source:
  type: regulation
  id: va-38cfr-36.4301
  authority: 38 CFR §36.4301 — VA loan-guaranty definitions
  description: '38 CFR §36.4301 sets the controlling definitions for the VA loan

    guaranty program under 38 U.S.C. chapter 37 / Subpart F of Part 36.

    '
obligations:
- id: va-38cfr-36.4301-full
  canonical_id: va-38cfr-36.4301-full
  section: 38 CFR §36.4301
  description: 'Whenever used in 38 U.S.C. chapter 37 or subpart F of this part, unless the context otherwise
    requires, the terms defined in this section shall have the following meaning: A period of more than
    180 days. For the purposes of sections 3707 and 3702(a)(2)(C) of title 38 U.S.C., the term a period
    of mor…'
  type: do
  tags:
  - regulator-direct
  - section-complete
  - cfpb-regulation
  primary_source:
    tier: 1
    authority: 38 CFR §36.4301
    source_class: va-regulation
    source_url: https://www.law.cornell.edu/cfr/text/38/36.4301
    snapshot_id: e687021b1f8c91d0
    fetched_at: '2026-05-22T18:52:45Z'
    content_hash: sha256:4109a9e3d8225fc7061259ef5452300a65b4b43470812bf277b0167519ade872
    paragraph_quote: 'Whenever used in 38 U.S.C. chapter 37 or subpart F of this part, unless the context
      otherwise requires, the terms defined in this section shall have the following meaning: A period
      of more than 180 days. For the purposes of sections 3707 and 3702(a)(2)(C) of title 38 U.S.C., the
      term a period of more than 180 days shall mean 181 or more calendar days of continuous active duty.
      Acquisition and improvement loan. A loan to purchase an existing property which includes additional
      funds for the purpose of installing energy conservation improvements or making other alterations
      , improvements , or repairs . (Authority: 38 U.S.C. 3703(c)(1) , 3710(a)(1) , (4), and (7)) Alterations.
      Any structural changes or additions to existing improved realty. Automatic lender. A lender that
      may process a loan or assumption without submitting the credit package to the Department of Veterans
      Affairs for underwriting review. Pursuant to 38 U.S.C. 3702(d) there are two categories of lenders
      who may process loans automatically: (1) Entities such as banks, savings and loan associations,
      and mortgage and loan companies that are subject to examination by an agency of the United States
      or any State and (2) Lenders approved by the Department of Veterans Affairs pursuant to standards
      established by the Department of Veterans Affairs . (Authority: 38 U.S.C. 3702(d) ) Condominium.
      Unless otherwise provided by State law, a condominium is a form of ownership where the buyer receives
      title to a three dimensional air space containing the individual living unit together with an undivided
      interest or share in the ownership of common elements. Cost. Cost means the entire consideration
      paid or payable for or on account of the application of materials and labor to tangible property.
      Credit package. Any information , reports or verifications used by a lender , holder or authorized
      servicing agent to determine the creditworthiness of an applicant for a Department of Veterans Affairs
      guaranteed loan or the assumer of such a loan . (Authority: 38 U.S.C. 3710 and 3714 ) Date of first
      uncured default. Date of first uncured default means the due date of the earliest payment not fully
      satisfied by the proper application of available credits or deposits. Default. Default means failure
      of a borrower to comply with the terms of a loan agreement. Designated appraiser. Designated appraiser
      means a person requested by the Secretary to render an estimate of the reasonable value of a property,
      or of a specified type of property, within a stated area for the purpose of justifying the extension
      of credit to an eligible veteran for any of the purposes stated in 38 U.S.C. chapter 37 . An appraiser
      on a fee basis is not an agent of the Secretary . Discharge or release. For purposes of basic eligibility
      a person will be considered discharged or released if the veteran was issued a discharge certificate
      under conditions other than dishonorable ( 38 U.S.C. 3702(c) ). The term discharge or release includes—
      (1) Retirement from the active military, naval, or air service, and (2) The satisfactory completion
      of the period of active military, naval, or air service for which a person was obligated at the
      time of entry into such service in the case of a person who, due to enlistment or reenlistment,
      was not awarded a discharge or release from such period of service at the time of such completion
      thereof and who, at such time, would otherwise have been eligible for the award of a discharge or
      release under conditions other than dishonorable. (Authority: 38 U.S.C. 101(18) ) Dwelling. Any
      building designed primarily for use as a home consisting of not more than four family units plus
      an added unit for each veteran if more than one eligible veteran participates in the ownership,
      except that in the case of a condominium housing development or project within the purview of 38
      U.S.C. 3710(a)(6) and §§ 36.4360 through 36.4365 of this part the term is limited to a one single-family
      residential unit. Also, a manufactured home , permanently affixed to a lot owned by a veteran and
      classified as real property under the laws of the State where it is located. (Authority: 38 U.S.C.
