Texas Administrative Code Title 40

Social Services and Assistance: As effective August 6, 2010

Part 5

Chapter 175

Subchapter A

§175.1: Sale of Bonds

Procedure for issuance and sale of bonds will be set by resolution of the Veterans' Land Board (hereinafter called board). The chairman of the board and the executive secretary of the board are authorized to work with the bond counsel selected by the board in ascertaining the elements of security permissible under the law, the maturities, option provisions, paying agency provisions, etc., pertaining to the bonds, acceptable in the market to the end that such elements may be incorporated into the bonds and resolution. The chairman, executive secretary of the board, and bond counsel will prepare a draft of the official notice of sale of bonds for the approval of the Attorney General of Texas and subsequently by the board. After the notice of sale is approved, it will be published, either in full or abbreviated form, in the manner prescribed by law, and the board has the right to reject any and all bids received.

Comments

Source Note: The provisions of this §175.1 adopted to be effective January 1, 1976

§175.2: Loan Eligibility Requirements

(a) The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise:

(1) Board--The Veterans Land Board of the State of Texas.

(2) Bona fide resident--An individual actually living within the State of Texas with the intention to remain.

(3) Missing/Missing in Action--To have an official designation of "missing status" as provided by Title 37, Chapter 10 of the United States Code relating to Payments to Missing Persons. The term "missing status" means the status of members of a uniformed service who are officially carried or determined to be absent in a status of missing; missing in action; interned in a foreign country; captured; beleaguered, or besieged by a hostile force; or detained in a foreign country against their will.

(4) Program--The Veterans Land Program as authorized by Title 7, Chapter 161 of the Texas Natural Resources Code relating to Veterans Land Board.

(5) Surviving spouse--A person who satisfies the federal definition of "surviving spouse" contained in Title 38 USC Sec. 101(3), as modified by the special provision in Title 38 USC Sec. 103, or any successor statutes, as amended from time to time. The board's intent is to match the eligibility requirements for a surviving spouse to qualify for a home loan guaranteed by the USDVA.

(6) USDVA/VA--The United States Department of Veterans Affairs or any successor thereto.

(7) Veteran--A person who satisfies the requirements of subsection (c)(1) of this section.

(b) The Board shall be the final authority in defining and interpreting all eligibility requirements, and whether an applicant has actually satisfied those requirements. The Board may by resolution prescribe the procedures and forms to be used by applicants to evidence eligibility, and may appoint a committee of qualified individuals to consider the evidence of eligibility and make recommendations to the Board. Evidence of service in the Armed Forces of the Republic of Vietnam consists of:

(1) documents from said Armed Forces of the Republic of Vietnam;

(2) documents from a federal office, such as the Army, Navy, Air Force, Marine Corps, or the Bureau of Immigration and Customs Enforcement;

(3) documents from the People's Republic of Vietnam; or

(4) other proof of service deemed appropriate by the Board or the Board's designee.

(c) To be eligible to participate in the program, an applicant must satisfy one of the following:

(1) be a person who:

(A) is at least 18 years of age;

(B) is a bona fide resident of Texas at the time of application for a loan. Military personnel on active duty, who otherwise meet the requirements of this subsection are eligible even though stationed outside of Texas at the time of application;

(C) satisfied one of the following service requirements after September 16, 1940:

(i) has served not less than 90 cumulative days of active duty or active duty training time in the Army, Navy, Air Force, Coast Guard, Marine Corps, United States Public Health Service, or a recognized reserve component of one of the listed branches of service, unless discharged earlier because of a service-connected cause;

(ii) has completed all initial active duty training required as a condition of service in any National Guard or reserve component of one of the branches of service listed in clause (i) of this subparagraph;

(iii) has at least 20 years of active or reserve military service as computed when determining the applicant's eligibility to receive retired pay under applicable federal law; or

(iv) served in the Armed Forces of the Republic of Vietnam between February 28, 1961 and May 7, 1975.

