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.
VA 4.03(4)(j)
(j) A single disbursement by the department may be made only upon compliance with all of the foregoing requirements. 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(5)(a)(a) When an applicant for a certificate of eligibility remains obligated to the department on either a secondary loan or another primary loan and the applicant is otherwise qualified for the certificate, a conditional certificate of eligibility shall be prepared authorizing application for a primary loan subject to the requirement that the existing secondary or primary loan be fully paid prior to or at the time of closing of the primary loan.
VA 4.03(5)(b)
(b) If an applicant failed to repay a department loan in a timely manner or quitclaimed real estate back to the department in lieu of foreclosure within the 5 years preceding application for a second certificate of eligibility, the applicant is ineligible to receive a second certificate of eligibility or a primary housing loan unless the applicant can establish strong offsetting characteristics. The department may consider whether or not the department incurred 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.
VA 4.03(6)
(6) Survey. Where the legal description of the property is in metes and bounds, a survey, or copy of a survey, clearly delineating a single perimeter of the entire plot and location of any existing or proposed improvements is required in connection with a primary loan, unless it is determined by the department that there is no dispute as to the location of the improvements within the perimeter. In these cases, a surveyor's or professional engineer's letter is required.
VA 4.03(7)
(7) Floodplain. Life of loan flood certifications are required for loan applications. If the property is in a 100 year floodplain, flood insurance shall be obtained on the property and shall be available at the time of closing. The property is deemed to be in a 100 year floodplain only if the buildings thereon are in the 100 year floodplain.
VA 4.03(8)(a)(a) An application for a purchase or construction loan involving property with a well, with a community water supply that is not municipally operated or with private septic disposal system shall include any of the following:
VA 4.03(8)(a)2.
2. A safe water report from a laboratory certified by the state of Wisconsin.
VA 4.03(8)(a)4.
4. Other documentation showing an adequate sewage disposal system.
VA 4.03(8)(b)
(b) Housing loans may not be approved for the purchase of or construction of housing accommodations on properties if the septic disposal systems are gas fired or chemical toilets are utilized.
VA 4.03(9)
(9) Separate housing accommodations. The department may not approve a housing loan to an applicant and co-applicant for a duplex or a multiple unit housing accommodation if the applicant and co-applicant are occupying or intend to occupy separate dwelling units, even though both are veterans.
VA 4.03(10)
(10) Term. The amortization period of a housing loan may not exceed 30 years.
VA 4.03(11)
(11) Business use. Except for a housing loan for a purpose designated in s.
45.34 (1) (c), Stats., the department may not approve a housing loan for a residence, other than a multi-family residence which may be financed under
sub. (12), in which it is reasonably expected that more than 15% of the total area is to be used in a trade or business.
VA 4.03(12)
(12) Multi-family residence. Except for a housing loan for a purpose designated in s.
45.34 (1) (c), Stats., the department may not approve a housing loan for a multi-family residence unless the housing accommodation has four units or less, the applicant intends to occupy one unit of the housing accommodation and the housing accommodation was first occupied as a residence at least 5 years before the mortgage is executed.
VA 4.03(13)
(13) Prior financing. Except for a housing loan for a purpose designated in s.
45.34 (1) (c), Stats., the department may not approve a housing loan for an applicant who had a mortgage or any other secured financing on the housing accommodation, while using the housing accommodation as a residence, whether or not paid off, at any time prior to the execution of the mortgage.
VA 4.03 History
History: Cr.
Register, May, 2000, No. 533, eff. 6-1-00;
CR 05-008: am. (2)
Register May 2005 No. 593, eff. 6-1-05.
VA 4.05
VA 4.05
Financial requirements. VA 4.05(1)
(1)
Veteran's contribution. If the applicant's contribution required under s.
