VA 4.05 Financial requirements.
VA 4.06 Property qualifications.
VA 4.08 Primary loan program.
VA 4.09 Secondary loan program.
VA 4.11 Procedure for suspension of builders, authorized lenders and appraisers.
VA 4.12 Omissions and material errors as grounds for suspension of authorized lenders.
VA 4.13 Primary loan forbearance.
VA 4.14 Home improvement loan program.
Ch. VA 4 Note
Note: Chapter VA 4 as it existed on October 31, 1974 was repealed and a new chapter VA 4 was created,
Register, October, 1974, No. 226, effective November 1, 1974. Chapter VA 4 as it existed on May 31, 2000 was repealed and a new chapter VA 4 was created,
Register, May, 2000, No. 533, effective June 1, 2000.
Ch. VA 4 Note
Note: 2005 Wis. Act 22 repealed and recreated Ch. 45, Stats. Cross-references to Ch. 45, Stats., were corrected by the revisor under s. 13.93 (2m) (b) 7., Stats.
VA 4.01
VA 4.01
Definitions. In this chapter the terms defined in s.
45.31, Stats., have the meanings designated and the statutory definitions are incorporated by reference. The federal regulations and guidelines issued by the Fannie Mae Program may be applied in conjunction with the provisions of this chapter where there is no conflict. The following terms shall have the meanings designated:
VA 4.01(1)
(1) "Adequate housing" means a structurally sound housing accommodation ready for immediate occupancy, sufficient in size to accommodate the applicant and the applicant's dependents, with electrical amperage of at least 100 amperes, heating and sanitary facilities, all of which are in good condition of repair.
VA 4.01(2)
(2) "Annual income" means "current monthly income" multiplied by 12.
VA 4.01(3)
(3) "Applicant" means a person who applies for a loan certificate of eligibility or a veteran who applies for a housing loan under subch.
III of ch. 45, Stats. The term "applicant" also means the applicant and co-applicant, if there is a co-applicant, unless the context clearly limits the meaning to the applicant only.
VA 4.01(4)
(4) "Basement survey" means the placement of stakes delineating, by survey, the perimeter of the proposed basement within the lot upon which an applicant's housing accommodation will be constructed. A basement constructed pursuant to a survey must comply with sideyard, setback and other applicable requirements.
VA 4.01(5)
(5) "Co-applicant" means any person who is eligible to apply and does apply with an applicant for a housing loan.
VA 4.01(6)
(6) "Current monthly income" means an applicant's current monthly adjusted gross income at the time of application, or in appropriate cases 1/12 of an applicant's annual income computed on the basis of the applicant's current adjusted gross income at the time of application.
VA 4.01(7)
(7) "Dependent child" means any natural child, any legally adopted child, or any stepchild of a veteran as defined in s.
45.71 (16) (a), Stats., who is at least 18 years of age and under the age of 26 if in full attendance at a recognized school of instruction or any age if incapable of self-support by reason of mental or physical disability.
VA 4.01 Note
Note: Section 45.71 (16), Stats., no longer exists since the repeal and recreation of ch. 45, Stats., by
2005 Wis. Act 22.
VA 4.01(8)
(8) "Housing accommodation" means the building in which the applicant will live. In the case of condominiums, the applicant's dwelling unit, but not the appertaining land, is included.
VA 4.01(9)
(9) "Lender" means either an "authorized lender" or "primary lender" or both.
VA 4.01(10)
(10) "Mortgagee" means the department or the authority.
VA 4.01(11)
(11) "Mortgagor" means a successful housing loan applicant named in a mortgage or a chattel security agreement or the co-applicant spouse of a successful applicant.
VA 4.01(13)
(13) "Property" means the housing accommodation, garage, land and any other non-housing improvements, the purposes for which a housing loan may be made.
VA 4.01(14)
(14) "Residence" means the fixed primary housing accommodation of an applicant situated on an amount of land reasonably necessary to maintain the housing accommodation's basic livability. The applicant must occupy or intend to occupy the residence.
VA 4.01(16)
(16) "Veteran" means either a veteran as defined in s.
45.71 (16) (a), Stats., or a deceased veteran's unremarried surviving spouse or minor or dependent child who is a resident of and living in this state at the time of making application for a certificate of eligibility or a primary loan.
VA 4.01 Note
Note: Section 45.71 (16), Stats., no longer exists since the repeal and recreation of ch. 45, Stats., by
2005 Wis. Act 22.
VA 4.01(17)
(17) "Work credit" or "sweat equity" means actual labor performed by the applicant and does not include the cost or value of materials used.
VA 4.01 History
History: Cr.
Register, May, 2000, No. 533, eff. 6-1-00.
VA 4.02
VA 4.02
Manufactured home loans. VA 4.02(1)
(1)
Security. No loan may be made under this section for the purchase of a manufactured home unless the loan is secured by both a first mortgage and a chattel security agreement on the manufactured home itself and the home is affixed to a permanent foundation.