      3710(a) and (f)) Economic readjustment. Economic readjustment means rearrangement of an eligible
      veteran''s indebtedness in a manner calculated to enable the veteran to meet obligations and thereby
      avoid imminent loss of the property which secures the delinquent obligation. Energy conservation
      improvement. An improvement to an existing dwelling or farm residence through the installation of
      a solar heating system, a solar heating and cooling system, or a combined solar heating and cooling
      system or through application of a residential energy conservation measure as prescribed in 38 U.S.C.
      3710(d) or by the Secretary . (Authority: 38 U.S.C. 3710(a)(7) ) Full disbursement. Payment by a
      lender of the entire proceeds of a loan or the purposes described in the report of the lender in
      respect of such loan to the Secretary either: (1) By payment to those contracting with the borrower
      for such purposes, or (2) By payment to the borrower, or (3) By transfer to an account against which
      the borrower can draw at will, or (4) By transfer to an escrow account, or (5) By transfer to an
      earmarked account if'
    drafter_attestation: Verbatim subsection of 38 CFR §36.4301 from Cornell LII snapshot e687021b1f8c91d0;
      body isolated between nav and notes; substring-verified.
  judgment: false
- id: va-38cfr-36.4301-i
  canonical_id: va-38cfr-36.4301-i
  section: 38 CFR §36.4301(i)
  description: '(i): (i) The amount is not in excess of 10 percent of the loan , or (ii) The loan is an
    Acquisition and Improvement loan pursuant to § 36.4301 , or (iii) The loan is one submitted by a lender
    of the class specified in 38 U.S.C. 3702(d) or 3703(a)(2) . (Authority: 38 U.S.C. 3703(c)(1) ) Graduated
    payment …'
  type: do
  tags:
  - regulator-direct
  - section-complete
  - cfpb-regulation
  primary_source:
    tier: 1
    authority: 38 CFR §36.4301
    source_class: va-regulation
    source_url: https://www.law.cornell.edu/cfr/text/38/36.4301
    snapshot_id: e687021b1f8c91d0
    fetched_at: '2026-05-22T18:52:45Z'
    content_hash: sha256:4109a9e3d8225fc7061259ef5452300a65b4b43470812bf277b0167519ade872
    paragraph_quote: '(i) The amount is not in excess of 10 percent of the loan , or (ii) The loan is
      an Acquisition and Improvement loan pursuant to § 36.4301 , or (iii) The loan is one submitted by
      a lender of the class specified in 38 U.S.C. 3702(d) or 3703(a)(2) . (Authority: 38 U.S.C. 3703(c)(1)
      ) Graduated payment mortgage loan. A loan for the purpose of acquiring a single-family dwelling
      unit involving a plan for repayment in which a portion of the interest due is deferred for a period
      of time. The interest so deferred is added to the principal balance thus resulting in a principal
      amount greater than at loan origination (negative amortization). The monthly payments increase on
      an annual basis (graduate) for a predetermined period of time until the payments reach a level which
      will fully amortize the loan during the remaining loan term. (Authority: 38 U.S.C. 3703(c) and (d))
      Guaranty. Guaranty means the obligation of the United States, assumed by virtue of 38 U.S.C. chapter
      37 , to repay a specified percentage of a loan upon the default of the primary debtor. Holder. The
      lender or any subsequent assignee or transferee of the guaranteed obligation or the authorized servicing
      agent (also referred to as “the servicer”) of the lender or of the assignee or transferee. (Authority:
      38 U.S.C. 3714 ) Home. Home means place of residence. Home equity. Home equity is the difference
      between the home ''s reasonable value and the outstanding balance of all liens on the property.
