(6) Construction loans.
Construction loan funds shall be disbursed on the basis of guidelines set forth in s. VA 4.03 (3)
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.
(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.
(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.
(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
Cr. Register, May, 2000, No. 533
, eff. 6-1-00.
Secondary loan program. VA 4.09(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.
(2) Payment distribution.
Payments shall be applied first to interest, then to mortgage cancellation life insurance premiums, and then to principal.
(3) Reduction in monthly payments.
The terms of the contract between the mortgagor and the department shall be complied with by the mortgagor after the note and mortgage have been executed, but the department may change the time and manner of repaying the obligation at the request of the mortgagor when a change is justified by circumstances not in existence at the time the loan was made.
(4) 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 mortgagor's equity in the property secured by the mortgage is verified by the department to be greater than 10% 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 on the loan.
(5) Release of satisfaction.
The department's satisfaction of mortgage, the mortgage and mortgage note may not be released for a period of 3 weeks following receipt of final payment, unless final payment is received in the form of cash, bank draft bank money order, cashier's check, certified check, savings and loan or building and loan association check, credit union check, insurance check, finance company check, mortgage banker's check, or real estate broker's or attorney's trust account check.
VA 4.09 History
Cr. Register, May, 2000, No. 533
, eff. 6-1-00; CR 05-008
: am. (4) Register May 2005 No. 593
, eff. 6-1-05.
False statement by applicant.
Whenever it is determined that an applicant has obtained any department loan through fraud, misrepresentation, or through concealment of a material fact, the mortgage note may be accelerated and full payment demanded.
(2) Transfer of possession.
The department or authorized lender may accelerate the mortgage note and require that the mortgage loan be paid in full when a mortgagor transfers physical possession of the mortgaged premises, without the lender's prior written consent. The mortgage shall provide for such acceleration.
(3) Sale of property.
Subject to the provisions of s. 45.36 (2) (a)
, Stats., the department or authorized lender shall accelerate a mortgage note and require that the mortgage loan be paid in full when the mortgagor completes a sale of the housing accommodation mortgaged to the department.
If a mortgagor is in default in loan repayments or has substantially breached mortgage covenants, the department may accelerate a secondary loan mortgage note and, with the department's consent, the authorized lender may accelerate a primary loan mortgage note.
VA 4.10 History
Cr. Register, May, 2000, No. 533
, eff. 6-1-00.
Procedure for suspension of builders, authorized lenders and appraisers.
Upon determination by the department that adequate cause exists for the suspension of a builder, authorized lender or appraiser from participation in the housing loan programs, the department shall do all of the following:
(1) Notice of suspension.
Notice of suspension signed by the secretary shall be sent by the department to the affected party by certified mail, return receipt requested. The notice of suspension shall outline the reasons for the act of suspension and the effective date of suspension and inform the affected party that the party may file a written request with the department for a hearing.
(2) Notice of hearing.
If a written request for a hearing filed with the department by the affected party meets the requirements of s. 227.42 (1) (a)
, Stats., and if the request is not denied by the department under s. 227.42 (2)
, Stats., the hearing granted by the department shall be treated as a "class 3 proceeding" as defined in s. 227.01 (3) (c)
, Stats., and written notice complying with s. 227.44 (2)
, Stats., shall be sent to the affected party by certified mail, return receipt requested, at least 10 days prior to the date of hearing.
(3) Conduct of hearing.
The hearing shall be held before a hearing examiner designated by the secretary. The hearing examiner has the powers enumerated under s. 227.46
, Stats. Every party to the hearing shall be afforded adequate opportunity to present evidence and to rebut evidence presented or offer countervailing evidence. A stenographic, electronic or other record shall be made of the hearing. The record shall be transcribed by the department, and free copies of the written transcript may be provided to any party in interest upon request.
(4) Final decisions.
Under s. 227.46 (3)
, Stats. the department may, by order, direct that the hearing examiner's decision be the final decision of the department. Alternatively, the decision of a majority of officials of the department appointed by the secretary shall be final. Whether the hearing examiner's decision, or the decision of the officials appointed by the secretary is final, the decision shall be based solely on the evidence presented at the hearing and on matters officially noticed. The decision shall be based on the standard of substantial evidence. It shall be in writing and contain findings of fact and conclusions of law. The findings of fact shall treat each material issue of fact. The final decision shall be served by personal delivery or mailing to each party to the hearing or to the party's attorney of record.