VA 4.02(2)
(2) Repayment of loans. All loans on manufactured homes will be amortized on a monthly payment basis and may have a maximum repayment term of 12 years.
VA 4.02(3)
(3) Items excluded from cost. Furniture and appliances, moving and utility hookup expenses and taxes included as a part of the purchase price of the manufactured home and skirting and tie-downs shall be considered a part of the total cost of the manufactured home for the purposes of ss.
45.33 and
45.35, Stats. The furniture and appliances shall be included in the chattel security agreement. Furniture and appliances which are not fixtures shall be separately valued and shall be paid for by the applicant and be conveyed by separate bill of sale at the time of the closing.
VA 4.02(4)
(4) Registration. All manufactured homes upon which primary loans are made must be registered with the department of transportation.
VA 4.02(5)
(5) Consent to removal. No manufactured home upon which a primary loan has been made may be moved from the site of original hookup without the consent of the authorized lender and the department and no manufactured home upon which a secondary loan has been made may be moved from the site of original hookup without the consent of the department.
VA 4.02 History
History: Cr.
Register, May, 2000, No. 533, eff. 6-1-00.
VA 4.03
VA 4.03
General loan policy. VA 4.03(1)(1)
Loan repayment record. The department may not issue a certificate of eligibility to an applicant or approve a loan to an applicant who is delinquent on a loan from the department.
VA 4.03(2)(a)(a) A primary loan may be made to replace a loan, the purpose of which was construction of a residence, including garage and the acquisition of land, if the original term of the loan did not exceed 24 months, or if the renegotiated term of the loan does not exceed 24 months and terminates within 24 months of the closing date of the original loan.
VA 4.03(2)(b)
(b) Applications for loans on residences where construction has not been completed shall be processed under
sub. (4), except that the contract may have multiple payments to the contractor and escrows are not permitted.
VA 4.03(3)(a)(a) Construction loans may be made for a term not exceeding 29 years and 4 months, in addition to the construction period not exceeding 8 months.
VA 4.03(3)(b)
(b) The applicant may not act as the applicant's own general contractor. Unless the applicant's occupation is directly related to the task involved, the applicant cannot perform any construction tasks other than painting and staining. The general contractor must warrant all work performed by the applicant.
VA 4.03(3)(c)
(c) On construction loans, payment on principal may be waived for up to 8 months. However, payment of interest and 1/12 of the estimated annual taxes and insurance premiums must be made monthly. The interest will be charged on principal actually disbursed during the previous month based on the number of days of usage and billed as of the first of the month.
VA 4.03(3)(d)
(d) Construction contracts shall be written on a firm price basis. No cost adjustment clause is permitted. Change orders in construction contracts may be permitted only with the approval of the authorized lender and if the applicant deposits the full cost of the change order with the lender prior to the change taking place.
VA 4.03(3)(e)
(e) Construction loan agreements shall be completed on closing of all construction loans.
VA 4.03(3)(f)
(f) When required, all building permits, septic adequacy reports and well drilling permits must be obtained prior to the advance of any primary loan funds by the authorized lender. The lender shall retain copies of all permits and tests in the loan file. All percolation tests, when required, shall be completed prior to the approval of the application.
VA 4.03(3)(g)
(g) The following documents shall be submitted to the department with every construction loan application:
VA 4.03(3)(g)1.
1. Offer to purchase vacant land or deed showing ownership of vacant land.
VA 4.03(3)(h)
(h) A basement survey is required in connection with every construction loan before closing. The lender may waive a basement survey under the following circumstances: the lender obtains a certificate from the local building inspector or zoning authority indicating that the proposed basement is located within the bounds of the described property, is in compliance with all applicable side yard and set back requirements and has a proper elevation. The authorized lender shall agree to sign the lender's warranty on the basis of the certificate.
VA 4.03(3)(i)
(i) There must be a general contractor who shall warrant in writing against defects in materials and workmanship for a period of not less than one year from the date of completion.
VA 4.03(3)(j)
(j) The lender shall approve the builder's qualifications and credit and require evidence that the builder carries or that the applicant will carry builder's risk insurance. The insurance shall be on a standard form 17c or a comparable form and shall include fire and extended coverage, vandalism and collapse coverage. If theft coverage is available, it is recommended that this coverage be carried also. The policy shall name the builder or mortgagor as the insured with a loss payable clause in favor of the mortgagee. The original policy shall be retained by the lender with a memorandum copy to the mortgagor. The mortgagor shall obtain a general liability policy naming the mortgagor as the insured. This policy shall remain in effect until completion of construction.
VA 4.03(3)(k)
(k) Authorized lenders shall establish that the builder is creditworthy.
VA 4.03(3)(L)
(L) Certificates of satisfactory completion of each stage of construction completed shall be submitted to and retained by the lender, signed by the builder and mortgagor prior to disbursement of any additional funds. Lender or its agent shall inspect completed work prior to any draw and retain a copy of the inspection report on file.
