40 Tex. Admin. Code § 175.20 - Delinquencies and Forfeiture Procedures
(a)
Definitions. The following words and terms when used in this section shall have
the following meanings, unless the context clearly indicates otherwise:
(1) Account--The loan account a borrower
holds with the Veterans Land Board. The account includes the obligations
between the borrower and the board as evidenced by contracts and documents in
the borrower's loan file as well as the accounting records of the board. This
includes the amount of the unpaid principal balance of the loan, any
administrative costs made a part of the loan, unpaid interest, and any
delinquent amount.
(2)
Borrower--The person presently obligated to make the loan installment payments
set forth in the contract, including the purchaser at a forfeited land sale or
the last board-approved assignee of the original veteran purchaser.
(3) Contract--The contract of sale and
purchase between the board and a borrower.
(4) Current--The account is in good standing
with no installments past due.
(5)
Delinquent amount--The total amount needed to bring an account current. This
includes all past due installments, administrative costs made part of such past
due installments, and all accrued delinquent interest or penalty on all such
past due installments. Delinquent interest or penalty shall accrue on any
delinquent amount as set by the board from time to time by
resolution.
(6) Forfeiture--The
action by which the board declares a borrower to be in breach of his or her
contract by virtue of failing to perform a material term of the contract,
including, but not limited to, timely payment of the loan
installments.
(7) Installment--The
amount of the periodic loan payment specified by the contract.
(8) Partial Payment Agreement--A borrower's
written agreement to clear the delinquent amount on or before a designated date
by making payments in addition to the installment amount on scheduled dates as
described in the agreement.
(9)
Delinquent interest--The interest or penalty which accrues on a loan
installment which has become delinquent. The delinquent interest rate or
penalty shall be set by the board from time to time by resolution
(10) Reinstatement penalty--The amount
charged to a borrower (whose contract has been forfeited by the board) in order
to reinstate the contract. The reinstatement penalty is in addition to the
amount necessary to bring the account current.
(A) Beginning on the date of the first and
any second forfeiture of the contract, each unpaid delinquent installment (of
principal and interest combined) will accrue a reinstatement penalty in an
amount equal to 1.5 percent per month (or 18 percent per year), until the
contract is reinstated.
(B)
Beginning on the date of the third instance and any subsequent forfeiture of
the contract, the outstanding principal balance of the contract will accrue a
reinstatement penalty in an amount equal to 1.5 percent per month (or 18
percent per year), less the accrued delinquent interest, until the contract is
reinstated.
(11) Sale
order date--The date on which the board meets to order a tract advertised for
sale, or for lease for mineral development.
(b) Delinquencies.
(1) If a scheduled loan installment is not
received by the board within the time allotted by the board, the account
becomes delinquent. Any payments received on an account shall be first applied
to the delinquent amount. The account continues in a delinquent status until
the full amount of the delinquent amount has been received by the
board.
(2) A partial payment
agreement may be granted at the discretion of the chairman at any time prior to
the date an account is forfeited. From time to time, the board may, by
resolution, set guidelines for other conditions under which partial payment
agreements may be approved.
(c) Forfeiture.
(1) The board is the sole judge whether any
contract has been forfeited. An account shall become eligible for forfeiture
if:
(A) it remains in a delinquent status for
30 or more consecutive days; or,
(B) the contract has been Transferred without
obtaining the board's permission; or,
(C) property taxes for all prior years shall
not have been paid by May 1 of any year; or,
(D) the provisions of the Natural Resources
Code, Chapter 161, the terms of the contract, or the rules of the board are not
satisfied.
(2) The board
must give 30 days written notice to the borrower, the original veteran
purchaser (if different from the borrower) and all board approved assignees of
the original veteran purchaser, if any, and must specify the reason why the
contract is subject to forfeiture. This notice will be sent by certified mail
to the last known address of these parties. If the reason for forfeiture is
cured or corrected within 30 days the board shall not declare a
forfeiture.
