§ 3714. Assumptions; release from liability

Legislative history

Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.

1. 1987

   Veterans’ Home Loan Program Improvements and Property Rehabilitation Act of 1987

   Pub. L. 100–198 § 10(a)(1) · 101 Stat. 1315

   Enacted · 38 U.S.C. § 3714

   Added Pub. L. 100–198, § 10(a)(1), Dec. 21, 1987, 101 Stat. 1321, § 1817A

   Source evidence

   Code source credit
   Added Pub. L. 100–198, § 10(a)(1), Dec. 21, 1987, 101 Stat. 1321, § 1817A

   Enacted provision · exact public law section
   (1) Chapter 37 is amended by inserting after section 1817 the following new section: “§ 1817A. Assumptions; release from liability “(a) (1) If a veteran or any other person disposes of residential property securing a guaranteed, insured, or direct housing loan obtained by a veteran under this chapter and the veteran or other person notifies the holder of the loan in writing before the property is disposed of, the veteran or other person, as the case may be, shall be relieved of all further liability to the Administrator with respect to the loan (including liability for any loss resulting from any default of the purchaser or any subsequent owner of the property) and the application for assumption shall be approved if the holder determines that— “(A) the loan is current; and “(B) the purchaser of the property from such veteran or other Contracts. person— “(i) is obligated by contract to purchase such property and to assume full liability for the repayment of the balance of the loan remaining unpaid and has assumed by contract all of the obligations of the veteran under the terms of the instruments creating and securing the loan; and “(ii) qualifies from a credit standpoint, to the same extent as if the purchaser were a veteran eligible under section 1810 of this title, for a guaranteed or insured or direct loan in an amount equal to the unpaid balance of the obligation for which the purchaser is to assume liability. “(2) For the purposes of paragraph (1), paragraph (3), and paragraph (4)(C)(ii) of this subsection, the Administrator shall be considered to be the holder of the loan if the actual holder is not an approved lender described in section 1802. “(3) If the holder of the loan determines that the loan is not current or that the purchaser of the property does not meet the requirements of paragraph (1)(B) of this subsection, the holder shall— “(A) notify the transferor and the Administrator of such determination; and “(B) notify the transferor that the transferor may appeal the determination to the Administrator. “(4) (A) Upon the appeal of the transferor after a determination described in paragraph (3) is made, the Administrator shall, in a timely manner, review and make a determination (or a redetermination in any case in which the Administrator made the determination described in such paragraph) with respect to whether the loan is current and whether the purchaser of the property meets the requirements of paragraph (1)(B) of this subsection. The Administrator shall transmit, in writing, a notice of the nature of such determination to the transferor and the holder and shall inform them of the action that shall or may be taken under subparagraph (B) of this paragraph as a result of the determination of the Administrator. “(B) (i) If the Administrator determines under subparagraph (A) of this paragraph that the loan is current and that the purchaser meets the requirements of paragraph (1)(B) of this subsection, the holder shall approve the assumption of the loan, and the transferor shall be relieved of all liability to the Administrator with respect to such loan. “(ii) If the Administrator determines under subparagraph (A) of this paragraph that the purchaser does not meet the requirements of paragraph (1)(B) of this subsection, the Administrator may direct the holder to approve the assumption of the loan if— “(I) the Administrator determines that the transferor of the property is unable to make payments on the loan and has made reasonable efforts to find a buyer who meets the requirements of paragraph (1)(B) of this subsection and that, as a result, the proposed transfer is in the best interests of the Veterans’ Administration and the transferor; “(II) the transferor has requested, within 15 days after receiving the notice referred to in subparagraph (A) of this paragraph, that the Administrator approve the assumption; and “(III) the transferor will, upon assumption of the loan by the purchaser, be secondarily liable on the loan. “(C) If— “(i) the loan is not approved for assumption under subparagraph (B) of this paragraph or paragraph (1) of this subsection; or “(ii) no appeal is made by the transferor under subparagraph (A) of this paragraph within 30 days after the holder informs the transferor of its determination under paragraph (3) of this subsection, the holder may demand immediate, full payment of the principal, and all interest earned thereon, of such loan if the transferor disposes of the property. “(b) If a person disposes of residential property described in subsection (a)(1) of this section and the person fails to notify the holder of the loan before the property is disposed of, the holder, upon learning of such action by the person, may demand immediate and full payment of the principal, interest, and all other amounts owing under the terms of the loan. “(c) (1) In any case in which the holder of a loan described in subsection (a)(1) of this section has knowledge of a person’s disposing of residential property securing the loan, the holder shall notify the Administrator of such action. “(2) If the holder fails to notify the Administrator in such a case, the holder shall be liable to the Administrator for any damage sustained by the Administrator as a result of the holder’s failure, as determined at the time the Administrator is required to make payments in accordance with any insurance or guaranty provided by the Administrator with respect to the loan concerned. “(d) The Administrator shall provide that the mortgage or deed of trust and any other instrument evidencing the loan entered into by a person with respect to a loan guaranteed, insured, or made under this chapter shall contain provisions, in such form as the Administrator shall specify, implementing the requirements of this section, and shall bear in conspicuous position in capital letters on the first page of the document in type at least 2 and ½ times larger than the regular type on such page the following: ‘This loan is not assumable without the approval of the Veterans’ Administration or its authorized agent.’. “(e) The Administrator shall establish in regulations a reasonable Regulations. amount as the maximum amount that a lender may charge for processing an application for a creditworthiness determination and assumption of a loan pursuant to this section. Such regulations shall establish requirements for the timely processing of applications for acceptance of assumptions. “(f) This section shall apply only to loans for which commitments are made on or after March 1, 1988.”.