(5) Petition for rehearing.
Any party who deems itself aggrieved by a final decision may within 20 days after entry of the order set forth in such final decision, file with the department a written petition for rehearing specifying in detail the grounds for the relief sought and supporting authorities. The department may also order a rehearing on its own motion within 20 days after a final order. The filing of a petition for rehearing shall not delay or suspend the effective date of the final order. The final order shall continue in effect unless the petition for rehearing is granted or until the order is superseded, modified, or set aside as provided by law.
(6) Disposition of petition.
A rehearing will be granted only on the basis of some material error of law, some material error of fact or discovery of new evidence sufficient to reverse or modify the final order which could not have been previously discovered by due diligence. The department may enter an order with reference to the petition for rehearing without a hearing, and shall take final action on the petition within 20 days after it is filed.
Upon the denial of a petition for rehearing by the department, an affected party may appeal to the board of veterans affairs within 20 days. The board of veterans affairs shall hear and act upon the appeal within 60 days after submission. If the affected party which is aggrieved by the final decision of the department does not appeal to the board of veterans affairs, the party is deemed to have exhausted all administrative remedies.
If the affected party which is aggrieved by the final decision in the department exercises the option to appeal to the board of veterans affairs and the appeal is denied by the board of veterans affairs, the affected party is deemed to have exhausted all administrative remedies.
In all cases in which the affected party who is aggrieved by the final decision of the department exercises the option to appeal to the board of veterans affairs and the appeal is granted by the board of veterans affairs, the board of veterans affairs shall make the final decision. This decision may affirm, reverse, change, modify or suspend the proposed final decision of the department.
VA 4.11 History
Cr. Register, May, 2000, No. 533
, eff. 6-1-00.
Omissions and material errors as grounds for suspension of authorized lenders. VA 4.12(1)
Grounds for suspension.
The department may suspend any authorized lender who makes excessive omissions or material errors on loan application packages the authorized lender submits to the department. An error is material if it prevents, or would prevent if the loan application package were not subsequently withdrawn, the correct processing to final determination of the loan application package as submitted. A loan application package is any loan application together with all supporting documents required by the department which is submitted to the department for processing, whether or not the loan application package is subsequently withdrawn before final determination by the department. For purposes of this section, an appeal of a loan denial is a new and separate loan application package.
(2) Notice of excessive omissions and material errors.
The department shall give notice to any authorized lender who has submitted loan application packages with excessive accumulated omissions and material errors that the authorized lender may be suspended if the lender fails to properly complete loan application packages submitted thereafter. At the request of any authorized lender, the department shall instruct the authorized lender as to how to properly complete loan application packages.
(3) Procedure for suspension.
If the secretary determines that an authorized lender, who has been given notice pursuant to sub. (2)
, has made excessive accumulated omissions and material errors on loan application packages it has submitted after receiving the notice, the secretary may give notice to the lender that the lender is temporarily suspended from originating primary housing loans. The notice of temporary suspension shall be sent by certified mail, return receipt requested. The notice of temporary suspension is effective 5 days after it is mailed, except for applications which the authorized lender commenced processing prior to the effective date of the temporary suspension. The notice of temporary suspension shall also contain notice of a hearing on indefinite suspension from participation in the primary housing loan program. The hearing shall be treated as a "class 3 proceedings" defined in s. 227.01 (3) (c)
, Stats. The hearing shall be conducted pursuant to s. VA 4.11 (3)
. The temporary suspension shall be effective until a final decision is reached following the hearing, pursuant to s. VA 4.11 (4)
. A party aggrieved by a final decision may petition for rehearing pursuant to s. VA 4.11 (5)
, and may appeal to the board of veterans affairs pursuant to s. VA 4.11 (7)
An authorized lender permanently suspended for making excessive accumulated omissions and material errors on loan application packages it has submitted after receiving the notice set forth in sub. (3)
, may make application to the department for reinstatement to the department's list of authorized lenders at any time after 6 months from the effective date of the permanent suspension. The application shall include the lender's proposal for elimination of omissions and material errors on future loan application packages. The department, after investigation and evaluation of the lender's application, may reinstate the lender to the department's list of authorized lenders. If the department finds that an application for reinstatement is made without sufficient cause to justify reinstatement, it shall deny reinstatement.