(3) The liability of
the original veteran purchaser and any subsequent assignee or assignees is
joint and several, but the original veteran purchaser is primarily liable for
payment of the money under the contract. The board may release any assignor
from liability if the assignor requests the release in writing and at least 3
years have passed since the assignment was approved and the assignee has paid
the account in a manner acceptable to the board.
(4) A forfeiture shall be effective at the
same time the board meets and adopts a resolution forfeiting the contract. At
that time, the land and all payments previously made are forfeited.
(5) When the forfeiture is effective, the
full title to the land shall revest in the board. Any interest in the mineral
estate which the board acquired at purchase shall likewise revest in the board.
The board shall recognize, and continue in force and effect, any outstanding
valid oil, gas, or mineral lease and collect all rentals, royalties, or other
amounts payable under the lease. The board may also lease the land on terms it
considers proper. The proceeds received from a lease on a forfeited tract shall
be credited to the Veterans Land Fund; however, the chairman is authorized to
credit any portion of the lease proceeds to the delinquent amount and unpaid
principal of a loan as part of a borrower's attempt to reinstate his or her
contract.
(d)
Reinstatement.
(1) From time to time, the
board by resolution may set additional guidelines and reasonable requirements
which must be satisfied before reinstatement may be granted (e.g., evidence
that there are no delinquent taxes due as of the date and time of
reinstatement, etc.).
(2) The
borrower, the original veteran purchaser (if different from the borrower) and
all board approved assignees may reinstate the contract at any time before the
sale order date if the reason for forfeiture was failure to keep the account
current. If the contract was forfeited for any other reason, the board in its
discretion may determine there is no right to reinstate the contract.
(A) Any person wishing to exercise a right of
reinstatement shall submit to the board payment of the delinquent amount, the
reinstatement penalty and other costs incident to the reinstatement as
prescribed by the board.
(i) If there is only
one person who has a right to reinstate a contract (there having been no board
approved assignments of the contract), or if the last approved assignee
requests reinstatement, the chairman of the board may in his or her discretion
reinstate the contract immediately upon receipt of payment of the delinquent
amount, the reinstatement penalty and other costs prescribed by the
board.
(ii) If two or more persons,
other than the last approved assignee, appear to have a right to reinstate the
same contract, reinstatement shall not be granted prior to the time the board
meets on the sale order date. In this event, all persons wishing to reinstate
the same contract are required to submit to the board payment of the delinquent
amount, reinstatement penalty and other costs prescribed by the board. Any
person failing to satisfy this requirement by the sale order date may, in the
chairman of the board's discretion, be deemed to have failed to exercise his or
her right to reinstate the contract. Any monies and documents submitted by such
persons shall be returned. If on the order for sale date, there are still two
or more persons who have satisfied the requirements to reinstate the same
contract, the chairman of the board may, in his or her discretion, reinstate
the contract in the name of the person that has complied with the board's
requirements for reinstatement and was most recently approved by the board as a
purchaser or an assignee.
(B) A person who desires to reinstate a
contract but is unable to submit full payment of the delinquent amount before
the anticipated sale order date, may petition the chairman to postpone the sale
order date for the tract. The chairman in his or her sole discretion may grant
or deny such a petition.
(i) In granting such
a petition, the chairman may set reasonable conditions which must be satisfied
by a stated deadline. Such conditions may include, but are not limited to, the
requirement that the requesting party enter into a partial payment
agreement.
(ii) If the requesting
party satisfies all conditions set by the chairman by the stated deadline, the
account shall be reinstated.
(iii)
If the requesting party fails to satisfy all conditions set by the chairman by
the stated deadline, the sale order date for the tract may be reset. If the
requesting party thereafter fails to pay the delinquent amount in full prior to
the sale order date, all monies paid under the partial payment agreement shall
be forfeited to the board.
(3) Any person failing to make a timely
submission shall lose his or her right of reinstatement.