2. 1988

   Veterans

   Pub. L. 100–322 § 415(b)(2)(B) · 102 Stat. 487

   Changed · 38 U.S.C. § 3714

   Pub. L. 100–322, § 415(b)(2)(B), renumbered section 1817A of this title as this section

   Source evidence

   Code amendment note
   Pub. L. 100–322, § 415(b)(2)(B), renumbered section 1817A of this title as this section.

   Enacted provision · exact public law section
   (B) Section 1817, as amended by subparagraph (A) of this paragraph, and section 1817 A are redesignated as sections 1813 and 1814, respectively, and transferred so that they will appear after section 1812, as transferred by paragraph (4)(C) of this subsection.

3. 1988

   Veterans’ Benefits and Programs Improvement Act of 1988

   Pub. L. 100–689 § 302(1) · 102 Stat. 4161

   1. Substituted · 38 U.S.C. § 3714(a)(1)

      Pub. L. 100–689, § 302(1), substituted “Except as provided in subsection (f) of this section, if” for “If”

   2. Substituted · 38 U.S.C. § 3714(a)(1)

      Pub. L. 100–689, § 302(1), substituted “loan guaranteed, insured, or made” for “guaranteed, insured, or direct housing loan obtained by a veteran”

   Source evidence

   Code amendment note
   Subsec. (a)(1). Pub. L. 100–689, § 302(1), substituted “Except as provided in subsection (f) of this section, if” for “If” and “loan guaranteed, insured, or made” for “guaranteed, insured, or direct housing loan obtained by a veteran”.

   Enacted provision · exact public law section
   (1) in subsection (a)(1), in the matter preceding clause (A)— (A) by striking out “If” and inserting in lieu thereof “Except as provided in subsection (f) of this section, if”; and (B) by striking out “guaranteed, insured, or direct housing loan obtained by a veteran” and inserting in lieu thereof “loan guaranteed, insured, or made”; and

4. 1988

   Veterans’ Benefits and Programs Improvement Act of 1988

   Pub. L. 100–689 § 302(2) · 102 Stat. 4161

   Amended · 38 U.S.C. § 3714(f)

   Pub. L. 100–689, § 302(2), amended subsec. (f) generally. Prior to amendment, subsec. (f) read as follows: “This section shall apply only to loans for which commitments are made on or after March 1, 1988.”

   Source evidence

   Code amendment note
   Subsec. (f). Pub. L. 100–689, § 302(2), amended subsec. (f) generally. Prior to amendment, subsec. (f) read as follows: “This section shall apply only to loans for which commitments are made on or after March 1, 1988.”

