US Laws, Codes, Statutes & Cases

Chapter 407 — Veterans Loans

 

2007 EDITION

 

VETERANS LOANS

 

BENEFITS OF VETERANS AND SERVICE PERSONNEL

 

GENERAL PROVISIONS

 

407.075     Purpose; legislative intent

 

407.085     Definitions

 

407.095     Policy against foreclosure; rules

 

407.115     Administration of loan program; rules

 

407.125     Loans to qualified person

 

407.131     Discount of principal; rules

 

407.135     Authority of department; disposition of certain moneys

 

407.145     Purchase and control of property; disbursements to protect security

 

407.155     Execution and custody of documents

 

407.165     Authority to hold certain funds received from borrower

 

407.169     Escrow accounts; standards; interest; rules

 

407.177     Loan processing and servicing contracts with lending institutions; terms; procedures

 

407.179     Additional powers delegated to lending institution; authority retained by department

 

407.181     Authority of lending institution

 

407.185     Cash flow projection; annual review; report

 

407.195     Loans not being amortized; identification; notice to borrowers

 

407.201     Required disclosure of credit information and loan terms

 

LOAN PROCEDURES AND CONDITIONS

 

407.205     Application for loan; amount of loan; limit on number of loans; exception

 

407.215     Loan transferred by annulment or dissolution judgment excluded in determining maximum allowable

 

407.225     Investigation and processing of loan application; security; maximum amounts of loans

 

407.265     Loans for home or farm improvements; terms and conditions

 

407.275     Terms of loan to veteran and transferee

 

407.285     Rate of interest payable by certain transferees

 

407.295     Transfer to spouse; notice to department; notice of delinquent payment

 

407.305     Assumption of previous loan by eligible veteran; additional funds

 

407.315     Interest rate for veteran’s assumption; variable rate; effect of rate on cash flow; rules

 

407.325     Rate of interest on loans

 

407.327     Department to prescribe fixed or variable interest rates

 

407.335     Rate of interest payable by transferee; limit on transfers; rules

 

407.349     Late charges authorized for periodic payments

 

407.375     Sale of foreclosed properties; improvement in lieu of down payment; interest rate; redemption of property; rules

 

407.377     Sale or management of foreclosed property under personal services contract

 

407.385     Prohibition against using loan for purpose other than farm or home acquisition; prompt use of farm or home as principal residence; extension; exception; penalty

 

GENERAL OBLIGATION BONDS

 

407.415     Issuance of bonds

 

407.425     Factors considered before requesting bond issuance

 

407.435     Issuance of bonds for tax payment; conditions; term

 

LIFE AND MORTGAGE INSURANCE

 

407.465     Loan cancellation life insurance

 

407.475     Persons insurable under ORS 407.465

 

407.480     Definitions for ORS 407.480 to 407.490

 

407.485     Agreements for mortgage insurance; terms; amount; required coverage

 

407.490     Mortgage insurance claims; liability of department

 

FINANCES

 

407.495     Oregon War Veterans’ Fund; sources; uses

 

407.505     Loan moneys to be reserved for borrower prior to loan commitment

 

407.515     Oregon War Veterans’ Bond Sinking Account; sources; use

 

407.525     Transfer of sinking account moneys to veterans’ fund; retransfer

 

407.555     Auditing and payment of claims

 

407.565     Revolving account

 

MISCELLANEOUS

 

407.595     Loans not subject to execution or assignment

 

      407.010 [Amended by 1975 c.219 §1; 1977 c.383 §6; subsection (3) enacted as 1977 c.383

§9; 1979 c.176 §1; 1981 c.661 §1; 1982 s.s. 1 c.11 §10; 1983 c.445 §1; renumbered 407.085]

 

      407.020 [Amended by 1967 c.245 §1; 1971 c.221 §2; renumbered 407.115]

 

      407.030 [Amended by 1977 c.383 §8; renumbered 407.125]

 

      407.035 [1981 c.659 §7; renumbered 407.505]

 

      407.040 [Amended by 1953 c.97 §2; 1957 c.125 §1; 1963 c.163 §1; 1965 c.269 §1; 1967

c.112 §1; 1969 c.615 §1; 1971 c.221 §3; 1973 c.574 §1; 1975 c.6 §1; 1975 c.263 §1; 1977 c.676

§3; 1979 c.177 §1; 1981 c.604 §1; 1982 s.s.1 c.11 §12; 1983 c.387 §1; renumbered 407.205]

 

      407.042 [1981 c.366 §2; renumbered 407.385]

 

      407.043 [1977 c.676 §2; renumbered 407.397]

 

      407.045 [1969 c.523 §1; renumbered 407.215]

