan

(1) A loan shall be made only to an individual veteran.

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

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

274-045-0025

Evidence Required to Establish Eligibility

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

(1) Evidence of service and separation must be documented on DD Form 214, a DD Form 215 Correction to DD Form 214, or other evidence of service provided by the Department of Defense that is satisfactory to the Director.

(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 407
Hist.: DVA 2-2001, f. & cert. ef. 5-23-01

274-045-0030

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. Substitution of security is not allowed.

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

274-045-0035

Cancellation of Application

(1) An applicant may cancel his or her 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 407
Hist.: DVA 2-2001, f. & cert. ef. 5-23-01

274-045-0040

Security for the Loan

(1) The veteran shall own the home offered as security in fee simple 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 274-045-0001(30) "Security Instrument".

(3) The security shall consist of real 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, with the exception of construction loans.

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

274-045-0045

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
Hist.: DVA 2-2001, f. & cert. ef. 5-23-01

274-045-0050

Appraisal of Property

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

Stat. Auth.: ORS 406.030, ORS 407.115 & ORS 407.225(3)
Stats. Implemented: ORS 407
Hist.: DVA 2-2001, f. & cert. ef. 5-23-01

274-045-0060

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:

(a) May not exceed 100 percent of the net appraised value of the property or the purchase price (whichever is less);

(b) May not be more than 100 percent of the net appraised value as defined in OAR 274-045-0001, if the loan is for replacement financing;

(c) Shall not be more than the maximum original principal balance permitted on a single-family first mortgage loan by the Federal National Mortgage Association, as published in its announcement and subsequently included in its Selling Guide for a home.

(2) The borrower shall not receive any cash back from the ODVA loan.

(3) 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.

(a) Loans shall be made in multiples of one dollar ($1).

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

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

(5) The borrower shall carry fire and extended coverage insurance on the security. The Director may also require that hazards other than fire be covered. All premiums and charges for said coverage shall be timely paid 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) In the event of failure to maintain coverage, the Director shall acquire the necessary coverage and collect amounts due in a manner consistent with security documents;

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

(6) The Director may collect in advance, unless otherwise agreed, from said borrowers together with their payments required under section (3) 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 87.245(1).

(7) The Director may pay property taxes, insurance premiums and other charges 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. Any amount paid by the Director may be collected in the manner consistent with the security documents or other manner agreeable to the Director and borrower. 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.

(8) The borrower's loan payment may be increased to repay the money advanced 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 2-2001, f. & cert. ef. 5-23-01; DVA 3-2001(Temp), f. & cert. ef. 6-15-01 thru 12-11-01; DVA 9-2001, f. & cert. ef. 11-23-01; 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 4-2008, f. & cert. ef. 2-22-08

274-045-0070

Interest

(1) The Director, with the advice of the Advisory Committee, will prescribe interests rates for loans funded by the Oregon Department of Veterans' Affairs ("ODVA" or the "Department") 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 periodically may change the prescribed rates of interest for loans to be funded by the Department to reflect reconsideration of, or changes in, factors considered under sections (1) and (2) of this rule, or in consideration of additional factors.

(4) The Director may prescribe different rates of interest for 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.

(5) 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 publication will be available for viewing at the Oregon Department of Veterans' Affairs, 700 Summer Street NE, Salem, Oregon, as permitted by the Department, during regular business hours.

Stat. Auth.: ORS 406.030, 407.115, 407.325 & 407.327
Stats. Implemented: ORS 407.325, 407.327
Hist.: DVA 2-2001, f. & cert. ef. 5-23-01; DVA 3-2005, f. & cert. ef. 4-22-05

274-045-0080

Approval of the Loan

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

(1) The veteran applicant must meet the 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 equity in the property.

(3) Secondary financing may be permitted.

(4) Construction shall meet the minimum standards set by federal, state or 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
Hist.: DVA 2-2001, f. & cert. ef. 5-23-01; 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

274-045-0085

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

274-045-0090

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 shall advise the applicant of his decision per Regulation B of the Fair Credit Reporting Act.