      Improvements. Any alteration that improves the property for the purpose for which it is occupied.
      Insurance. Insurance means the obligation assumed by the United States to indemnify a lender to
      the extent specified in this subpart for any loss incurred upon any loan insured under 38 U.S.C.
      3703(a)(2) . Insurance account. Insurance account means the record of the amount available to a
      lender or purchaser for losses incurred on loans insured under 38 U.S.C. 3703(a) . Lender. The payee
      or assignee or transferee of an obligation at the time it is guaranteed or insured. This term also
      includes any sole proprietorship, partnership, or corporation and the owners, officers and employees
      of a sole proprietorship, partnership, or corporation engaged in the origination, procurement, transfer,
      servicing, or funding of a loan which is guaranteed or insured by VA. (Authority: 38 U.S.C. 3703(c)(1)
      and 3704(d) ) Lien. Lien means any interest in, or power over, real or personal property, reserved
      by the vendor, or created by the parties or by operation of law, chiefly or solely for the purpose
      of assuring the payment of the purchase price , or a debt, and irrespective of the identity of the
      party in whom title to the property is vested, including but not limited to mortgages, deeds with
      a defeasance therein or collaterally, deeds of trust, security deeds, mechanics'' liens, lease-purchase
      contracts, conditional sales contracts, consignments. Liquidation sale. Any judicial, contractual
      or statutory disposition of real property, under the terms of the loan instruments and applicable
      law, to liquidate a defaulted loan that is secured by such property. This includes a voluntary conveyance
      made to avoid such disposition of the obligation or of the security. This term also includes a short
      sale . (Authority: 38 U.S.C. 3732 ) Lot. A parcel of land acceptable to the Secretary as a manufactured
      home site. (Authority: 38 U.S.C. 3710(a)(9) ) Manufactured home. A moveable dwelling unit designed
      and constructed for year-round occupancy by a single family, on land, containing permanent eating,
      cooking, sleeping and sanitary facilities. A double-wide manufactured home is a moveable dwelling
      designed for occupancy by one family and consisting of: (1) Two or more units intended to be joined
      together horizontally when located on a site, but capable of independent movement or (2) A unit
      having a section or sections which unfold along the entire length of the unit. For the purposes
      of this section of VA regulations, manufactured home/lot loans guaranteed under the purview of §§
      36.4300 through 36.4393 must be for units permanently affixed to a lot and considered to be real
      property under the laws of the State where it is located. If the loan is for the purchase of a manufactured
      home and lot it must be considered as one loan . (Authority: 38 U.S.C. 3710(a)(9) ) Net loss (insured
      loans). Net loss on insured loans means the indebtedness , plus any other charges authorized under
      § 36.4314 , remaining unsatisfied after the liquidation of all available security and recourse to
      all intangible rights of the holder against those obligated on the debt. Net value. The fair market
      value of real property, minus an amount representing the costs that the Secretary estimates would
      be incurred by VA in acquiring and disposing of the property. The number to be subtracted from the
      fair market value will be calculated by multiplying the fair market value by the current cost factor.
      The cost factor used will be the most recent percentage of the fair market value that VA calculated
      and published in the Notices section of the Federal Register (it is intended that this percentage
      will be calculated annually). In computing this cost factor, VA will determine the average operating
      expenses and losses (or gains) on resale incurred for properties acquired under § 36.4323 which
      were sold during the preceding fiscal year and the average administrative cost to VA associated
      with the property management activity. The final net value derived from this calculation will be
      stated as a whole dollar amount (any fractional amount will be rounded up to the next whole dollar).