 

      407.048 [1977 c.315 §2; 1981 c.628 §1; 1982 s.s.1 c.11 §13; 1983 c.445 §4; renumbered

407.255]

 

      407.050 [Amended by 1957 c.125 §2; 1971 c.221 §4; 1973 c.574 §2; 1975 c.219 §2;

renumbered 407.225]

 

      407.055 [1977 c.383 §1; 1981 c.565 §3; 1983 c.445 §5; renumbered 407.175]

 

      407.058 [1977 c.383 §3; 1983 c.445 §6; renumbered 407.235]

 

      407.060 [Repealed by 1971 c.743 §432]

 

      407.061 [1977 c.383 §4; 1983 c.445 §7; renumbered 407.245]

 

      407.063 [1981 c.387 §1; 1982 s.s.1 c.11 §14; renumbered 407.305]

 

      407.065 [1979 c.176 §3; renumbered 407.265]

 

      407.070 [Amended by 1955 c.151 §1; 1957 c.125 §3; 1969 c.615 §5; 1971 c.221 §5; 1975

c.219 §3; 1977 c.676 §4; 1981 c.387 §2; 1982 s.s.1 c.11 §17; renumbered 407.275]

 

      407.072 [1969 c.615 §3; 1971 c.221 §6; 1975 c.219 §4; 1977 c.645 §1; 1981 c.659 §5;

renumbered 407.325]

 

      407.073 [1969 c.615 §4; 1971 c.221 §7; 1977 c.676 §5; 1983 c.420 §3; renumbered 407.335]

 

      407.074 [1955 c.102 §§2,3,7; 1975 c.219 §5; 1979 c.238 §1; renumbered 407.465]

 

GENERAL PROVISIONS

 

      407.075 Purpose; legislative intent. (1) The provisions of this chapter are intended to carry out the purposes of Article XI-A of the Oregon Constitution. The Legislative Assembly recognizes that its authority to define the scope and purpose of this chapter is limited by the purposes expressed in Article XI-A.

      (2) The primary purpose of this chapter is to provide loan funds to qualifying Oregon veterans for the acquisition or improvement of farms and homes. The Legislative Assembly does not intend, by any past or present enactment, to establish as a principal purpose of this chapter the providing of subsidized energy financing. [1983 c.445 §9]

Note: 407.075 was enacted into law by the Legislative Assembly but was not added to or made a part of ORS chapter 407 or any series therein by legislative action. See Preface to Oregon Revised Statutes for further explanation.

 

      407.076 [1955 c.102 §§4,5,6; 1969 c.433 §1; 1979 c.35 §1; 1979 c.238 §2; renumbered 407.475]

 

      407.080 [Amended by 1975 c.219 §6; renumbered 407.135]

 

      407.085 Definitions. (1) As used in Article XI-A, Oregon Constitution, and this chapter, for the purposes of administration:

      (a) “Acquisition” means:

      (A) Purchase and improvement of a home or farm.

      (B) Payment of the balance of the purchase price and interest on a purchase contract, and the improvement of property thereby acquired.

      (C) Refinance of an existing purchase-money mortgage or mortgage in the nature thereof, and the improvement of property thereby purchased.

      (D) Improvement of a home or farm.

      (b) “Bonds” includes, but is not limited to, serial bonds, term bonds, notes, obligations, lines of credit, revolving credit agreements, loans, financing agreements or other evidence of indebtedness determined by the Department of Veterans’ Affairs, with the approval of the State Treasurer, to be necessary or desirable to provide funds for the purposes expressed in Article XI-A of the Oregon Constitution.

      (2) As used in this chapter:

      (a) “Committee” means the Advisory Committee provided for by ORS 406.210.

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

      (c) “Improvement” means new construction or any necessary or beneficial additions, alterations or changes appurtenant to the home or farm which protect or improve the basic livability or energy efficiency of the premises.

      (d) “Mobile home” means a structure, transportable in one or more sections, which is 10 feet or more in width, and contains more than 500 square feet of living space figured on exterior dimensions of the structure, exclusive of any hitch and is designed to be used as a dwelling by one family, and which remains as personal property under the laws of this state. [Formerly 407.010; 2001 c.98 §5; 2005 c.625 §15]

 

      407.095 Policy against foreclosure; rules. (1) It is the policy of the State of Oregon to make every reasonable attempt to keep a veteran in the home purchased under the loan program when the veteran is unable to make required loan payments because of illness, injury, death, involuntary job loss or economic stress due to factors beyond individual control. The Department of Veterans’ Affairs, by rule, shall implement such state policy. Rules adopted by the department under this section:

      (a) May provide for a temporary reduction of loan payment.