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

(a) The purchase of property from a spouse where the amount that 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, either title or contractual, in the property being purchased, except it will not be grounds for refusing to make a loan if:

(a) The applicant is purchasing a one-half interest from a divorced spouse, as stated in the divorce decree, and the new loan must be funded no more than 18 months from the date of the original purchase money obligation;

(b) Within the past 18 months, the applicant closed a non-ODVA loan or completed construction on a construction loan and is now applying for an ODVA loan to pay it off;

(c) 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 applicable underwriting or industry property standards as determined by the Department.

(13) 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:

(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 & Federal Tax Act of 1986
Stats. Implemented: ORS 183 & 407
Hist.: DVA 2-2001, f. & cert. ef. 5-23-01; DVA 8-2001, f. & cert. ef. 11-23-01; DVA 6-2005, f. & cert. ef. 10-24-05

274-045-0100

Evidence of Title

The veteran shall furnish at his or her expense an ALTA Mortgagee's Title Insurance policy for the amount of the loan, a title company lien search, or a certificate of title.

(1) 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) An ALTA Mortgagee's Title Insurance policy insuring the State against loss from any prior encumbrance, but the encumbrance must be acceptable to the veteran mortgagor.

(2) 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 407
Hist.: DVA 2-2001, f. & cert. ef. 5-23-01

274-045-0110

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 Laws (ORS 696.505 to 696.590), or an attorney at law rendering services in the performance of duties as attorney at law.

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

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

Stat. Auth.: ORS 406 & 407
Stats. Implemented: ORS 407
Hist.: DVA 2-2001, f. & cert. ef. 5-23-01; DVA 3-2007, f. & cert. ef. 9-25-07

274-045-0120

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 following are conditions that 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;

(B) Deed to a government entity for public use as noted inORS 407.275(2);

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

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

(3) If any or all of the above referenced conditions in subsection (2)(a) through (d) occur to the security of an ODVA loan, the entire balance of the loan will be immediately due and payable.

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

Stat. Auth.: ORS 406.030, 407.115, 407.275, 407.305, 407.335
Stats. Implemented: ORS 407.275, 407.335
Hist.: DVA 2-2001, f. & cert. ef. 5-23-01; DVA 3-2001(Temp), f. & cert. ef. 6-15-01 thru 12-11-01; DVA 9-2001, f. & cert. ef. 11-23-01; DVA 3-2007, f. & cert. ef. 9-25-07

274-045-0125

Rental

The Director may approve the rental of a security, that has been occupied by the veteran. The Director, when determining whether to approve the rental of a home that serves as security for an ODVA 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 was and is appropriately used as the principal residence of the borrower(s).

(3) The financial integrity of the loan program.

(4) Any potential decreases 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 as his/her principal residence.

[Publications: The publications referenced in this rule is available from the agency.]

Stat. Auth.: ORS 406.030, ORS 407.115, ORS 407.385
Stats. Implemented: ORS 407.385
Hist.: DVA 2-2001, f. & cert. ef. 5-23-01

274-045-0130

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
Hist.: DVA 2-2001, f. & cert. ef. 5-23-01

274-045-0140

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;

(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, NE, Salem, Oregon 97301-1285. 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 and the escrow portion of the monthly payment, if applicable;

(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 circumstances;

(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 Director may modify the loan payment reduction; and

(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.

[Publications: The publications referenced in this rule is available from the agency.]

Stat. Auth.: ORS 406.030, ORS 407.095, ORS 407.115
Stats. Implemented: ORS 406.030, ORS 407.095, ORS 407.115
Hist.: DVA 2-2001, f. & cert. ef. 5-23-01

274-045-0145

Loan Cancellation Life Insurance

(1) The Director of the Oregon Department of Veterans' Affairs (Director), prior to obtaining loan cancellation life insurance for any person who receives or assumes a loan or makes a contract with ODVA for the acquisition of a home, and the spouse or former spouse of that person, may enter into a contract with an insurance carrier which allows the carrier to:

(a) Require an application for insurance;

(b) Underwrite classes of prospective insureds on the basis of information, such as age and health status, contained in the application;

(c) Set premium schedules commensurate with risk factors for other than service-connected disability;

(d) Deny payment of benefits for suicide or certain pre-existing, nonservice-connected disability.

