Section 4.08. Primary loan program.

 

(1)   Certificate of eligibility.

(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.

(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.

(c) If the applicant is a veteran who was a resident of the state of Wisconsin at the time of entry into military service or has been a resident of this state for any consecutive 12-month 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.

(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.

(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.

(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.

(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.

(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.

(6)   Construction loans. Construction loan funds shall be disbursed on the basis of guidelines set forth in s. VA 4.03 (3) .

(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.

(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.

History: Cr. Register, May, 2000, No. 533 , eff. 6-1-00; 2013 Wis. Act 189 : am. (1) (c) Register April 2014 No. 700 , eff. 4-1-14.