      (b) May provide for any other solution jointly agreed to by the borrower and the department.

      (c) Shall provide for repayment of the amount of any loan payments reduced under the rules in accordance with terms and conditions agreed upon by the borrower and the department.

      (2) In reducing loan payments under this section, the department must consider the effect of such reduction on the solvency of the program as a whole, on estimates of the most probable financial position of the program for one or more future periods, the condition of the tax exempt bond market, and the effect on other borrowers in the program. [1982 s.s.1 c.11 §3; 2005 c.625 §16]

 

      407.100 [Renumbered 407.155]

 

      407.110 [Renumbered 407.595]

 

      407.115 Administration of loan program; rules. The Department of Veterans’ Affairs shall administer the provisions of ORS 407.125, 407.165, 407.205, 407.275, 407.415, 407.495 and 407.515 to 407.565. The department may adopt all necessary rules not inconsistent with those sections to carry into effect their provisions. The department may appoint assistants and agents necessary to expeditious and efficient administration and fix their compensation. [Formerly 407.020; 2005 c.625 §17]

 

      407.120 [Amended by 1975 c.219 §8; renumbered 407.165]

 

      407.125 Loans to qualified person. All moneys in the Oregon War Veterans’ Fund created by ORS 407.495 may be advanced by the Department of Veterans’ Affairs as loans to any person qualified for loans under the provisions of section 3, Article XI-A, Oregon Constitution, for the acquisition of farms and homes, as provided in ORS 407.115, 407.165, 407.205, 407.275, 407.415, 407.495 and 407.515 to 407.565 and not otherwise. [Formerly 407.030; 1991 c.798 §6; 1995 c.238 §3; 2005 c.625 §18]

 

      407.129 [1987 c.509 §§2,3; repealed by 1993 c.159 §1]

 

      407.130 [Amended by 1967 c.369 §2; 1979 c.115 §1; repealed by 1981 c.660 §18]

 

      407.131 Discount of principal; rules. The Department of Veterans’ Affairs, by rule, may discount a portion of the principal payable to the department in connection with a home or farm loan or in connection with a purchase contract for a home or farm if such action results in economic benefit to the home and farm loan program after considering the time value of money. [1987 c.509 §4; 2005 c.625 §19]

 

      407.135 Authority of department; disposition of certain moneys. The Department of Veterans’ Affairs is authorized and empowered, in the name and in behalf of the state to commence and prosecute to judgment all suits, actions and proceedings necessary to protect the interest of the state; to bid in property offered for sale under such proceedings and to acquire title to property for and in behalf of the state as a result of such proceedings; to accept deeds from borrowers in lieu of foreclosure; to sell, transfer, convey, lease or assign any property acquired by the department for and in behalf of the state; to make repairs and improvements or alterations; to pay taxes, liens and charges of every kind superior to the lien of the state; and otherwise to administer such property in such manner as the department deems to the best interest of the state. All money received by the department from the sale, leasing or other disposition of any property shall be paid over to the State Treasurer and deposited in the Oregon War Veterans’ Bond Sinking Account. [Formerly 407.080; 1987 c.652 §3; 2003 c.576 §439; 2005 c.625 §20]

 

      407.140 [Amended by 1975 c.462 §12; 1981 c.660 §36; renumbered 407.415]

 

      407.145 Purchase and control of property; disbursements to protect security. (1) The Department of Veterans’ Affairs may acquire property by purchase when the acquisition of such property is necessary to protect the interest of the state because of default in repayment of loans made in accordance with ORS 407.125 or statutes supplementary thereof. The department shall exercise control of all the property while the title remains vested in the state.

      (2) The department may take any action and make disbursements as may be necessary to protect the securities for loans acquired under this chapter. Any disbursement so made shall be added to the amount due from the borrower and shall bear interest at the rate then fixed for home improvement loans under ORS 407.325 or at the rate on the existing loan, whichever is higher. Any such disbursement shall be made only upon order of the department.