      The cost items included in the calculation will be: (1) Property operating expenses. All disbursements
      made for payment of taxes, assessments, liens, property maintenance and related repairs , management
      broker''s fees and commissions, and any other charges to the property account excluding property
      improvements and selling expenses . (2) Selling expenses. All disbursements for sales commissions
      plus any other costs incurred and paid in connection with the sale of the property. (3) Administrative
      costs.'
    drafter_attestation: Verbatim subsection of 38 CFR §36.4301 from Cornell LII snapshot e687021b1f8c91d0;
      body isolated between nav and notes; substring-verified.
  judgment: false
- id: va-38cfr-36.4301-i
  canonical_id: va-38cfr-36.4301-i
  section: 38 CFR §36.4301(i)
  description: '(i): (i) An estimate of the total cost for VA of personnel (salary and benefits) and overhead
    (which may include things such as travel, transportation, communication, utilities, printing, supplies,
    equipment, insurance claims and other services) associated with the acquisition, management and disposition…'
  type: do
  tags:
  - regulator-direct
  - section-complete
  - cfpb-regulation
  primary_source:
    tier: 1
    authority: 38 CFR §36.4301
    source_class: va-regulation
    source_url: https://www.law.cornell.edu/cfr/text/38/36.4301
    snapshot_id: e687021b1f8c91d0
    fetched_at: '2026-05-22T18:52:45Z'
    content_hash: sha256:4109a9e3d8225fc7061259ef5452300a65b4b43470812bf277b0167519ade872
    paragraph_quote: '(i) An estimate of the total cost for VA of personnel (salary and benefits) and
      overhead (which may include things such as travel, transportation, communication, utilities, printing,
      supplies, equipment, insurance claims and other services) associated with the acquisition, management
      and disposition of property acquired under § 36.4323 of this part. The average administrative costs
      will be determined by: (A) Dividing the total cost for VA personnel and overhead salary and benefits
      costs by the average number of properties on hand and adjusting this figure based on the average
      holding time for properties sold during the preceding fiscal year; and (B) Dividing the figure calculated
      in paragraph (3)(i)(A) of this definition by the VBA ratio of personal services costs to total obligations.
      (ii) The three cost averages will be added to the average loss (or gain) on property sold during
      the preceding fiscal year (based on the average property purchase price) and the sum will be divided
      by the average fair market value at the time of acquisition for properties which were sold during
      the preceding fiscal year to derive the percentage to be used in estimating net value . (Authority:
      38 U.S.C. 3732 ) Purchase price. The entire legal consideration paid or payable upon or on account
      of the sale of property, exclusive of acquisition costs , or for the cost of materials and labor
      to be applied to the property. Real-estate loan. Any obligation incurred for the purchase of real
      property or a leasehold estate as limited in §§ 36.4300 through 36.4393 or for the construction
      of fixtures or appurtenances thereon or for alterations , improvements , or repairs thereon required
      by §§ 36.4300 through 36.4393 to be secured by a lien on such property or is so secured. Loans for
      the purpose specified in 38 U.S.C. 3710(a)(5) (refinancing of mortgage loans or other liens on a
      dwelling or farm residence), loans for the purpose specified in 38 U.S.C. 3710(a)(8) (refinancing
      of a VA guaranteed, insured or direct loan to lower the interest rate), loans for the purposes specified
      in 38 U.S.C. 3710(a)(9) (purchase of manufactured homes / lots or the refinancing of such loans
      in order to reduce the interest rate or purchase a lot , in States in which manufactured homes ,
      when permanently affixed to a lot , are considered real property, and loans to purchase one-family
      residential units in condominium housing developments or projects within the purview of 38 U.S.C.