(D) is considered not to have been dishonorably discharged under subsection (h) of this section, if the person has been discharged from military service; and

(E) satisfies one of the following:

(i) was a bona fide resident of Texas at the time of enlistment, induction, commissioning, appointment or drafting;

(ii) has been a legal resident of Texas for at least one year immediately before the date of application; or

(iii) is serving on active duty, at the time of application, assigned to a military base or facility in Texas, and has officially designated Texas as the applicants home of record.

(2) is the surviving spouse of a veteran who died:

(A) as a result of a service-connected cause, as certified by the USDVA, or who is identified as missing in action, if the spouse satisfies the requirements of paragraph (1)(A) and (B) of this subsection, and the veteran satisfied the requirements of paragraph (1)(C) and (D) of this subsection and either paragraph (1)(E)(i) of this subsection or the Veteran was a legal resident of Texas at the time of his or her death; or

(B) after filing an application and contract of sale with the Board, but before the transaction was completed, if he or she meets all other qualification requirements of the Board.

(d) A person may only have one loan at a time as a veteran. However, once that loan is paid in full, he or she may apply for another loan as a veteran. The foregoing notwithstanding, an individual who is currently participating in the land program as a veteran may also, as a non-veteran:

(1) take an assignment of a contract or contracts;

(2) assume a land mortgage loan or loans; or

(3) bid on a forfeited or foreclosed tract or tracts.

(e) The applicant must sign applications and contracts. An attorney in fact may not sign these documents for an applicant, except under limited conditions approved by the Board.

(f) No application shall be approved to purchase land under the program:

(1) which provides for or recognizes a second or subordinate lien as a part of the original purchase price for any tract except as provided for in §175.54(b)(1);

(2) where there is evidence that the benefits derived from the use of the land will not pass to the applicant; or

(3) where there exists any other good and sufficient reason to refuse approval, as determined by the chairman of the Board.

(g) Any requirement of this section, or of any section within this chapter, which is not otherwise required by the constitution or statutes of this state, may be waived on a case by case basis by the Veterans Land Board. Any waiver request must be in writing and must describe the circumstances surrounding the request, including all of the reasons why the waiver is requested.

(h) For purposes of this section, a person who has been discharged from the branch of the service in which the person served or from the reserve or National Guard is considered not to have been dishonorably discharged if the person:

(1) received an honorable discharge;

(2) received a discharge under honorable conditions; or

(3) received a discharge and provides evidence from the United States Department of Veterans Affairs, its successor, or other competent authority that indicates that the character of the person's duty has been determined to be other than dishonorable.

Comments

Source Note: The provisions of this §175.2 adopted to be effective March 11, 1986, 11 TexReg 1005; amended to be effective November 10, 1986, 11 TexReg 4487; amended to be effective June 11, 1990, 15 TexReg 2917; amended to be effective December 10, 1993, 18 TexReg 8797; amended to be effective August 24, 1999, 24 TexReg 6516; amended to be effective April 15, 2001, 26 TexReg 2748; amended to be effective November 18, 2001, 26 TexReg 9221; amended to be effective June 23, 2002, 27 TexReg 5248; amended to be effective June 9, 2003, 28 TexReg 4434; amended to be effective November 23, 2003, 28 TexReg 10253

§175.3: Land Selection

(a) Land selected by a veteran for purchase or financing through the program must:

(1) be situated entirely in Texas;

(2) contain at least one acre (excluding, as defined by the board, inundated or submerged land, or otherwise unusable land);

(3) have insurable title under conditions acceptable to the board;

(4) if more than one tract of land is selected the tracts must be contiguous as defined by the board; or, if not contiguous, then one tract must meet the minimum acreage requirement, and the use, location, and value of the tracts would permit the board, in its sole discretion, to consider the combination of the tracts as one tract; and

(5) have direct access to a public road. If the tract does not directly abut a public road, a perpetual access easement appurtenant must be conveyed to the board, or other board approved access must be provided. This easement must meet the county width requirement for publicly maintained roads and, in any event, must be at least 60 feet wide. The easement must be conveyed to the board by general warranty deed or dedicated to the public or subdivision owners. If the easement is conveyed to the board by deed, it must be described by metes and bounds. This description must contain specific tie calls to both the tract and a public road. If the easement is dedicated, the deed to the board must refer to the recording information of the subdivision plat or other dedication instrument. If the board finances the transaction the tract must have similar easement rights. Easements and roads must be usable by standard automobiles during inclement weather.