      (3) Funds for the protection of security may be disbursed from the Oregon War Veterans’ Fund including the Oregon War Veterans’ Bond Sinking Account as the department shall determine. [Formerly 407.090; 1987 c.131 §1; 1987 c.652 §4; 1997 c.214 §1; 2005 c.625 §21]

 

      407.150 [Repealed by 1981 c.660 §18]

 

      407.155 Execution and custody of documents. All deeds, leases, contracts, releases of mortgages and other instruments necessary or proper in the administration of this chapter shall be executed in behalf of the state by the Department of Veterans’ Affairs and shall be acknowledged by the department; and all deeds, mortgages, notes, insurance policies, abstracts and other instruments, documents and papers delivered to the department in the administration of those sections shall be kept in the custody of the department. [Formerly 407.100; 2005 c.625 §22]

 

      407.160 [Amended by 1967 c.335 §49; 1967 s.s. c.19 §2; 1983 c.798 §10; renumbered 407.495]

 

      407.165 Authority to hold certain funds received from borrower. The Department of Veterans’ Affairs may receive and hold for future disposition conditional payments from borrowers who have executed mortgages and security instruments under authority of ORS 407.225, indemnities for fire losses on secured property, and such other sums as must be held by the department in suspense pending further or final disposition thereof. Said funds shall be deposited in the State Treasury in the revolving account authorized by ORS 407.565 until they can be properly applied to the purposes for which they were paid to and received by the department. [Formerly 407.120; 2005 c.625 §23]

 

      407.169 Escrow accounts; standards; interest; rules. (1) The Department of Veterans’ Affairs shall make escrow accounts available to current and future borrowers and contract purchasers in connection with loan agreements and purchase contracts made under this chapter.

      (2) Escrow accounts established under this section shall be consistent with general lending and servicing standards for real estate loan agreements in this state and with the standards used by the United States Department of Veterans Affairs and the Federal Housing Administration.

      (3) Notwithstanding ORS 86.245 (5) and (7), the Department of Veterans’ Affairs shall pay interest to a borrower or contract purchaser on funds deposited in the escrow account for the borrower or contract purchaser in the manner and at the rate of interest described in ORS 86.245 (1) to (4).

      (4) The department shall adopt such rules as the department considers necessary to establish criteria for implementation of this section.

      (5) As used in this section, “escrow account” means any account which is part of a real estate loan agreement or purchase contract, whether incorporated into the agreement or contract or as part of a separately executed document, whereby the borrower makes periodic prepayment to the department of estimated property taxes, and the department pays the charges out of the account at the due dates. [1989 c.580 §2; 1995 c.182 §4; 2005 c.625 §24]

 

      407.170 [Amended by 1967 c.335 §50; 1981 c.660 §37; renumbered 407.515]

 

      407.175 [Formerly 407.055; repealed by 1995 c.238 §8]

 

      407.177 Loan processing and servicing contracts with lending institutions; terms; procedures. (1) When the Department of Veterans’ Affairs considers such contracts necessary to improve the financial condition of the loan program conducted under this chapter, the department is authorized to enter into contracts with lending institutions under which the lending institutions may provide any of the following services:

      (a) Processing of new loans and purchase contracts; and

      (b) Management and servicing of new loans and purchase contracts.

      (2) Contracts entered into by the department under this section may provide that the lending institution:

      (a) Receive applications for loans for the acquisition of homes or farms under this chapter;

      (b) Immediately investigate and process an application for a loan as provided by law; and

      (c) For approved loans or contracts, if requested by the department, service the loan or purchase contract for a period of time specified by the department.

      (3) When a lending institution, pursuant to a contract authorized by this section, receives an application for a loan for the acquisition of a manufactured home, as defined in ORS 197.295, the lending institution shall investigate and process the application in the manner prescribed in the contract between the lending institution and the department.

      (4) When a lending institution, pursuant to a contract authorized by this section, investigates and processes a loan application that it considers eligible for approval under this chapter, the lending institution shall notify the department and state the reasons why the loan may be approved under this chapter. The department shall retain final authority to approve or disapprove the loan. If the department disapproves the loan, the department shall notify the lending institution and the applicant of the disapproval and shall indicate the reasons for the disapproval. When the department is satisfied that all requirements for approval of a loan have been met by the applicant and the lending institution and that the property offered as security for the loan protects the interests of the state, the department shall transfer to the lending institution an amount of money from the Oregon War Veterans’ Fund equal to the loan amount approved by the department. The lending institution shall disburse the money in the manner prescribed by the department. The lending institution shall record the mortgage, trust deed, contract or other security agreement relating to the loan and then shall forward all the original loan documents to the department.

      (5) All moneys received by a lending institution as payments on principal and interest for loans made under this chapter shall be paid to the department in accordance with the terms of the contract between the department and the lending institution.

      (6) The department and lending institution shall mutually agree upon the compensation to be paid to the lending institution for services performed under a contract authorized by this section. Such compensation may be a fixed annual payment or a percentage of the amount of each loan or purchase contract processed or serviced by the lending institution under the contract.

      (7) Contracts entered into under this section are exempt from the requirements of the provisions of ORS 279.835 to 279.855 and ORS chapters 279A, 279B and 279C regarding personal services contracts.