45.35, Stats., or any closing costs and moving expenses as the applicant may be required to pay, has been or is to be acquired by borrowing, other than from a government sponsored program, a program approved by the department or from the applicant's own assets, the application shall not be approved. The applicant must be financially able with the aid of the housing loan applied for to complete the purchase, construction or improvement and to pay all required closing and moving expenses. When the sales price, construction cost or total cost exceeds the value pursuant to
s. VA 4.07 (2), the applicant's contribution required under s.
45.35, Stats., will be increased by the excess. Work credits, rent credits or other reductions of the price of the property being acquired by an applicant may be allowed but only after the applicant establishes that a 5% down payment has been made from the applicant's own funds. Mortgage funds may not be utilized to pay closing costs. Applicants shall submit verifications of all deposits in excess of $100 which will constitute a portion of their contribution.
VA 4.05(2)
(2) Other owned real estate. All or any portion of or interest in other owned real estate, assigned to or encumbered in favor of the department in connection with primary loans, may be released pursuant to
s. VA 4.08 (9).
VA 4.05(3)
(3) Personal property. The cost of any personal property included in a construction or improvement contract shall be paid by the applicant. The payment may not constitute part of the applicant's equity in the property. Carpeting, built-ins, fixtures or other items permanently affixed to the structure may not be considered personal property. No personal property may be financed with primary housing loans.
VA 4.05(4)
(4) Employment. The applicant shall have stable employment and sufficient income and financial stability to assure repayment according to the terms of the loan. In the case of a primary loan, income and employment that is not maintained at closing as stated on the application shall result in the authorized lender canceling the loan commitment.
VA 4.05(5)
(5) Liabilities. To determine whether the level of indebtedness is excessive, the department and authorized lender shall 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 on the application. If the department or authorized lender determines the accumulated indebtedness indicates financial instability or the amount of monthly payments will impair the applicant's ability to make shelter cost payments and meet ordinary living expenses, the loan application shall be denied. Accumulation of net worth may be considered to be an indication of creditworthiness.
VA 4.05 History
History: Cr.
Register, May, 2000, No. 533, eff. 6-1-00.
VA 4.06
VA 4.06
Property qualifications. VA 4.06(1)
(1)
General. The department may approve a housing loan only on a housing accommodation which is determined to be adequate housing, either at the time of loan closing or after the completion of the improvements or rehabilitation to be completed with the assistance of a housing loan. If the property has any deficiencies, it may be considered adequate housing if the lender has established an adequate escrow of the sellers funds. The housing accommodation must be located in Wisconsin. The housing accommodation shall be occupied by the applicant as the applicant's and dependent's residence.
VA 4.06(2)
(2) Sub-standard housing accommodations. The department may not approve applications for housing loans to purchase substandard housing accommodations, temporary dwellings, or housing accommodations not meeting minimum requirements of health and sanitation, such as garages, basements, or cottages inadequately converted for permanent occupancy.
VA 4.06(3)
(3) Lots. The department may not approve an application to purchase a housing accommodation situated on a lot deemed to be of inadequate size.
VA 4.06(4)
(4) Property analysis. The department shall use federal regulations and guidelines issued by the Fannie Mae Program for evaluating properties. Loans may not be approved on properties that fail to meet the standards and the standards and guidelines shall be used for determining the maximum number of years for which loans will be made on properties offered as security.
VA 4.06 History
History: Cr.
Register, May, 2000, No. 533, eff. 6-1-00.
VA 4.07(1)(1)
General. Except in the case of applications for loans made for the purposes set forth in s.
45.34 (1) (c), Stats., appraisals shall be submitted with all housing loan applications.
VA 4.07(2)
(2) Use of appraisals. Appraisals shall be used to determine whether the properties so appraised adequately secure proposed housing loans, but the appraisals are advisory only. The department may determine the value of properties for its purposes by means of property inspection by department representatives, by obtaining appraisal reports at its own expense, or by such other means as it deems practical.
VA 4.07(3)
(3) Appraisers. The secretary may designate appraisers in any county for the protection of veterans and the department.