(2) The Director will negotiate a contract with the insurance carrier as necessary to insure procurement and maintenance of adequate, solvent, and uninterrupted, long-term insurance coverage.

(3) The insurance contract may provide that loan cancellation life insurance on a loan or contract for the acquisition of a home or farm will be canceled after payments on the loan or contract become four months delinquent. Accounts due monthly are considered four months delinquent when the cumulative delinquency equals four times the standard monthly payment.

(4) The insurance contract may provide that insurance canceled for the above reason cannot be reinstated unless payments are brought current and a new application for insurance is submitted. The provisions of section (1) of this rule will apply to the newly submitted application.

Stat. Auth.: ORS 406.030, ORS 407.115, ORS 407.465, ORS 407.475
Stats. Implemented: ORS 407.115, ORS 407.135, ORS 407.145, ORS 407.465, 407.475
Hist.: DVA 2-2001, f. & cert. ef. 5-23-01

274-045-0150

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. If for any reason the taxes cannot be paid on November 15th, the director will send the notice as soon as possible after the taxes are paid.

(2) 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.

(3) 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 and/or hazard insurance, any advance by the director for such a shortage/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.

(4) Pursuant to the provisions of ORS 407.169, under this division, escrow accounts are available for the prepayment of estimated property taxes and insurance.

(5) 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 such as mortgage insurance, condominium/homeowners dues, and bancrofted amounts. In cases of unassessed new construction, the estimate may be based, inter alia, on the assessment of comparable residential property in the market area.

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

(7) Under this Division, all escrow accounts on monthly 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 (CPI) 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) Except if a loan is two (2) months or more delinquent in payments, an analysis 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 director may advance the shortage/deficiency. The required escrow payments on the loan will be increased to recover any interest, fee or other 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 analysis) will be provided to the borrower each year.

(8) The following definitions apply to section (7) 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.

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

Stat. Auth.: ORS 86.240, 86.245, 406.030, 407.115, 407.169 & 407.275
Stats. Implemented: ORS 406.030 & 407.275
Hist.: DVA 2-2001, f. & cert. ef. 5-23-01; DVA 2-2005, f. & cert. ef. 4-22-05

274-045-0160

Partial Release of Security

(1) A partial release of security may be granted when the borrower 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 balance under the provisions of ORS 407.225(3) and OAR 274-045-0040 to 274-045-0060.

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

[Publications: The publications referenced in this rule is available from the agency.]

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

274-045-0170

Confidential Nature of Information Submitted by the Borrower

Information submitted by the veteran in support of his or her 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
Hist.: DVA 2-2001, f. & cert. ef. 5-23-01

274-045-0180

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 407
Hist.: DVA 2-2001, f. & cert. ef. 5-23-01

274-045-0190

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. The director may make advance charges for anticipated labor expenses 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 2-2001, f. & cert. ef. 5-23-01; DVA 2-2005, f. & cert. ef. 4-22-05

274-045-0200

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 407
Hist.: DVA 2-2001, f. & cert. ef. 5-23-01

274-045-0205

Review of Loan Determinations and Other Decisions

(1) Any person adversely affected by a decision of an ODVA 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 Oregon Department of Veterans' Affairs Office, located at 700 Summer Street, NE, Salem, Oregon 97301-1285.

(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. The Director must receive a request for an informal hearing 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 Director did not receive the request 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 137-003-001 to 137-003-092.

[Publications: The publications referenced in this rule is available from the agency.]