      (8) As used in this section, “lending institution” means an entity that is licensed 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 the department, is capable of meeting the needs of the department in carrying out this chapter. [1989 c.746 §2; 1993 c.35 §1; 1995 c.238 §4; 1997 c.802 §18; 1999 c.50 §1; 2003 c.794 §273; 2005 c.625 §§25,26]

 

      407.179 Additional powers delegated to lending institution; authority retained by department. In addition to the powers described in ORS 407.177, the Department of Veterans’ Affairs also may delegate by contract to a lending institution any of the powers granted to the department in ORS 407.165 and 407.225. The department shall retain final authority to approve or disapprove loans and interpret the duties and responsibilities of borrowers under this chapter. [1989 c.746 §4; 1995 c.238 §5; 2005 c.625 §27]

 

      407.180 [Renumbered 407.525]

 

      407.181 Authority of lending institution. In exercising the authority granted to it by ORS 407.177 to 407.181, a lending institution shall perform only the services that are delegated to it by contract entered into under ORS 407.177, and shall comply with the terms of the contract and applicable laws. [1989 c.746 §3]

 

      407.183 [1967 s.s. c.1 §2; 1967 s.s. c.19 §1; 1969 c.615 §6; renumbered 407.535]

 

      407.185 Cash flow projection; annual review; report. In addition to, and not in lieu of, the audit required by ORS 297.210 the Department of Veterans’ Affairs may contract with an independent public accountancy organization for a review of the cash flow projection for the loan program established under this chapter and Article XI-A of the Oregon Constitution and of the assumptions used in developing that projection. The review shall be conducted in accordance with the review guidelines developed by the American Institute of Certified Public Accountants (AICPA). Such contract shall require a written report, copies of which shall be provided to the Governor, the Secretary of State, the State Treasurer, the President of the Senate, and the Speaker of the House of Representatives by the department no later than December 31 of each year. Payment for the services required under the contract shall be paid from funds appropriated for the administration of the department. [1982 s.s.1 c.11 §4; 1989 c.489 §1; 1997 c.35 §1; 1999 c.322 §38; 2005 c.625 §28]

 

      407.186 [1967 s.s. c.1 §3; renumbered 407.545]

 

      407.190 [Amended by 1967 c.454 §45; 1971 c.80 §3; renumbered 407.555]

 

      407.195 Loans not being amortized; identification; notice to borrowers. (1) The Director of Veterans’ Affairs shall identify each farm or home loan made under this chapter with moneys from the Oregon War Veterans’ Fund which, at the current rate of payment by the borrower, is not being amortized or will not be fully amortized by the agreed to date.

      (2) The director shall notify each borrower making payments on a loan identified under subsection (1) of this section that, at the current rate of payment, the loan principal will not be fully paid by the final payment date. The notice shall also include:

      (a) The current principal balance.

      (b) The current monthly principal and interest payment.

      (c) The estimated monthly principal and interest payment necessary to reduce the principal balance to zero by the agreed to date.

      (d) The estimated time remaining until the obligation is fully paid at the current payment level and the difference between that time and the agreed to date.

      (3) The notice required under this section shall be made a part of the annual statement to borrowers for the calendar year 1989 and thereafter. [1987 c.652 §22]

 

      407.200 [Amended by 1967 c.189 §1; 1971 c.80 §4; 1983 c.740 §128; renumbered 407.565]

 

      407.201 Required disclosure of credit information and loan terms. (1) When making a loan or otherwise extending credit under this chapter with moneys from the Oregon War Veterans’ Fund, the Department of Veterans’ Affairs shall comply with Title I (Truth in Lending Act) of the Consumer Credit Protection Act, as amended (15 U.S.C. 1601 et seq.) in the same manner required for a bank or national bank, as defined in ORS 706.008, when the bank extends credit in a transaction in which a security interest in real property is or will be acquired.

      (2) In addition to the requirements of subsection (1) of this section, the department shall notify each person seeking to acquire a home or farm under this chapter, prior to the signing of a loan agreement or contract, of the variable interest rate provisions of ORS 407.275, 407.315, 407.325 and 407.335. Information required to be disclosed under this subsection includes a history of the interest rate increases on loans during the preceding 10 years and an estimate of the financial effect that an increase of one percent in the interest rate will have on the borrower’s obligation under the mortgage, contract or other security agreement. [1987 c.652 §20; 1997 c.631 §470; 2005 c.625 §29]

 

LOAN PROCEDURES AND CONDITIONS

 