VA 4.07(4)
(4) Disinterest. The appraiser may not have an interest in the property to be purchased or constructed, or be employed by the lender, except under exceptional circumstances with prior approval of the department.
VA 4.07(5)(a)(a) The appraiser shall consider and comment upon encroachments, easements, code violations or variances.
VA 4.07(5)(b)
(b) Construction loans in a floodplain may not be approved unless the plans and specifications comply with the requirements of
ch. NR 116.
VA 4.07(5)(c)
(c) The appraiser may evaluate personal property if personal property of value is included in the property to be purchased or constructed.
VA 4.07 History
History: Cr.
Register, May, 2000, No. 533, eff. 6-1-00.
VA 4.08
VA 4.08
Primary loan program. VA 4.08(1)(a)(a) Except in the cases of applications for loans made for the purposes set forth in s.
45.34 (1) (c), Stats., an application for issuance of a certificate of eligibility shall be submitted to the department through the applicant's county veterans service officer and shall be in the same form as an application for the establishment of eligibility for general benefits from the department but shall contain a specific request for issuance of the certificate. In the case of an application for a loan for the purposes set forth in s.
45.34 (1) (c), Stats., the department may not issue a separate certificate of eligibility but shall certify an applicant as eligible prior to approving the application.
VA 4.08(1)(b)
(b) A certificate of eligibility may be issued only to an applicant whose previous transactions with the department would in no way bar approval of another loan by the department.
VA 4.08(1)(c)
(c) If the applicant is a veteran who was a resident of the state of Wisconsin at time of entry into military service or has been a resident of this state for any consecutive 5-year period after entry or reentry into service on active duty, the certificate of eligibility shall be issued for an indefinite period. If the applicant qualifies as a veteran by virtue of being the unremarried spouse of a deceased veteran, the certificate shall become null and void upon the remarriage of the applicant and shall so state upon its face.
VA 4.08(1)(d)
(d) If the original certificate has been lost and the applicant is still an eligible veteran at time of application for reissue, a certificate of eligibility may be reissued.
VA 4.08(2)
(2) Contracts. No lender may process a mortgage loan application until the lender has entered into a contract with the department. The contract shall delineate or include reference to the responsibilities of the authorized lenders and other matters set forth in s.
45.37 (5) (a) 1., Stats., shall vest authorized lenders with such powers as the department deems necessary to enable them to properly carry out their servicing responsibilities, shall specify the minimum number of days notice to the department of anticipated closing or first disbursement dates, and shall specifically require such lenders to execute warranties and servicing agreements in connection with primary loans closed by them. The provisions of the warranties and agreements shall be deemed to be incorporated into the contract.
VA 4.08(3)
(3) Application. Application for a primary loan shall be made through the authorized lender of the applicant's choice. The application shall be completed on forms prescribed by the department, and shall include the applicant's certificate of eligibility, a fact-built credit report, appraisal report, employment and deposit verifications and, if appropriate, plans, specifications, a construction contract, a survey, water analysis report, purchase agreement, and such other instruments and exhibits as the authorized lender deems necessary to complete the application.
VA 4.08(4)
(4) Denial by authorized lender. If at any time during the course of the development or evaluation of an application for a loan, the authorized lender determines that the application does not meet the requirements set forth in this chapter and subch.
III of ch. 45, Stats., or that it would not approve a loan to the applicant under its normal underwriting standards because the property to be acquired does not meet its minimum or Fannie Mae minimum property standards or because the applicant does not meet its credit standards, the authorized lender shall inform the applicant that the application will be submitted to the department with a recommendation that it be denied and provide the reasons for the recommendation. Incomplete applications denied by authorized lenders shall not be forwarded to the department but the department shall promptly be notified in writing of the denials. Completed applications shall not be denied by the lender but will be forwarded to the department and the department will approve or deny the application.