VA 4.12 History
Cr. Register, May, 2000, No. 533
, eff. 6-1-00.
Primary loan forbearance. VA 4.13(1)
In this section the following terms shall have the meanings designated:
"Agreement" means an oral or written agreement to pay the delinquency owing on a primary housing loan over a period of time so that the loan may be brought current in accordance with the provisions of the mortgage and mortgage note.
"Forbearance" means suspension of the acceleration of the balance due on a primary housing loan on the basis of the compliance of the mortgagor with the terms of an agreement.
(2) Exclusive remedies.
The forbearance provisions contained in this section are the exclusive remedies of primary loan mortgagors under s. 45.32 (9)
(3) Request for forbearance.
A written request for forbearance shall be submitted to the department by a primary loan mortgagor through the authorized lender servicing the loan. This request shall set forth the anticipated duration of the delinquency, the terms under which the delinquency will be repaid and the reasons for the delinquency. If the mortgagor receives rental income from the property mortgaged to the department, the mortgagor must agree in writing to assign this rental income to the department to be applied toward primary loan payments due until the loan is brought current. Full written financial disclosure may be required of a mortgagor in any case where the authorized lender or the department determines that the disclosure is necessary to enable the department to make a determination on the mortgagor's request for forbearance. Failure of the mortgagor to provide the disclosure in a timely manner are grounds for denial of forbearance.
The department may approve an agreement if the information contained in the written request for the agreement establishes to the department's satisfaction that the delinquency will be made up within a temporary period acceptable to the department and that the mortgagor will probably be able to comply with the terms and conditions of the proposed agreement.
The department may not approve an agreement if the mortgagor has been in default prior to the inception of the delinquency to which the agreement is to relate unless the mortgagor is able to establish to the satisfaction of the department that the previous default resulted from unusual and unforeseeable circumstances or is able to provide additional security for the primary loan either in the form of a guaranty of part or all of the balance due on the loan or in the form of a mortgage on other Wisconsin real property in which the owners have sufficient equity.
The department may not approve an agreement if the delinquency to which the agreement is to relate was primarily the result of financial mismanagement by the mortgagor unless it is determined by the department that the agreement will probably result in the loan being brought current in accordance with the terms of the agreement.
(5) Form of agreement.
An agreement shall be in writing if the delinquency will not be fully repaid within 6 months from the date the agreement is entered into. The department may, however, enter into an oral agreement if the delinquency will be fully repaid under the terms of the agreement within 6 months from the date of the agreement.
(6) Modification of agreement.
Upon the request of the mortgagor or the mortgagor's representative, the department may modify or consent to the modification of the terms of an agreement. Any modification shall be in writing and shall be signed by the mortgagor. Not more than one modification to an agreement may be approved unless the department determines that extenuating circumstances necessitate a subsequent modification and that the current market value of the property mortgaged to the department is sufficient to warrant subsequent modification.
(7) Failure to keep agreement.
If the mortgagor fails to make payments required by the agreement and the department determines that modification of the agreement is not warranted, the department may notify the mortgagor that the agreement has been terminated and accelerate the primary loan balance.
VA 4.13 Note
A special forbearance/repayment agreement form is required in connection with the creation of s. VA 4.13
. A copy of this form is available at the department of veterans affairs.
VA 4.13 History
Cr. Register, May, 2000, No. 533
, eff. 6-1-00.
Home improvement loan program. VA 4.14(1)(1)
This section applies only to the program under s. 45.34 (1) (c)
, Stats. This section applies in conjunction with other provisions of this chapter, except that the provisions of s. VA 4.03 (3)
do not apply to this section. This section supercedes any inconsistent provision of this chapter with respect to the program under s. 45.34 (1) (c)
"Date of application" means the date a complete loan application with supporting documents is received by the department.
"Loan" means a home improvement loan as authorized by s. 45.34 (1) (c)
, Stats., for the purpose of this subchapter.
"Total debt payments" means 1/12 of an applicant's monthly [annual] housing expense and monthly repayments required on debts with 13 or more remaining monthly payments due at the time of application for a home improvement loan program loan. "Total debt payments" includes 5% of the applicant's total indebtedness on which regular monthly payments are not required except when the applicant has sufficient verified assets to repay the indebtedness.