      407.205 Application for loan; amount of loan; limit on number of loans; exception. (1) Applications for loans for acquisition of a home or farm under this chapter shall be made to the Department of Veterans’ Affairs. Loans exclusive of funds disbursed under ORS 407.145 (2) and 407.275 (4) may not exceed the maximum original principal balance permitted on a single-family first mortgage loan by the Federal National Mortgage Association, as published in its announcements and subsequently included in its Selling Guide, at a rate of interest provided by ORS 407.325. Except as provided in subsection (2) of this section, an eligible individual may not receive or, under ORS 407.305, assume more than two loans under this chapter. An applicant may not borrow more than the maximum amount allowed under this section, except that when a loan is made on property that is destroyed by fire or other natural hazard, taken through condemnation or lost or disposed of for a compelling reason devoid of fault on the part of the applicant and when the loan is repaid or the property is transferred by deed or otherwise, the loan may be excluded from consideration in computing the maximum loan allowable. However, the loan right provided in this section may be restored not more than once while an unrepaid balance remains on a previous loan granted to the applicant.

      (2) The department may allow an eligible individual to receive or, under ORS 407.305, assume more than two loans under this chapter when:

      (a) The loan received or assumed is an additional loan made for the improvement of the farm or home acquired with an initial loan for the acquisition of that property; or

      (b) The last official certification of record by the United States Department of Veterans Affairs or any branch of the Armed Forces of the United States shows the eligible individual to be at least 50 percent disabled. However, a loan may be made to an eligible disabled veteran under this paragraph only if the veteran must acquire a different principal residence for compelling medical reasons or because the veteran is transferred by an employer for employment purposes or because the veteran’s spouse is transferred by an employer for employment purposes and the spouse provides more than 50 percent of the household income.

      (3) For the purposes of this section, an applicant owns a home when the applicant has fee simple title to the home or is the purchaser of the home under a contract of sale or other instrument of sale. Earnest money or preliminary sales agreements, options or rights of first refusal are not contracts or instruments of sale under this subsection.

      (4) As used in this section, “home” includes mobile homes and houseboats. [Formerly 407.040; 1989 c.677 §5; 1991 c.67 §97; 1993 c.192 §1; 1997 c.36 §1; 1999 c.41 §1; 2005 c.625 §30; 2007 c.43 §1]

 

      407.210 [Amended by 1963 c.9 §23; renumbered 407.575]

 

      407.215 Loan transferred by annulment or dissolution judgment excluded in determining maximum allowable. No applicant is entitled to borrow more than the maximum amount allowed under ORS 407.205 other than for reasons specified in ORS 407.205 except that when the property on which the loan was made becomes the property of the applicant’s spouse as a result of a judgment declaring a marriage void or dissolved and the loan is repaid or remains unrepaid and there is an assumption of primary liability on the loan by a party, such loan may be excluded from consideration in computing the maximum loan allowable under ORS 407.205. [Formerly 407.045; 2003 c.576 §440]

 

      407.225 Investigation and processing of loan application; security; maximum amounts of loans. (1) When the Department of Veterans’ Affairs receives an application pursuant to ORS 407.205, the department shall immediately investigate and process it as provided by law. The security for the loan shall consist of the property to be acquired by the veteran as a home or a farm. The security shall be secured by a mortgage or security agreement in the full amount of the loan which mortgage or security agreement shall be either a first lien or a lien insured by mortgagee’s title insurance against loss from any prior encumbrance. The department may make subsequent loans for improvements to the security if there are no intervening liens between the first lien of the department created under this section and the recorded liens upon the security securing repayment of such subsequent improvement loans. Such consecutive liens, for the purposes of this chapter, shall be deemed collectively as a first lien upon the security. The mortgage or security agreement shall provide that the borrower, or any subsequent owner of the secured property, may pay all or any part of the loan at any time without penalty.

      (2) A mobile home shall be secured by a security agreement in the full amount of the loan and the department shall perfect a security interest in favor of the State of Oregon. The security agreement shall provide that the borrower or any subsequent owner of the mobile home, may pay all or any part of the loan at any time without penalty. The security agreement shall provide for immediate acceleration of the unpaid balance of the loan if the mobile home is moved from the original site listed in the security agreement without first obtaining the written consent of the department. The security agreement shall also provide that removal of the mobile home to a site outside of this state shall constitute an act of default and result in immediate acceleration of the unpaid balance of the loan.