   Enacted provision · exact public law section
   (2) by striking out subsection (f) and inserting in lieu thereof the following: “(f) (1) This section shall apply— “(A) in the case of loans other than loans to finance the purchase of real property described in section 1833(a)(1) of this title, only to loans for which commitments are made on or after March 1, 1988; and “(B) in the case of loans to finance the purchase of such property, only to loans which are closed more than 45 days after the date of the enactment of the Veterans’ Benefits and Programs Improvement Act of 1988. “(2) This section shall not apply to a loan which the Administrator has sold without recourse.”.

5. 1989

   Veterans Home Loan Indemnity and Restructuring Act of 1989

   Pub. L. 101–237 § 313(b)(1) · 103 Stat. 2062

   Substituted · 38 U.S.C. § 3714(a)(c)(f)

   Pub. L. 101–237, § 313(b)(1), substituted “Secretary” for “Administrator” wherever appearing

   Source evidence

   Code amendment note
   Subsecs. (a), (c) to (f). Pub. L. 101–237, § 313(b)(1), substituted “Secretary” for “Administrator” wherever appearing.

   Enacted provision · exact public law section
   (1) Chapters 23, 24, and 37 are amended by striking out “Administrator” and “Administrator’s” each place such terms appear (other than in sections 906(e)(2) and 1812(h)(2)(B) and in section 1845(a) the third place “Administrator” appears) and inserting in lieu thereof “Secretary” and “Secretary’s”, respectively.

6. 1991

   Pub. L. 102–83 § 5(a) · 105 Stat. 378

   Changed · 38 U.S.C. § 3714

   Pub. L. 102–83, § 5(a), renumbered section 1814 of this title as this section

   Source evidence

   Code amendment note
   Pub. L. 102–83, § 5(a), renumbered section 1814 of this title as this section.

   Enacted provision · exact public law section
   (a) Redesignation of Sections to Conform to Chapter Numbers.— Each section contained in any of chapters 11 through 23 is redesignated by replacing the first digit of the section number with the number of the chapter containing that section. Each section contained in any of chapters 24 through 42 is redesignated so that the first two digits of the section number of that section are the same as the chapter number of the chapter containing that section.

7. 1991

   Pub. L. 102–83 § 5(c)(1) · 105 Stat. 378

   Substituted · 38 U.S.C. § 3714(a)(1)(B)(ii)

   Pub. L. 102–83, § 5(c)(1), substituted “3710” for “1810”

   Source evidence

   Code amendment note
   Subsec. (a)(1)(B)(ii). Pub. L. 102–83, § 5(c)(1), substituted “3710” for “1810”.

   Enacted provision · exact public law section
   (1) Each provision of title 38, United States Code, that contains a reference to a section redesignated by subsection (a) is amended so that the reference refers to the section as redesignated.

8. 1991

   Pub. L. 102–83 § 5(c)(1) · 105 Stat. 378

   Substituted · 38 U.S.C. § 3714(a)(2)

   Pub. L. 102–83, § 5(c)(1), substituted “3702” for “1802”

   Source evidence

   Code amendment note
   Subsec. (a)(2). Pub. L. 102–83, § 5(c)(1), substituted “3702” for “1802”.

   Enacted provision · exact public law section
   (1) Each provision of title 38, United States Code, that contains a reference to a section redesignated by subsection (a) is amended so that the reference refers to the section as redesignated.

9. 1991

   Pub. L. 102–83 § 4(a)(3) · 105 Stat. 378

   Substituted · 38 U.S.C. § 3714(a)(4)(B)(ii)(I)

   Pub. L. 102–83, § 4(a)(3), (4), substituted “Department” for “Veterans’ Administration”

   Source evidence

   Code amendment note
   Subsec. (a)(4)(B)(ii)(I). Pub. L. 102–83, § 4(a)(3), (4), substituted “Department” for “Veterans’ Administration”.

   Enacted provision · exact public law section
   (3) Such title is further amended by striking out “Veterans’ Administration” each place it appears (other than as amended under paragraphs (1) and (2) and as specified in paragraph (4)) and inserting in lieu thereof “Department”.

