Basic entitlement

§ 1802. Basic entitlement (a) Each veteran who served on active duty at any time during World War II or the Korean conflict and whose total service was for ninety days or more, or who was discharged or released from a period of active duty, any part of which occurred during World War II or the Korean conflict, for a service-connected disability, shall be eligible for the benefits of this chapter. Entitlement derived from service during the Korean conflict (1) shall cancel any unused entitlement derived from service during World War II, and (2) shall be reduced by the amount by which entitlement from service during World War II, has been used to obtain a direct, guaranteed, or insured loan— (A) on real property which the veteran owns at the time of application; or (B) as to which the Administrator has incurred actual liability or loss, unless in the event of loss or the incurrence and payment 72 Stat. 1204 of such liability by the Administrator the resulting indebtedness of the veteran to the United States has been paid in full. (b) In computing the aggregate amount of guaranty or insurance entitlement available to a veteran under this chapter— (1) the Administrator may exclude the initial use of the veteran’s entitlement for any loan with respect to which the security has been (A) taken (by condemnation or otherwise) by the United States or any State, or by any local government agency for public use, (B) destroyed by fire or other natural hazard, or (C) disposed of because of other compelling reasons devoid of fault on the part of the veteran; and (2) the Administrator shall exclude the amount of guaranty or insurance entitlement previously used for any guaranteed or insured home loan which has been repaid in full, and with respect to which the real property which served as security for the loan has been disposed of because the veteran, while on active duty, was transferred by the service department with which he was serving. Entitlement restored under this subsection may be used at any time before February 1, 1965. (c) An honorable discharge shall be deemed to be a certificate of eligibility to apply for a guaranteed loan. Any veteran who does not have a discharge certificate, or who received a discharge other than honorable, may apply to the Administrator for a certificate of eligibility. Upon making a loan guaranteed or insured under this chapter, the lender shall forthwith transmit to the Administrator a report thereon in such detail as the Administrator may, from time to time, prescribe. Where the loan is guaranteed, the Administrator shall provide the lender with a loan guaranty certificate or other evidence of the guaranty. He shall also endorse on the veteran’s discharge, or eligibility certificate, the amount and type of guaranty used, and the amount, if any, remaining. Nothing in this chapter shall preclude the assignment of any guaranteed loan or the security therefor. (d) Loans will be automatically guaranteed under this chapter only if made (1) by any Federal land bank, national bank, State bank, private bank, building and loan association, insurance company, credit union, or mortgage and loan company, that is subject to examination and supervision by an agency of the United States or of any State, or (2) by any State. Any loan proposed to be made to a veteran pursuant to this chapter by any lender not of a class specified in the preceding sentence may be guaranteed by the Administrator if he finds that it is in accord otherwise with the provisions of this chapter. (e) The Administrator may at any time upon thirty days’ notice require loans to be made by any lender or class of lenders to be submitted to him for prior approval. No guaranty or insurance liability shall exist with respect to any such loan unless evidence of guaranty or insurance is issued by the Administrator. (f) Any loan at least 20 per centum of which is guaranteed under this chapter may be made by any national bank or Federal savings and loan association, or by any bank, trust company, building and loan association, or insurance company, organized or authorized to do business in the District of Columbia. Any such loan may be so made without regard to the limitations and restrictions of any other law relating to— (1) ratio of amount of loan to the value of the property; (2) maturity of loan; (3) requirement for mortgage or other security; (4) dignity of lien; or (5) percentage of assets which may be invested in real estate loans.