      3710(a)(6) and §§ 36.4360 through 36.4365 shall also be considered real estate loans. Reasonable
      value. Reasonable value means that figure which represents the amount a reputable and qualified
      appraiser, unaffected by personal interest, bias, or prejudice, would recommend to a prospective
      purchaser as a proper price or cost in the light of prevailing conditions. Registered mail. The
      term registered mail wherever used in the regulations concerning guaranty or insurance of loans
      to veterans shall include certified mail. Repairs. Any alteration of existing improved realty or
      equipment which is necessary or advisable for protective, safety or restorative purposes. Repayment
      plan. This is a documented agreement by and between the borrower and the holder to reinstate a loan
      that is 61 or more calendar days delinquent, by requiring the borrower to pay each month over a
      fixed period (minimum of three months duration) the normal monthly payments plus an agreed upon
      portion of the delinquency each month. Repossession. Repossession means recovery or acquisition
      of such physical control of property (pursuant to the provisions of the security instrument or as
      otherwise provided by law) as to make further legal or other action unnecessary in order to obtain
      actual possession of the property or to dispose of the same by sale or otherwise. Residential property.
      (1) Any one-family residential unit in a condominium housing development within the purview of 38
      U.S.C. 3710(a)(6) and §§ 36.4360 through 36.4365; (2) Any manufactured home permanently affixed
      to a lot owned or being purchased by a veteran and considered to be real property under the laws
      of the State where it is located; (3) Any improved real property (other than a condominium housing
      development or a manufactured home and/or lot) or leasehold estate therein as limited by this subpart,
      the primary use of which is for occupancy as a home , consisting of not more than four family units,
      plus an added unit for each eligible veteran if more than one participates in the ownership thereof;
      or (4) Any land to be purchased out of the proceeds of a loan for the construction of a dwelling
      , and on which such dwelling is to be erected. (Authority: 38 U.S.C. 3703(c)(1) and 3710(a) ) Secretary.
      The Secretary of Veterans Affairs , or any employee of the Department of Veterans Affairs authorized
      to act in the Secretary ''s stead. Servicer. The authorized servicer is either: (1) The servicing
      agent of a holder ; or (2) The holder itself, if the holder is performing all servicing functions
      on a loan . The servicer is typically the entity reporting all loan activity to VA and filing claims
      under the guaranty on behalf of the holder . VA will generally issue guaranty claims and other payments
      to the servicer , who will be responsible for forwarding funds to the holder in accordance with
      its servicing agreement. Incentives under § 36.4319 will generally be paid directly to the servicer
      based on its performance under that section and in accordance with its tier ranking under § 36.4318
      . Servicing agent. An agent designated by the loan holder as the entity to collect installments
      on the loan and/or perform other functions as necessary to protect the interests of the holder .
      (Authority: 38 U.S.C. 3714 ) Short sale. A sale to a third party for an amount less than is sufficient
      to repay the unpaid balance on the loan where the holder has agreed in advance to release the lien
      in exchange for the proceeds of such sale. Special forbearance. This is a documented agreement by
      and between the holder and the borrower where the holder agrees to suspend all payments or accept
      reduced payments for one or more months, on a loan 61 or more calendar days delinquent, and the
      borrower agrees to pay the total delinquency at the end of the specified period or enter into a
      repayment plan . Total indebtedness: For purposes of 38 U.S.C. 3732(c) , the veteran''s “total indebtedness”
      shall be the sum of: the unpaid principal on the loan as of the date of the liquidation sale , accrued
      unpaid interest permitted by § 36.4324(a) of this part, and allowable advances/other charges permitted
      to be included in the guaranty claim by § 36.4314 of this part. (Authority: 38 U.S.C. 3703(c)(1)
      ) [ 73 FR 6310 , Feb. 1, 2008. Redesignated at 75 FR 33705 , June 15, 2010, as amended at 75 FR
      65238 , Oct. 22, 2010; 83 FR 64468 , Dec. 17, 2018; 89 FR 25143 , Apr. 10, 2024] CFR Toolbox Law
      about... Articles from Wex Table of Popular Names Parallel Table of Authorities Accessibility About
      LII Contact us Advertise here Help Terms of use Privacy'
    drafter_attestation: Verbatim subsection of 38 CFR §36.4301 from Cornell LII snapshot e687021b1f8c91d0;
      body isolated between nav and notes; substring-verified.
  judgment: false