Stat. Auth.: ORS 183, ORS 406.030 & ORS 407.115
Stats. Implemented: ORS 407
Hist.: DVA 2-2001, f. & cert. ef. 5-23-01

274-045-0220

Fees

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

(a) New Loan;

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

(c) Dishonored Check;

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

(e) Mineral Rights and Geothermal Resource Rights Release;

(f) Veterans' Home Improvement Loan;

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

(h) 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 or actual cost;

(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) The director shall charge a loan fee on conventional loans not to exceed two percent (2%) 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) 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 mortgaged 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) $50 for consenting to an easement;

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

(D) $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;

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

(F) A fee for the partial release of property to a government entity for public use as noted in Chapter 238 Oregon Laws 1995. This fee may be modified or waived at the discretion of the director.

(c) 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;

(d) 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;

(e) 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.

(f) 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.

(g) 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.

(h) 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 bank returns the check. Any fee added to the amount due on the loan shall bear interest at the same rate as on the principal indebtedness.

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 2-2001, f. & cert. ef. 5-23-01; DVA 2-2005, f. & cert. ef. 4-22-05; DVA 2-2012, f. & cert. ef. 6-25-12

274-045-0230

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; [See ED. NOTE]

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

(c) A list of authorized officers;

(d) Its most recent, audited financial statements;

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

(f) Resumes of principal officers and key employees;

(g) Company biography and background;

(h) Signed and executed broker agreement;

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

(j) Articles of Incorporation (if incorporated);

(k) Signed Credit Release Authorization;

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

(m) Explanation of Quality Control Procedures;

(n) W-9;

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

(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 274-045-0001(6)(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 be in 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 Post Vietnam Era Veterans' Home 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 Post Vietnam Era Veterans' Home Loan Origination Guide/Mortgage Brokers Loan Origination Guide.

[ED. NOTE: The Form referenced in this rule is not printed in the OAR compilation. Copies are available from the agency.]

[Publications: The publications referenced in this rule is available from the agency.]

Stat. Auth.: ORS 291.021, ORS 406.030, ORS 407.115, ORS 407.177, ORS 407.179, ORS 407.181 & ORS 407.275
Stats. Implemented: ORS 407.125, ORS 407.177, ORS 407.205, ORS 407.275
Hist.: DVA 2-2001, f. & cert. ef. 5-23-01

274-045-0240

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 Post Vietnam Era Veterans' Home 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) A first lien security instrument as defined shall secure each program loan or allowed pursuant to OAR 274-045-0001(30) 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: ORS 407
Hist.: DVA 2-2001, f. & cert. ef. 5-23-01; DVA 4-2008, f. & cert. ef. 2-22-08

274-045-0250

Reservation of Funds and Commitments

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.

(1) 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.

(2) 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, will bear an interest rate at the higher of the expired/cancelled rate or the then-current interest rate at the time of reissue. 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.

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

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

(4) 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.

(5) 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
Hist.: DVA 2-2001, f. & cert. ef. 5-23-01

274-045-0260

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.

[The Form referenced in this rule is not printed in the OAR compilation. Copies 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
Hist.: DVA 2-2001, f. & cert. ef. 5-23-01

274-045-0270

Hazard Insurance

The home securing a program loan shall be covered by hazard insurance, which meets the requirements of the rules and the Post Vietnam Era Veterans' Home Loan Origination Guide/Mortgage Brokers Loan Origination Guide, a copy of the Guide is on file with the Oregon Department of Veterans' Affairs, 700 Summer Street NE, Salem, Oregon 97301-1285, and is available to the public during normal business hours. 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) referenced in this rule is available from the agency.]

