Current through Register Vol. 63, No. 12, December 1, 2024
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:
(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