      (3) Loans may not exceed:

      (a) 100 percent of the net appraised value on homes that are real property;

      (b) 85 percent of the net appraised value on homes that are not real property; and

      (c) 90 percent of the net appraised value on farms that are real property. [Formerly 407.050; 1985 c.296 §3; 1997 c.214 §2; 2003 c.49 §1; 2005 c.20 §1; 2005 c.625 §31]

 

      407.235 [Formerly 407.058; 1985 c.296 §4; repealed by 1995 c.238 §8]

 

      407.245 [Formerly 407.061; repealed by 1995 c.238 §8]

 

      407.255 [Formerly 407.048; 1987 c.652 §5; repealed by 1995 c.238 §8]

 

      407.265 Loans for home or farm improvements; terms and conditions. (1) An applicant for a loan solely for the improvement of a home or farm may receive the loan if:

      (a) The applicant has not previously received a loan under this chapter;

      (b) The applicant has received a loan under this chapter for the acquisition of that home or farm for which there is an unpaid balance and repayment has been satisfactory; or

      (c) The applicant has previously received a loan under this chapter and there is no unpaid balance remaining on that loan.

      (2) Any loan made to an applicant who qualifies under subsection (1)(b) of this section for a loan solely for the improvement of a home or farm may be added to the amount due from the applicant and shall bear interest at the rate prescribed in ORS 407.325. [Formerly 407.065; 1987 c.221 §1; 1997 c.214 §3]

 

      407.275 Terms of loan to veteran and transferee. (1) Loans may be made bearing interest at the rate per annum prescribed as provided by ORS 407.325. Loans may be amortized over a period of not more than 40 years for homes other than mobile homes. Loans for mobile homes may be amortized over a period not exceeding the expected life of the mobile home, as determined by the Department of Veterans’ Affairs. The limitations contained in this subsection do not preclude the department from later extending the amortization period.

      (2) If the ownership of the secured property is transferred by deed or otherwise to anyone other than a veteran eligible for a loan under this chapter and Article XI-A of the Oregon Constitution, the veteran’s surviving spouse or unremarried former spouse, the veteran’s surviving child or stepchild, another veteran eligible for a loan under this chapter and Article XI-A of the Oregon Constitution who assumes the previous loan for the property as described in ORS 407.305 or a governmental entity when the secured property is transferred for public use, the interest from the date of transfer shall be at the rate per annum then fixed as provided by ORS 407.335. However, the department, during the term of the loan, may periodically prescribe the interest rates to be paid by the transferee.

      (3) Ownership of property that constitutes security for a loan made to a veteran under this chapter and Article XI-A of the Oregon Constitution may not be transferred by deed or otherwise to anyone other than the veteran’s surviving spouse, unremarried former spouse, surviving child or stepchild or another veteran eligible for a loan under this chapter and Article XI-A of the Oregon Constitution who assumes the previous loan for the property as described in ORS 407.305, unless the property is used primarily as the principal residence of the transferee for at least two years after the transfer or such shorter period of time as the department for good cause may allow.

      (4) Mortgages, trust deeds or security agreements on property given to secure any loan made under ORS 407.125 or statutes supplementary thereof may provide that the taxes and insurance premiums may be paid by the department from the Oregon War Veterans’ Bond Sinking Account. The amount so paid may be added to and become part of the principal of the loan and be repaid as prescribed by the department. The department may prescribe any method or period for repayment of the amount so paid that is not in conflict with the mortgage, trust deed or security agreement. The department may prescribe any method or period for repayment of interest on the amount so paid that is not in conflict with the mortgage, trust deed, security agreement or a separate agreement with the borrower. [Formerly 407.070; 1987 c.221 §2; 1987 c.652 §6; 1987 c.767 §1; 1995 c.238 §1; 2005 c.625 §32; 2007 c.766 §1]

 

      407.285 Rate of interest payable by certain transferees. (1) Notwithstanding the repeal of section 5, chapter 11, Oregon Laws 1982 (first special session), during the term of a loan for which the interest rate was initially fixed under section 5, chapter 11, Oregon Laws 1982 (first special session), the Department of Veterans’ Affairs may periodically prescribe the interest rate to be paid by the transferee. However, the interest rate for such loans may not at any time be less than the rate initially fixed under section 5, chapter 11, Oregon Laws 1982 (first special session), nor exceed a rate per annum which is one percent higher than the rate initially fixed under section 5, chapter 11, Oregon Laws 1982 (first special session).