VA 4.14 Note
Note: It is the intent of the department to use 1/12 of the annual housing expense rather than monthly as sub. (2) (c) reads.
The applicant's eligibility to participate in the program shall be established prior to the approval of the loan by the department.
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 may 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 of the deficiency by the department to the county veterans service office or to the applicant.
An applicant's current monthly income shall be verified. Acceptable verification of current monthly income may be any of the following:
Copies of check stubs from the applicant's employment for a recent month within 3 months of the date of application.
A copy of the prior year's income tax returns except if the applicant's employer, type of employment or method of compensation has changed. Applicants verifying their income by the prior year's income tax returns shall submit a complete copy of the state and federal tax return including all schedules.
An award letter or copy of a check of unemployment compensation. Unemployment compensation may be considered income when it is received for regular or seasonal layoffs from the applicant's current employment.
A business plan and professionally prepared profit and loss statement of income to be derived by an applicant from a new business which the applicant is establishing or an existing business the applicant is purchasing.
A profit and loss statement for at least 6 of the 12 months immediately preceding the loan application date of the income of a self employed applicant.
Depreciation as listed on an applicant's federal tax return may be used as income at the request of the applicant.
All loans shall be amortized on a monthly basis and the term of the loan shall be at least 1 year and may not exceed 15 years. The department may set loan amortization terms based upon the loan amount.
If an applicant's total debt payments exceed 35% 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% 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.
The department shall consider the income, assets and debts of a co-applicant.
VA 4.14(4)(a)(a) Guarantors.
The department may accept as adequate security the guarantee of home improvement loan program loan promissory notes by creditworthy and financially acceptable guarantors who are not the spouse of the applicant and who are Wisconsin residents. Guarantors are subject to the same underwriting criteria as the applicant and the department may request verification of information submitted. There must be at least 1 guarantor on guaranteed home improvement loan promissory notes. No employee of the department, no county veterans service officer and no other person in any way connected with the administrative duties of the department or serving in an advisory capacity thereto may be accepted as guarantor on any loan unless the applicant is a member of the guarantor's immediate family. Any other Wisconsin resident who is determined by the department to be financially responsible and whose joining in the obligation provides adequate security may be accepted as a guarantor.
(b) Real estate security.
The department may accept the primary residence of the applicant as security if the applicant presents evidence of at least 10% equity therein after the home improvement loan program loan has been made. Possession of merchantable title to the primary residence by the applicant is required. If the title to the primary residence is held in more than one name, all parties with an interest in the real estate shall sign the mortgage.
If an appraisal is being used to determine the value an appraiser, selected by the applicant and licensed by the Wisconsin department of safety and professional services, shall perform the appraisal and complete the appraisal form prescribed by the department. The appraisal may include the value added by the improvements or one half of the cost of the proposed improvements may be added to an appraisal that does not include the value for the improvements. The applicant is responsible for payment of the appraisal expenses.
If the applicant submits an appraisal the appraisal is advisory only. The department may consider age of the appraisal, equity established by the appraisal, condition of the property or market value established by the appraisal in evaluating the appraisal submitted. 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 may deem practical.
(d) Alternate value establishment.
The department may accept the current equalized assessed value or fair market value as stated on the last year's property tax statement plus one half of the cost of the proposed improvements as the cost and value of the residence for all purposes. In order to establish the value of the proposed improvement for the purpose of determining the increased equity value, the applicant shall submit a description of the project and estimates for the work or an appraisal that incorporates the proposed improvements.
(e) Letter title report.
A letter title report completed by a licensed title company or a licensed attorney, or an individual authorized by the department and subject to restrictions imposed by the department, verifying the nature and amount of all mortgages, liens, and other claims outstanding against the applicant's primary residence where the applicant offers a residence as security for a home improvement loan program loan is required.
(f) 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 10% 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 on the loan.
VA 4.14 History
Cr. Register, May, 2000, No. 533
, eff. 6-1-00; CR 05-008
: am. (1), (2) (a), (3) (b) and (d), (4) (a), (c) 1. and (d) to (f), r. (3) (g) Register May 2005 No. 593
, eff. 6-1-05; correction in (4) (c) 1. made under s. 13.92 (4) (b) 6.
, Stats., Register February 2012 No. 674