10. 1991

    Pub. L. 102–83 § 4(a)(2)(B)(iv) · 105 Stat. 378

    Substituted · 38 U.S.C. § 3714(d)

    Pub. L. 102–83, § 4(a)(2)(B)(iv), substituted “Department of Veterans Affairs” for “Veterans’ Administration”

    Source evidence

    Code amendment note
    Subsec. (d). Pub. L. 102–83, § 4(a)(2)(B)(iv), substituted “Department of Veterans Affairs” for “Veterans’ Administration”.

    Enacted provision · exact public law section
    (iv) Section 1814(d).

11. 1991

    Pub. L. 102–83 § 5(c)(1) · 105 Stat. 378

    Substituted · 38 U.S.C. § 3714(f)(1)(A)

    Pub. L. 102–83, § 5(c)(1), substituted “3733(a)(1)” for “1833(a)(1)”

    Source evidence

    Code amendment note
    Subsec. (f)(1)(A). Pub. L. 102–83, § 5(c)(1), substituted “3733(a)(1)” for “1833(a)(1)”.

    Enacted provision · exact public law section
    (1) Each provision of title 38, United States Code, that contains a reference to a section redesignated by subsection (a) is amended so that the reference refers to the section as redesignated.

12. 1998

    Pub. L. 105–368 title X § 1005(b)(10) · 112 Stat. 3315

    Substituted · 38 U.S.C. § 3714(f)(1)(B)

    Pub. L. 105–368 substituted “after January 1, 1989” for “more than 45 days after the date of the enactment of the Veterans’ Benefits and Programs Improvement Act of 1988”

    Source evidence

    Code amendment note
    Subsec. (f)(1)(B). Pub. L. 105–368 substituted “after January 1, 1989” for “more than 45 days after the date of the enactment of the Veterans’ Benefits and Programs Improvement Act of 1988”.

    Enacted provision · exact public law section
    (10) Section 3714(f)(1)(B) is amended by striking “more than 45 days after the date of the enactment of the Veterans’ Benefits and Programs Improvement Act of 1988” and inserting “after January 1, 1989”.

13. 2001

    Veterans Education and Benefits Expansion Act of 2001

    Pub. L. 107–103 title IV § 403 · 115 Stat. 976

    Amended · 38 U.S.C. § 3714(d)

    Pub. L. 107–103 amended subsec. (d) generally. Prior to amendment, subsec. (d) read as follows: “The Secretary shall provide that the mortgage or deed of trust and any other instrument evidencing the loan entered into by a person with respect to a loan guaranteed, insured, or made under this chapter shall contain provisions, in such form as the Secretary shall specify, implementing the requirements of this section, and shall bear in conspicuous position in capital letters on the first page of the document in type at least 2 and ½ times larger than the regular type on such page the following: ‘This loan is not assumable without the approval of the Department of Veterans Affairs or its authorized agent.’.”

    Source evidence

    Code amendment note
    Subsec. (d). Pub. L. 107–103 amended subsec. (d) generally. Prior to amendment, subsec. (d) read as follows: “The Secretary shall provide that the mortgage or deed of trust and any other instrument evidencing the loan entered into by a person with respect to a loan guaranteed, insured, or made under this chapter shall contain provisions, in such form as the Secretary shall specify, implementing the requirements of this section, and shall bear in conspicuous position in capital letters on the first page of the document in type at least 2 and ½ times larger than the regular type on such page the following: ‘This loan is not assumable without the approval of the Department of Veterans Affairs or its authorized agent.’.”

    Enacted provision · exact public law section
    SEC. 403. MODIFICATION OF LOAN ASSUMPTION NOTICE REQUIREMENT. Section 3714(d) is amended to read as follows: “(d) With respect to a loan guaranteed, insured, or made Regulations. under this chapter, the Secretary shall provide, by regulation, that at least one instrument evidencing either the loan or the mortgage or deed of trust therefor, shall conspicuously contain, in such form as the Secretary shall specify, a notice in substantially the following form: ‘This loan is not assumable without the approval of the Department of Veterans Affairs or its authorized agent’.”.

14 of 14 references resolved to an enrolled provision