VA 4.08(5)
(5) Submission to the department. All applications approved by authorized lenders shall be submitted to the department for review and approval or denial. A loan application which has been submitted but which is found to lack the necessary information or documentation for the department to approve a loan, shall be denied, unless the lender corrects the deficiency within 60 days after notice of the deficiency by the department to the lender. Immediately upon approval of an application the department shall send a commitment letter to the authorized lender, committing the department to transfer funds as provided under s.
45.37 (5) (a) 4., Stats., subject to such funds being made available to the department. Loan commitments will expire 6 months from date of issuance, commitments for the purchase of a housing accommodation to be constructed (PC) and construction takeout loans (TO) will expire 8 months from the date of issuance, and construction (C) loan commitments will expire 12 months from the date of issuance. Commitments may be extended at the discretion of the department.
VA 4.08(6)
(6) Construction loans. Construction loan funds shall be disbursed on the basis of guidelines set forth in
s. VA 4.03 (3).
VA 4.08(7)
(7) Warranty. As soon as practicable after the closing of a loan or after the first disbursement of funds in a construction loan the authorized lender shall transmit the executed mortgage note, summary of closing worksheet, mortgagor's affidavit and lender's warranty to the department. The lender's warranty shall be made on a form furnished by the department and shall contain information sufficient to enable the department to determine that a valid first lien complying with the requirements of all federal and state laws, exists in favor of the authority or of the department on the mortgaged premises and that the mortgagor has obtained, or in the case of construction loans will obtain, adequate fire and extended coverage insurance on the mortgaged premises. The lender's warranty will also contain such other information as the department requires from time to time.
VA 4.08(8)
(8) Servicing agreements. Servicing agreements shall specifically empower authorized lenders to collect and retain late charges, NSF check charges, partial release fees, and amounts representing expenditures made by them with respect to mortgages executed or properties mortgaged to the department or to the lenders or to the authority for which they have not been reimbursed by the department. Late charges, NSF check charges and partial release fees not collected by such lenders from mortgagors, in addition to required principal, interest and escrow payments, may not be deducted from such payments, charged to the department or the authority or added to mortgage loan balances. The agreements shall specify the items for which authorized lenders may incur reimbursable expenses and the terms and conditions under which the department may pay such expenses.
VA 4.08(9)
(9) Partial releases. An authorized lender may, with the consent of the department, release a portion of the property mortgaged to it or the department or the authority under a primary loan if the release of such property will not unduly diminish the value of the remainder of the property. The authorized lender shall require that any funds received by a mortgagor from the sale of property released be applied to reduction of the mortgage loan balance unless it is proposed that a part or all of such funds will be used to improve the property, in which case the authorized lender may approve and supervise the disbursement of funds for improvements.
VA 4.08(10)
(10) Consumer laws. Notwithstanding any provisions of the department's lender's manual, subch.
III of ch. 45, Stats., or this chapter or contracts and servicing agreements entered into between the department and the lender, the lender shall comply with all applicable federal statutes and regulations and state statutes and rules. The lender shall defend any suits brought for noncompliance and shall be liable for any damages awarded for the noncompliance.
VA 4.08 History
History: Cr.
Register, May, 2000, No. 533, eff. 6-1-00.
VA 4.09
VA 4.09
Secondary loan program. VA 4.09(1)
(1)
Title evidence and property insurance. When the department is notified of the cancellation, lapse or non-renewal of a fire and extended coverage, homeowners or fire and windstorm insurance policy insuring a property in which it has a mortgage interest, or when the mortgagor fails to obtain and pay for this insurance in an amount at least equal to appraised value of the improvements at time of application on property mortgaged to the department, the mortgagor involved shall be notified that it is such mortgagor's responsibility to obtain and pay for adequate insurance coverage and shall be instructed to submit a memorandum of such insurance coverage to the department. Until the memorandum is received, the department shall insure its interest in the property with the state insurance fund.
VA 4.09(2)
(2) Payment distribution. Payments shall be applied first to interest, then to mortgage cancellation life insurance premiums, and then to principal.