Stat. Auth.: ORS 406.030, ORS 407.115, ORS 407.177, ORS 407.179 & ORS 407.18
Stats. Implemented: ORS 407
Hist.: DVA 2-2001, f. & cert. ef. 5-23-01

274-045-0280

Flood Insurance

(1) 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 is 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) If there is no established escrow account, disperse all costs of the acquisition and establish an escrow account to cover the cost; 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 2-2001, f. & cert. ef. 5-23-01; DVA 6-2005, f. & cert. ef. 10-24-05

Veterans' Home Improvement Loan Program

274-045-0401

Purpose and Objectives

(1) This subsection of division 045 is established to administer the provisions of Article XI-A of the Constitution of the State of Oregon as it applies to ORS Chapter 407. These rules, together with the Processing Manual, shall implement the Post Vietnam Era Veterans' Home Improvement Loan Program.

(2) The program's objective is to provide funds to finance qualified improvements of owner occupied, residential housing for qualified veterans in the State of Oregon. No improvement will be financed that is inconsistent with the provisions of ORS Chapter 407, applicable federal tax laws, ODVA's Processing Manual and any subsequent changes as they are effected. Copies of the Processing Manual are on file with the Oregon Department of Veterans' Affairs, 700 Summer Street NE, Salem Oregon, and available to the public during normal business hours.

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

Stat. Auth.: ORS 406.030, ORS 407.115, ORS 407.125 & Art. XI-A Or Const
Stats. Implemented:ORS 407.115, ORS 407.125 & Art. XI-A Or Const.
Hist.: DVA 10-2001, f. & cert. ef. 12-26-01

274-045-0411

Definitions

Selected words and terms as used in OAR chapter 274, division 045, are defined as follows:

(1) Veterans' Home Improvement loan means a loan or loans issued pursuant to OAR 274-045-0401 for not more than the total loan right where said loan funds are used to improve the basic livability of the home as defined in OAR 274-045-0001(11).

(2) Qualified improvements means the remodel or improvement of an existing home which will substantially enhance or protect the basic livability of the home, which are consistent with provisions of applicable tax laws.

(3) Processing Manual means the Oregon Department of Veterans' Affairs (ODVA) manual containing the policy for the Veterans' Home Improvement Loan Program and any subsequent changes as they are effected.

(4) Veterans' Home Improvement Loan Program means all veterans' home improvement loans for which applications are received on or after June 29, 2001, and the veterans eligible for this program.

(5) Existing loan means any loan or loans obtained by the veteran to purchase or improve the property used as security for a loan with the ODVA.

(6) Loan to Value Ratio is the loan amount plus any outstanding balance owed to ODVA on the security divided by the net appraised value.

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

Stat. Auth.: ORS 406.030, 407.115, 407.125 & Art. XI-A OR Const.
Stats. Implemented: ORS 407.115, 407.125 & Art. XI-A OR Const.
Hist.: DVA 10-2001, f. & cert. ef. 12-26-01; DVA 2-2005, f. & cert. ef. 4-22-05

274-045-0421

Interest Rate

As provided by ORS 407.327, the interest rate on veterans' home improvement loans for which applications are received on or after June 29, 2001 shall be fixed and consistent with OAR 274-045-0070.

Stat. Auth.: ORS 406.030, ORS 407.115, ORS 407.125 & Art. XI-A Or Const
Stats. Implemented: Art. XI-A Or Const.
Hist.: DVA 10-2001, f. & cert. ef. 12-26-01

274-045-0431

Approval of Veterans' Home Improvement Loans

Veterans' home improvement loans will be processed using ODVA Processing Manual and current industry standards determined by the Department to be applicable to the proposed loan. 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. A copy of the Processing Manual is on file with the Oregon Department of Veterans' Affairs, 700 Summer Street NE, Salem Oregon, and is available to the public during normal business hours.

Stat. Auth.: Art. XI-A, OR Const., ORS 406.030, 407.115 & 407.125
Stats. Implemented: Art. XI-A, OR Const., ORS 407.115 & 407.125
Hist.: DVA 10-2001, f. & cert. ef. 12-26-01; DVA 6-2005, f. & cert. ef. 10-24-05

274-045-0441

Terms and Requirements of Veterans' Home Improvement Loans

(1) The veterans' home improvement loan must be placed in the first lien position on the security or be an immediate subsequent lien to an existing ODVA lien. The first ODVA lien and any immediate subsequent lien made on the security by the Director shall be deemed collectively as a first lien on the security.