      (2) The department may prescribe the interest rate to be paid by the transferee at a rate greater than the rate described in subsection (1) of this section, but only to the extent necessary to avoid invoking the provisions of section 4, Article XI-A of the Oregon Constitution. [1982 s.s.1 c.11 §7; 1987 c.221 §3; 2005 c.625 §33]

 

      407.295 Transfer to spouse; notice to department; notice of delinquent payment. When an ownership interest or possession of a home or farm securing a loan received under this chapter is transferred to the spouse or former spouse of the original borrower as a result of any judicial order or judgment, the Department of Veterans’ Affairs shall be notified in writing of the transfer by the transferee not later than 30 days after the transfer occurs. If the original borrower remains obligated under the order or judgment to make the payments on the principal and interest of the loan, the department shall notify the transferee when any such loan payment is not received by the 30th day after the payment is due. [1983 c.420 §5; 2003 c.576 §441; 2005 c.625 §34]

 

      407.305 Assumption of previous loan by eligible veteran; additional funds. When a veteran who is eligible for a loan under this chapter and Article XI-A of the Oregon Constitution seeks to acquire a home or farm that is serving as security for a previous loan made under this chapter, the veteran may choose either to receive a new loan for the property or to assume the previous loan. If the loan balance for the loan being assumed does not exceed the amount of the veteran’s entitlement under ORS 407.205, the interest rate to be paid on the assumed loan balance shall be the rate per annum prescribed under ORS 407.315. In addition to the amount assumed, the veteran may apply for and receive additional funds to be applied to the purchase price. The interest rate to be paid on the additional funds shall be the rate per annum currently prescribed under ORS 407.325. The sum of the assumed loan balance and the additional funds shall not exceed the amount of the veteran’s entitlement under ORS 407.205 or the percentage of the net appraised value prescribed by ORS 407.225 (3). An assumption or an assumption with additional funds under this section shall be deemed to be one loan and the veteran making the assumption or the assumption with additional funds shall be deemed to be a borrower for the purposes of ORS 407.145, 407.205, 407.215, 407.325, 407.385, 407.465 and 407.475. [Formerly 407.063; 1985 c.296 §5; 1987 c.221 §4; 1995 c.238 §6]

 

      407.310 [Repealed by 1981 c.660 §18]

 

      407.315 Interest rate for veteran’s assumption; variable rate; effect of rate on cash flow; rules. (1) When a veteran assumes a previous loan under ORS 407.305, the interest rate to be paid by the veteran from the date of assumption shall be the rate per annum prescribed periodically by the Department of Veterans’ Affairs, taking into consideration the solvency of the loan program and the interest rates currently prevailing in this state for loans secured by owner-occupied residential property.

      (2) The department shall make a cash flow projection to determine if assumptions at the interest rate established under subsection (1) of this section are among the causes of a negative cash flow projection for the loan program. The cash flow projection required by this section shall be an estimate of the revenue received from the repayment of mortgages, interest earnings, administrative expenses of the loan program, payment of interest and principal on outstanding debt and other relevant factors during the period in which current outstanding bonds are required to be retired.

      (3) If the cash flow projection required under subsection (2) of this section indicates that assumptions of loans at the interest rate established under subsection (1) of this section are a cause of a negative cash flow projection for the loan program, the department, by rule and notwithstanding ORS 407.325 (2), shall increase the interest rate to be paid for loans assumed under ORS 407.305 to the lowest rate per annum that assures a positive cash flow projection, but not exceeding the rate then prescribed under ORS 407.325. [1982 s.s.1 c.11 §15; 1987 c.221 §5; 1987 c.564 §1; 2005 c.625 §35]

 

      407.320 [Repealed by 1981 c.660 §18]

 

      407.325 Rate of interest on loans. (1) The Department of Veterans’ Affairs, with the advice of the Advisory Committee, will periodically, during the term of the loan, prescribe the interest rates to be paid by the applicant, taking into consideration the current value of the money, the solvency of the loan program, and the rates’ effect on veterans. If the department, after considering the factors specified in this section, determines that there is an economic need for a higher rate of interest on loans made for the acquisition of mobile homes and houseboats, the department shall prescribe the rate of interest for the acquisition of a mobile home or houseboat at not higher than two percent more per annum than the basic rate established by this section.

      (2) Except as provided in subsection (3) of this section:

      (a) The rate of interest on loans granted on or after May 27, 1971, and originally set at five and nine-tenths percent per annum may not be increased to more than seven and nine-tenths percent per annum.

      (b) The rate of interest on loans granted on or after January 1, 1981, and originally set at seven and two-tenths percent per annum may not be increased to more than nine and two-tenths percent per annum.

      (c) The rate of interest on a loan granted on or after May 27, 1971, for the acquisition of a mobile home or houseboat originally set at seven and nine-tenths percent per annum may not be increased to more than nine and nine-tenths percent per annum.

      (3) The department may prescribe the interest rates to be paid by the applicant at a rate greater than the rates described in subsection (2) of this section, but only if the department determines, at the sole discretion of the department, that such action reduces the probability that invoking the provisions of section 4, Article XI-A of the Oregon Constitution will become necessary.