Wisconsin Administrative Code
Department of Veterans Affairs
Chapter VA 12 - Personal Loan Program
Section VA 12.02 - General loan policy

(1) E LIGIBILITY. The applicant's eligibility to participate in the program shall be established prior to the approval of the loan by the department.

(2) LOAN APPLICATION. An application for a loan shall be on a form approved by the department and shall include documentation of income, verification of adequate security and other items as may be required by the department. An application shall be signed by the applicant or submitted electronically after obtaining a valid log-on ID and password. Applications for loans by applicants who are married and not separated or in the process of obtaining a divorce shall be completed and signed by the applicant's spouse. If the application is submitted electronically, the spouse does not need to sign the application. Applications may be prepared with the assistance of and submitted through the office of a county veterans service officer or other representative as approved by the department or may be submitted directly to the department. Loan applications that are not complete will not be accepted by the department. A loan application which has been accepted by the department, but which is determined to lack the necessary information or documentation for the department to approve a loan, shall be denied, unless the applicant corrects the deficiency within 30 days' notice by the department to the county veterans service office or the applicant.

(3) INCOME. An applicant's current monthly income shall be verified. Acceptable verification of current monthly income may be:

(4) TERM OF LOAN. All loans, except loans for which an educational deferment is authorized under s. VA 12.06(1), shall be amortized on a monthly basis and the term of the loan shall be at least 1 year and may not exceed 10 years. The department may set amortization terms based upon the loan amount. Loans for which an educational deferment has been authorized shall have a maximum amortization term of 5 years.

(5) LOAN CHECKS. Loan checks shall be made payable to the applicant except where the department determines payment to a specific party is required to ensure compliance with s. 45.42, Stats., and this chapter. Checks may not be released until the department has received all necessary documentation and all requirements set forth in the department's commitment letter have been complied with to the satisfaction of the department. The department shall issue checks in whole number amounts and may adjust the loan amount requested by the applicant to a whole number.

(6) DELINQUENCY IN DEPARTMENT LOANS. The department shall not approve a loan to an applicant who is delinquent on another loan from the department. The department may authorize a loan to an applicant who has failed to pay a prior loan from the department in compliance with a repayment agreement if the applicant establishes that a loss of employment due to no fault of the applicant or other unavoidable circumstances caused the underlying repayment problem.

(8) BAD CREDIT PRACTICES. Applications from applicants who have failed to pay their obligations in compliance with a repayment agreement or have quitclaimed real estate to a lender in lieu of foreclosure within the last 5 years shall be denied unless such applications show strong off-setting characteristics. The department may consider whether the lender did not incur a loss as a result of the quitclaim and whether a loss of employment due to no fault of the applicant or other unavoidable circumstances caused the underlying repayment problem.

(9) DELINQUENT SUPPORT, SEPARATE MAINTENANCE PAYMENTS, MEDICAL AND BIRTH EXPENSES. If the department has not received a certification under s. 49.854(2) (b), Stats., that the applicant is delinquent in child support or maintenance payments or owes past support, medical expenses or birth expenses, the applicant's credit may be considered favorable if medical or birthing expenses do not exist or payments for such expenses are being made in accordance with a court order and child support and maintenance payments are current as of the date of approval of the personal loan program loan by the department. Evidence that the applicant is current shall be required if the child support or maintenance is not paid in the state of Wisconsin. If the applicant is in arrears or expenses exist, then a personal loan program loan may be made to that applicant only if the amount necessary to satisfy the arrearage or expense is paid from proceeds of the department's loan.

(10) TOTAL DEBT PAYMENTS. Where an applicant's total debt payments exceed 35 percent of the applicant's current monthly income the application shall be denied unless the applicant has a history of excellent debt service combined with either a demonstrated ability to accumulate savings, at least 15 percent equity in real estate or such other factors as the department finds to be relevant to the applicant's ability and motivation to make higher debt service payments.

(11) LIABILITIES. To determine whether the level of indebtedness is excessive, the department may analyze the stated purposes for which an applicant's debts were incurred, the total amount of the indebtedness in relation to income, and the applicant's record of meeting past financial obligations. The purpose for which all debts were incurred shall be stated by the applicant. If the department determines the accumulated indebtedness indicates financial instability or the amount of monthly payments will impair the applicant's ability to make debt service payments and meet ordinary living expenses, the loan application shall be denied. Accumulation of net worth may be considered an indication of creditworthiness.

(12) BANKRUPTCY, COLLECTION ACCOUNTS, JUDGMENTS, AND LIENS. Applications from applicants currently under federal bankruptcy proceedings shall be denied. Any application from an applicant who has been subject to bankruptcy proceedings or to liens and judgments within the 5 years immediately preceding the application, shall be examined carefully and the circumstances fully analyzed to determine whether the applicant is creditworthy and has demonstrated financial recovery. A copy of the petition, schedules of debts and discharge in bankruptcy along with the applicant's signed statement of the reason for such bankruptcy shall be submitted with the loan application. Proceeds of the loan may be used to pay collection accounts, judgments, and liens when approved by the department. No loan shall be approved where a collection account, judgment, or lien would remain unsatisfied after distribution of the loan proceeds.

(13) SUBORDINATION AGREEMENT AND PARTIAL RELEASE OF MORTGAGE. The department may execute a subordination agreement or release a portion of the property providing security for its mortgage if the department verifies that the mortgagor's equity in the property secured by the mortgage is greater than 15 percent after the execution of the subordination agreement or partial release, the applicant is current on the loan, the applicant meets current underwriting criteria and the repayment history for the 6 months immediately preceding the request has been satisfactory.

(14) CO-APPLICANTS. The department shall consider the income, assets, and debts of a co-applicant.

(16) INDEBTEDNESS OF MARRIED VETERANS. Eligible veterans who are married to each other may have indebtedness to the department in an amount up to $50,000 under the personal loan program and total indebtedness to the department up to $50,000 under the personal loan program, the economic assistance loan program under s. 45.351(2), 1995 Stats., and the veterans trust fund stabilization loan program under s. 45.356, 1995 Stats., subject to the indebtedness limitations for an individual veteran delineated at s. 45.42(2) and (7), Stats.