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Loan Guaranty: Implementation of Public Law 107-103

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Department of Veterans Affairs.


Final rule.


This document affirms, with one modification, an amendment to the Department of Veterans Affairs (VA) loan guaranty regulations implementing sections 401 through 404 of the Veterans Education and Benefits Expansion Act of 2001. The amendment incorporates into the regulations the following statutory changes: an increase in the maximum amount of loan guaranty Start Printed Page 3893entitlement from $50,750 to $60,000, a liberalization of the requirements regarding Memoranda of Understanding (MOU) between VA and Native American Tribes in order for their members to qualify for direct housing loans to Native American veterans, a revision of the requirement that loan instruments used in connection with VA guaranteed loans contain a statement that such loans are not assumable without prior VA approval, and an increase in the maximum specially adapted housing grant and in the special housing adaptations grant. Because these special housing grant amounts have been increased by subsequent legislation, this final rule reflects the current statutory limits of $50,000 and $10,000, respectively.


Effective Date: This rule is effective on January 27, 2005.

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Mr. Robert D. Finneran, Assistant Director for Policy and Valuation (262), Loan Guaranty Service, Veterans Benefits Administration, Department of Veterans Affairs, Washington, DC 20420, (202) 273-7368.

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Under 38 U.S.C. chapter 37, VA guarantees loans made by private lenders to veterans for the purchase, construction, and refinancing of homes owned and occupied by veterans. VA also makes direct housing loans to Native American veterans living on tribal trust land.

In addition, under 38 U.S.C. chapter 21, VA provides grants to certain severely disabled veterans with qualifying permanent and total service-connected disabilities to make adaptations to their homes that are necessary because of the nature of the veterans' disabilities.

Regulations detailing the procedures necessary for the Secretary to operate these programs are set forth in 38 CFR part 36. On February 10, 2003, VA published in the Federal Register at 68 FR 6625 an interim final rule implementing sections 401 through 404 of Pub. L. 107-103. Section 36.4302 of 38 CFR was amended to reflect an increase in the maximum guaranty on a housing loan made to eligible veterans from $50,750 to $60,000. Section 36.4527 of 38 CFR was amended to allow VA to make housing loans to a Native American veteran if the tribe has entered into an MOU with another Federal agency with regard to loans to Native Americans residing on tribal lands, so long as the Secretary of VA determines that the MOU substantially complies with VA's home loan requirements. Section 36.4308 of 38 CFR was amended to require that the statement that loans are not assumable without prior VA approval appear on at least one, rather than all, instruments evidencing the loan or the security therefor. It was also amended to eliminate the requirement that the notice be in capital letters and on the first page of the document. Title 38 CFR 36.4404 was amended to reflect the increased maximum grants VA may make to certain veterans with total and permanent service connected disabilities to assist those veterans in adapting housing to their special needs. At the time of publication of the interim final rule, the specially adapted housing grant had been increased from $43,000 to $48,000 and the special housing adaptations grant was increased from $8,250 to $9,250.

The interim final rule provided for a 60-day comment period that ended April 11, 2003. We received no comments. Based on the rationale set forth in the interim final rule we now affirm as a final rule the changes made to 38 CFR 36.4302, 36.4308, and 36.4527.

However, we are modifying the change made to § 36.4404 of 38 CFR by the interim final rule. Section 402 of Pub. L. 108-183, enacted December 16, 2003, further increased the maximum specially adapted housing grant to $50,000 and the special housing adaptations grant to $10,000. This final rule reflects the current statutory limits.

Paperwork Reduction Act

This document contains no provisions constituting a collection of information under the Paperwork Reduction Act (44 U.S.C. 3501-3521).

Administrative Procedure Act

Changes to 38 CFR 36.4404 are being published without regard to the notice-and-comment and delayed-effective-date provisions of 5 U.S.C. 553 since they merely conform VA's existing rules to the statutory amendments made by Pub. L. 108-183. Accordingly, these changes involve interpretive rules exempt from the notice-and-comment and delayed-effective-date requirement of 5 U.S.C. 553(b) and (d).

Regulatory Flexibility Act

For the reasons set forth in the interim final rule, the Secretary hereby certifies that this final rule will not have a significant economic impact on a substantial number of small entities as they are defined in the Regulatory Flexibility Act, 5 U.S.C. 601-612. Therefore, pursuant to 5 U.S.C. 605(b), this final rule is exempt from the initial and final regulatory flexibility analysis requirements of sections 603 and 604.

Unfunded Mandates

The Unfunded Mandates Reform Act requires, at 2 U.S.C. 1532, that agencies prepare an assessment of anticipated costs and benefits before developing any rule that may result in an expenditure by State, local, or tribal governments, in the aggregate, or by the private sector, of $100 million or more in any given year. As explained in the interim final rule, this rule would have no such effect on State, local, or tribal governments, nor will it impose costs on the private sector.

The Catalog of Federal Domestic Assistance Program numbers are 64.114 and 64.119.

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List of Subjects in 38 CFR Part 36

  • Condominiums
  • Flood insurance
  • Housing
  • Indians
  • Individuals with disabilities
  • Loan programs-housing and community development
  • Loan programs-Indians
  • Loan programs-veterans
  • Manufactured homes
  • Mortgage insurance
  • Reporting and recordkeeping requirements
  • Veterans
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Approved: January 6, 2005.

Anthony J. Principi,

Secretary of Veterans Affairs.

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Accordingly, the interim rule amending 38 CFR part 36, which was published in the Federal Register at 68 FR 6625 on February 10, 2003, is adopted as a final rule with the following changes.

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1. The authority citation for part 36 continues to read as follows:

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Authority: 38 U.S.C. 501, 3701-3704, 3707, 3710-3714, 3719, 3720, 3729, 3762, unless otherwise noted.

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2. In § 36.4404, paragraph (a) introductory text, paragraph (b)(2), and the authority citation at the end of the section are revised to read as follows:

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Computation of cost.

(a) Computation of cost of housing unit. Under section 2101(a) of chapter 21, for the purpose of computing the amount of benefits payable to a veteran-beneficiary, there may be included in the total cost to the veteran the following amount, not to exceed $50,000.

* * * * *

(b) * * *

(2) $10,000.

(Authority: 38 U.S. C. 2102)

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[FR Doc. 05-1540 Filed 1-26-05; 8:45 am]