(4) The right to reinstate a contract is
extinguished when the tract has been ordered advertised for sale (or for lease
for mineral development). However, the borrower, the original veteran purchaser
(if different from the borrower), or any board approved assignee may petition
the board to permit reinstatement.
(A) The
board, in its discretion, may reinstate the contract under conditions it deems
appropriate, including, but not limited to, requiring that the account be paid
in full simultaneously with the reinstatement.
(B) Stay of Sale.
(i) The board, in its discretion, may stay
(postpone) sale of the tract. The board may set conditions which must be
satisfied before reinstatement will be permitted. The chairman is authorized by
the board to make a written agreement with the party seeking reinstatement
setting forth all conditions for reinstatement, including a date by which each
condition must be satisfied. The conditions may include, but are not limited
to, the following: payment of the delinquent amount, payment of the
reinstatement penalty (including costs incident to the reinstatement), and
submission of tax certificates evidencing that there are no delinquent taxes on
the land. When the board determines that all conditions set forth in the
agreement have been satisfied, it shall reinstate the contract. Until the
board's conditions have been satisfied, the contract will remain in a forfeited
status, but the sale of the tract shall be stayed.
(ii) The stay may be revoked at any time by
the board if the borrower fails to satisfy any of the conditions set forth in
the agreement.
(iii) The board
shall be the sole judge of whether the conditions of the agreement have been
satisfied.
(5) The board expressly authorizes the
chairman to reinstate any account at any time prior to receipt of full payment
of the delinquent amount if he or she deems it to be in the best interest of
the Veterans Land Program.
(6) If a
contract is forfeited more than two times, the chairman may require, as an
additional condition of reinstatement, that the account be paid in
full.
(e)
Re-amortization.
(1) The chairman, in his or
her discretion, may permit a borrower to re-amortize his or her loan to
incorporate all or part of the delinquent amount into the unpaid
balance.
(2) A re-amortization
shall be granted only on the condition that the borrower's loan has not been
previously re-amortized.
(3) The
chairman's consent to re-amortize shall state the new balance and the term over
which it is to be re-amortized.
(f) Restoring Eligibility to Participate
after Order for Sale.
(1) A person who is
ineligible to participate in loan programs because of a past forfeiture and
order for sale, may make a written request to the board for a restoration of
the person's eligibility. The request must detail the circumstances which led
to the prior forfeiture and order for sale and justify such request. If
granted, the requestor must fulfill any conditions that the board, in its sole
discretion and notwithstanding any other provisions of this chapter,
establishes or determines are necessary to restore such eligibility.
(2) Notwithstanding any other provisions of
this chapter, the board authorizes the chairman to restore a person's
eligibility to participate in board loan programs, as a veteran or non-veteran
as the case may be, without further board action if the person requesting the
restoration of eligibility:
(A) was not the
account holder at the time the account was forfeited and ordered for sale,
because the board had earlier approved a transfer of the account to a new
account holder and the account was current at the time of transfer;
or
(B) was the account holder at
the time of forfeiture and order for sale and:
(i) the board has sold the property that was
the subject of the forfeited account; and
(ii) the person requesting the restoration of
eligibility pays to the board the unpaid interest, including delinquent
interest, and reinstatement penalty that had accrued on the forfeited account
as of the date the account was ordered for sale.
(g) Savings clause.
Interest charged and collected on any contract will not exceed the maximum rate
or amount of nonusurious interest that may be contracted for, taken, reserved,
charged, or received under any law. Any interest in excess of that maximum
amount will be credited on the principal amount of the contract or, if the
principal amount has been paid, refunded to the borrower. On any acceleration
or required or permitted prepayment any excess interest will be canceled
automatically as of the acceleration or prepayment or, if the excess interest
has already been paid, credited on the principal amount or, if the principal
amount has been paid, refunded to the borrower. This subsection shall prevail
over other provisions in this chapter and any instruments concerning the
debt.
(h) All contracts are subject
to the provisions of the constitution, statutes, and rules governing the board,
as such constitution, statutes, and rules may from time to time be
amended.
Notes
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