(2) The net appraised value will be used as the basis for determining the maximum veterans' home improvement loan subject to statutory limitations and remaining loan right.

(3) When a veterans' home improvement loan is made on a security with an existing balance owed to the Director, the total of the unpaid balance of the existing loan and the veterans' home improvement loan shall not exceed 80 percent of the net appraised value as determined by the Director.

(4) When a veteran' home improvement loan is made on a property where no balance is owing, the veterans' home improvement loan shall not exceed 97 percent of the net appraised value as determined by the Director. If the loan-to-value ratio is greater than 80 percent of the net appraised value, the loan must be insured by mortgage insurance consistent with ORS 407.485.

(5) The borrower shall not receive any cash back from the home improvement loan.

(6) All existing nonamortizing ODVA loans on the security must be reamortized to bring the principal and interest payment and final payment date into conformance with ODVA policy as identified in the Processing Manual. A copy of the manual is on file with the Oregon Department of Veterans' Affairs, 700 Summer Street NE, Salem Oregon, and available to the public during normal business hours. All other terms of the existing loan on the security remain unchanged.

(7) Depending upon the loan amount, the maximum term of a home improvement loan may not exceed 20 years.

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

Stat. Auth.: ORS 406.030, ORS 407.115, ORS 407.125 & Art. XI-A Or Const
Stats. Implemented: ORS 407.115, ORS 407.125 & Art. XI-A Or Const.
Hist.: DVA 10-2001, f. & cert. ef. 12-26-01; DVA 3-2003(Temp), f. & cert. ef. 4-7-03 thru 10-3-03; DVA 11-2003, f. & cert. ef. 9-23-03

274-045-0451

Appraisal of Property

An appraisal may be made at the discretion of the Director to assist in establishing the net appraised value. A fee will be charged in accordance with OAR 274-045-0220.

Stat. Auth.: Art. XI-A Or Const
Stats. Implemented: Art. XI-A Or Const.
Hist.: DVA 10-2001, f. & cert. ef. 12-26-01

274-045-0461

Transfer of Ownership

The Director will call the entire balance of the loan due and payable if any of the conditions in OAR 274-045-0120(2) occur.

Stat. Auth.: ORS 406.030, ORS 407.115, ORS 407.125 & Art. XI-A Or Const
Stats. Implemented:ORS 407.115, ORS 407.125 & Art. XI-A Or Const.
Hist.: DVA 10-2001, f. & cert. ef. 12-26-01

274-045-0471

Taxes, Hazard Insurance and Flood Insurance

(1) For veterans' home improvement loans which are subsequent to an ODVA existing loan, the director may pay property taxes or hazard or flood insurance on the existing loan until the existing loan is paid in full, after which it will be the borrower's responsibility to pay these items directly.

(2) If delinquent taxes become a lien against the security, or the borrower fails to maintain the required insurance, the director may pay the taxes or insurance and if so paid, will collect the amount paid by ODVA from the borrower through an escrow account per the provisions of OAR 274-045-0150.

Stat. Auth.: ORS 406.030, 407.115, 407.125 & Art. XI-A OR Const.
Stats. Implemented: ORS 407.115, 407.125 & Art. XI-A OR Const.
Hist.: DVA 10-2001, f. & cert. ef. 12-26-01; DVA 2-2005, f. & cert. ef. 4-22-05

274-045-0481

Title Insurance

Each loan shall be covered by a title insurance policy as designated by the Director at the borrower's expense.

Stat. Auth.: ORS 406.030, ORS 407.115, ORS 407.125 & Art. XI-A Or Const
Stats. Implemented:ORS 407.115, ORS 407.125 & Art. XI-A Or Const.
Hist.: DVA 10-2001, f. & cert. ef. 12-26-01

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