VA 4.03(3)(m)
(m) Lien waivers shall be obtained. If any question arises concerning the adequacy of the lien waivers, the waivers shall be cleared through a title company.
VA 4.03(3)(n)
(n) All down payment monies received by any of the parties to the construction transaction shall be deposited with the lender. The amounts that are necessary for closing shall be disbursed at closing. Monies not disbursed at closing shall be retained by the lender in an escrow account until the next draw is requested by the builder. No housing loan proceeds may be disbursed until all of the down payment monies have been fully expended. Advances prior to completion may equal 80% of the cost of completed construction unless the cost breakdown shows profit as a separate entry, in which case 100% of the cost of completed construction may be disbursed. Disbursements may not exceed 75% of the total committed primary loan funds until after final inspection. Funds remaining after each and every draw shall be sufficient to complete the construction. Advances shall be made on construction completed, in place, and inspected by the lender or agent using guidelines approved by the department. Advances may take place at any of the following times:
VA 4.03(3)(n)1.
1. Upon purchase of the lot, if not already owned by the mortgagor.
VA 4.03(3)(n)3.
3. When the roof is on, the house is enclosed, and all other work is roughed in to include electrical, plumbing, heating and carpentry including windows and doors.
VA 4.03(3)(n)4.
4. After final inspection. Minor items that do not affect livability or work prevented because of weather related circumstances may be incomplete provided the lender establishes an adequate escrow of at least one and one-half times the cost to complete the items.
VA 4.03(3)(o)
(o) Landscaping is not required, other than rough grading and backfilling.
VA 4.03(3)(p)
(p) Painting of the exterior of the housing accommodation and garage, if not pre-finished, is required. At least one coat of finish on the interior woodwork, kitchen and bathroom walls is required. A finished product, such as hardwood properly sealed, tile or carpeting, is required on all floors. Access walks and driveways must be completed.
VA 4.03(3)(q)
(q) In primary loan applications work credits and sweat equity may be allowed only after the applicant evidences that the down payment is unborrowed funds and that the applicant has adequate funds for closing and moving expenses. The primary loan shall be the total cost of the construction minus the down payment. The work credits and sweat equity shall be deducted from the loan principal amount after the construction has been completed. An authorized lender may waive firm price contracts for labor for required painting if all of the following occur:
VA 4.03(3)(q)1.
1. The authorized lender obtains an agreement from the general contractor stating that should painting become necessary, the contractor shall do such painting at no expense to the mortgagor, authorized lender or the department;
VA 4.03(3)(q)2.
2. The contract and supporting documents include a firm price for all painting materials required; and
VA 4.03(3)(q)3.
3. The authorized lender and general contractor agree not to authorize occupancy by the mortgagor until the required painting and other sweat equity tasks are completed.
VA 4.03(3)(r)
(r) Plans and specifications for any unusual type of construction shall be submitted to the department prior to loan processing by the lender.
VA 4.03(4)
(4) Purchase loans for a housing accommodation to be constructed. VA 4.03(4)(a)(a) A purchase loan for a housing accommodation and, if applicable, a garage to be constructed, may be made for a term not exceeding 360 months.
VA 4.03(4)(b)
(b) The loan documents shall be submitted to the department as an application for purchase of a completed housing accommodation and, if applicable, a garage.
VA 4.03(4)(c)
(c) The housing accommodation and garage shall be fully constructed not more than 8 months from the date of commitment.
VA 4.03(4)(d)
(d) A single payment construction contract for a complete, finished, firm price, warranted housing accommodation shall be submitted in all cases, with any of the following:
VA 4.03(4)(d)1.
1. An offer to purchase the land on which the housing accommodation is to be constructed, if the land is owned by the builder or a third party; or
VA 4.03(4)(d)2.
2. A copy of the recorded deed, if the land is owned by the applicant.
VA 4.03(4)(e)
(e) Work credit may be agreed to between the applicant and the builder in order to arrive at a reduced sale price or a reduced contract-to-construct price to the applicant, but the amount of the loan applied for shall not include the value of the work credit agreed to so as to result in payment to the applicant for the work credit. No part of the required downpayment can be made up of the value of the work credit. No payment for work credit shall be made to the applicant by either the lender or builder.
VA 4.03(4)(f)
(f) The appraisal submitted to the department shall be based upon the value of the property after completion of construction in accordance with the plans and specifications.
VA 4.03(4)(g)
(g) Upon completion of construction, the general contractor shall warrant, in writing, against defects in materials and workmanship for a period of not less than one year from the date of completion.
VA 4.03(4)(h)
(h) Lien waivers shall be obtained and submitted to the lender upon completion.
VA 4.03(4)(i)
(i) The housing accommodation and garage, if applicable, shall be fully completed. Final inspection shall be made by an appropriate inspector prior to closing.
