Current through Register Vol. 63, No. 3, March 1, 2024
The Director may refuse to make a loan to an applicant based on
any of the following reasons:
(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;
(b) The applicant has established credit
since the bankruptcy and made timely and satisfactory payments on obligations;
and
(c) The bankruptcy was caused
by circumstances beyond the applicant's control, such as uninsured medical
expense, layoff, strike, or divorce.
(5) The applicant has declared bankruptcy
between three and five years prior to application for a loan, unless the
applicant has reestablished credit since the bankruptcy.
(6) Business bankruptcies will not be grounds
for refusing to make a loan if:
(a) The
applicant was self-employed and the bankruptcy was not due to misconduct;
and
(b) There is no evidence of
derogatory credit information prior to the self-employment or after the
bankruptcy; and
(c) The applicant
has subsequently obtained a permanent position with reliable income.
(7) Chapter 13 bankruptcies will
not be grounds for refusing to make a loan if: The applicant has made
satisfactory payment of at least three-fourths of the total payments due the
trustee.
(8) The applicant's
ability to repay the loan is insufficient, as determined by the Department of
Veterans' Affairs (Department) by applying relevant industry
standards.
(9) The applicant is an
unsatisfactory credit risk, as determined by the underwriting analysis of the
credit rating agency selected by the Director. In that case, the Director shall
advise the applicant of his refusal on this basis and supply to the applicant
the name and address of any consumer reporting agency which provided the
Director with information on the applicant. If the applicant requests in
writing within 60 days after being notified of the refusal, the Director shall
provide the applicant with the name of any person other than a consumer
reporting agency who provided information which was, wholly or in part, a basis
of such refusal.
(10) The applicant
is involved in the following type of transactions:
(a) The purchase of property from a spouse
where the amount which the applicant seeks to borrow from the Department
exceeds the unpaid balance on loans used to acquire or improve the
property;
(b) The purchase from a
corporation wholly or substantially owned by the applicant;
(c) The purchase of property indirectly owned
by the applicant.
(11)
The applicant has or has had any interest, within the past three years, either
title or contractual, in the property being purchased, except it will not be
grounds for refusing to make a loan:
(a) If
the applicant is purchasing a one-half interest from a divorced spouse. The sum
shall be stated in the divorce decree;
(b) If the applicant acquired an interest in
property by inheritance and is purchasing the interest which co-heirs have in
the same property;
(c) If the
application is for an additional loan;
(d) If the application is for a
rehabilitation loan or a loan to pay off a bridge loan. A "bridge loan" is
temporary financing obtained for the purpose of financing the purchase of a
home pending the sale of a home owned by the borrower and listed with a real
estate broker or advertised for sale;
(e) If the application is for a loan to pay
off an interim loan whose term does not exceed 24 months (not
renewable);
(f) If the application
is for a loan to pay off a construction period loan obtained not more than 24
months, and the construction was completed not more than 18 months before the
veteran applied for a loan;
(g) If
the application is for amount spent on the purchase of, or the value of, land
only (whichever is less) and construction commences within 24 months of land
acquisition and the loan is funded within 18 months of the start of
construction.
(12) The
applicant does not meet the applicable underwriting or industry property
standards as determined by the Department.
(13) Effective with applications received
after May 15, 1984, except for farm loans and loans for multi-family dwellings,
if the applicant will use the property offered as security for the loan for a
purpose that would jeopardize the tax-exempt status of interest to holders of
Bonds issued by the Director of Veterans' Affairs:
(a) Specifically excluded uses are:
(A) As an investment;
(B) As a recreational home;
(C) As a principal place of business for any
trade or business of the applicant.
(b) Examples of excluded uses (if a portion
of the property is used regularly and exclusively in connection with a trade or
business) are:
(A) Using any portion of the
residence as a place to meet patients, clients, or customers in the normal
course of business;
(B) Storage of
inventory in a separate and identifiable fixed location and kept for the
wholesale or retail selling of products as a part of the applicant's trade or
business which would entitle the applicant to a "Business Use of the Home"
income tax deduction;
(C) Providing
care for children, for the elderly, or for handicapped persons, if the nature
and character of the care entitles the property owner to a "Business Use of the
Home" income tax deduction.
(c) Any use of a residence which does not
qualify for a "Business Use of the Home" income tax deduction shall not be
considered as a use in a trade or business. Examples of such permitted uses
are:
(A) Storage of inventory for the benefit
of an employer or in conduct of a direct selling business, if the use is not
exclusive of any personal use of that part of the residence;
(B) Babysitting, if the nature and character
of the babysitting does not entitle the property owner to a "Business Use of
the Home" income tax deduction;
(C)
Engaging in person-to-person sales of consumer products to customers in the
home, such as Tupperware, Amway, Avon, wicker, crystal, or similar
products;
(D) Foster home
established by Court Order, or designated by a Government Agency with
jurisdiction to make such a designation;
(E) Using part of the residence to write
legal briefs, prepare tax returns, read financial periodicals and reports, clip
bond coupons, or engage in similar work, if the use is not exclusive of any
personal use of that part of the residence.
Statutory/Other Authority: ORS
406.005
& 407.115
Statutes/Other Implemented: ORS
407.075
to 407. 385; Oregon Constitution Article XI-A, Section 3
