(a)Whenever any veteran disposes of residential property securing a guaranteed, insured, or direct housing loan obtained by the veteran, the Secretary, upon application made by such veteran and by the transferee incident to such disposal, shall issue to such veteran in connection with such disposal a release relieving the veteran of all further liability to the Secretary on account of such loan (including liability for any loss resulting from any default of the transferee or any subsequent purchaser of such property) if the Secretary has determined, after such investigation as the Secretary may deem appropriate, that
(1) the loan is current, and
(2) the purchaser of such property from such veteran
(A) is obligated by contract to purchase such property and to assume full liability for the repayment of the balance of the loan remaining unpaid, and has assumed by contract all of the obligations of the veteran under the terms of the instruments creating and securing the loan, and
(B) qualifies from a credit standpoint, to the same extent as if the transferee were a veteran eligible for purposes specified in section
3710 of this title, for a guaranteed or insured or direct loan in an amount equal to the unpaid balance of the obligation for which the transferee has assumed liability.
(b)If any veteran disposes of residential property securing a guaranteed, insured, or direct housing loan obtained by the veteran under this chapter without receiving a release from liability with respect to such loan under subsection (a), and a default subsequently occurs which results in liability of the veteran to the Secretary on account of the loan, the Secretary may relieve the veteran of such liability if the Secretary determines, after such investigation as the Secretary deems appropriate, that the property was disposed of by the veteran in such a manner, and subject to such conditions, that the Secretary would have issued the veteran a release from liability under subsection (a) with respect to the loan if the veteran had made application therefor incident to such disposal. Failure of a transferee to assume by contract all of the liabilities of the original veteran-borrower shall bar such release of liability only in cases in which no acceptable transferee, either immediate or remote, is legally liable to the Secretary for the indebtedness of the original veteran-borrower arising from termination of the loan. The failure of a veteran to qualify for release from liability under this subsection does not preclude relief from being granted under section
5302(b) of this title, if the veteran is eligible for relief under that section.
(c)This section shall apply only to loans for which commitments are made before March 1, 1988.
1994—Subsec. (b). Pub. L. 103–446before period at end substituted “section
5302(b) of this title, if the veteran is eligible for relief under that section” for “subsection 5302(b) of this title, if eligible thereunder”.
1981—Subsec. (a). Pub. L. 97–72, § 303(f)(1), substituted “direct housing loan” for “direct loan”.
Subsec. (b). Pub. L. 97–72, § 303(f)(2), substituted “or direct housing loan obtained” for “or direct loan obtained”.
1976—Subsec. (a). Pub. L. 94–324, § 7(18), substituted “the veteran” for “him” in two places, “the Administrator may deem” for “he may deem”, “the transferee were a veteran” for “he were a veteran”, “the transferee has assumed” for “he has assumed”, and “is obligated” for “has obligated himself”.
Subsec. (b). Pub. L. 94–324, § 7(19), substituted “obtained by the veteran” for “obtained by him”, “the Administrator determines” for “he determines”, and “the Administrator deems” for “he deems”.
1972—Pub. L. 92–328designated existing provisions as subsec. (a) and added subsec. (b).
Effective Date of 1981 Amendment
Amendment by Pub. L. 97–72effective at end of 180-day period beginning on Nov. 3, 1981, see section 305 ofPub. L. 97–72, set out as an Effective Date note under section
3741 of this title.
Section 301(c) ofPub. L. 92–328provided that: “Sections 201 through 206 of this Act [amending this section and sections
1820 [now 3720], 3102 [now 5302], and 3503 [now 6103] of this title, and enacting provisions set out as a note under section
5302 of this title] shall take effect upon the date of enactment of this Act [June 30, 1972].”
The table below lists the classification updates, since Jan. 3, 2012, for this section. Updates to a broader range of sections may be found at the update page for containing chapter, title, etc.
The most recent Classification Table update that we have noticed was Tuesday, August 13, 2013
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