(b) The board will not purchase or finance a tract of land that was wholly owned by the veteran or his spouse, separately or jointly, within 3 years of the date of application.

(c) If the veteran or his or her spouse owns an undivided interest in the land that he or she has selected, the board may approve the application after the tract has been partitioned and a copy of the recorded partition deed is furnished to the board. The board may purchase only that interest not owned by the applicant or the applicant's spouse. If the land is not partitioned because the applicant is purchasing the remaining undivided interest not currently owned by the applicant or the applicant's spouse, the board may nonetheless approve the purchase or financing of the tract. In such cases, the purchase price or loan amount will be limited to the value of the interest not previously owned by the applicant or the applicant's spouse. Whether or not the land is partitioned however, title to the entire tract must be conveyed to the board, or the board must be in a first lien position as to the entire tract.

(d) Except as provided in subsection (c) of this section, the board will not purchase or finance land in which the seller or any prior owner is to retain any interest, other than a mineral interest or an access or utility easement.

(e) The board will not approve any application that will result in a refinancing of a prior purchase by a veteran or his or her spouse.

(f) A tract must be free and clear of all liens when the board takes title or perfects its lien.

(g) The board reserves the right to refuse to purchase or finance any tract for any reason.

Comments

Source Note: The provisions of this §175.3 adopted to be effective March 11, 1986, 11 TexReg 1005; amended to be effective November 10, 1986, 11 TexReg 4487; amended to be effective January 8, 2002, 27 TexReg 286; amended to be effective October 21, 2003, 28 TexReg 9088

§175.4: Land Description

(a) Land selected to be purchased by the board must be described by a legally sufficient metes and bounds description. The property description must:

(1) contain a general description of the land, specifying the acreage contained, the original survey(s) or grant(s) with abstract number(s), survey number(s) and block designation, if applicable, and the county in which the tract is located (if the tract is divided by a county line, the appropriate abstract numbers and acreage on each side of the county line will be shown). The general description shall also contain the deed reference to the parent tract including grantor, grantee, date of instrument, and volume and page of recording. Additional references to other instruments in the chain of title may be referred to if appropriate;

(2) contain a specific description of the land, defining each side of the tract by course and distance or appropriate and complete curve data, identifying and describing monuments at each corner, and further identifying the land by calls for other natural and artificial objects on and along the boundaries and by calls for and reference to adjoining properties where appropriate;

(3) be tied to a corner of an original grant or survey if such corner is locatable and if the tie is not impractical to obtain. If it is impossible or impractical to tie to a corner of an original grant or survey the tract should tie to a locatable corner of the parent tract or any of the adjoinders;

(4) include a description, either by metes and bounds or center line, of the access easement from the tract to an existing public road of all tracts which do not abut a public road.

(b) If the tract selected is in a subdivision, a lot and block description of the tract may be substituted for the metes and bounds description. If a lot and block description is to be used, the board must be furnished a copy of the recorded subdivision plat. This plat must show the recording information and the required signatures of the governmental entity (commissioners court, city council, etc.) authorized to accept such subdivision plat. Easements as necessary for access to a public road from all tracts must be clearly shown on the subdivision plat together with appropriate language dedicating such easement to the public or to the owners of tracts in the subdivision. All the data required in subsection (a) of this section should be shown on the face of the plat, including courses and distances for all lot lines and areas for each lot. All plats accepted subsequent to the adoption of this section shall identify the size and type of monument set at each corner of every lot. If a lot is part of a subdivision already of record where monumentation is not shown, a survey plat shall be furnished indicating monuments set or found at all corners of the tract together with sufficient ties to locate the lot within the subdivision.

(c) All metes and bounds descriptions and survey plats shall bear the seal and original signature of the surveyor preparing the same. Any field notes or survey plat prepared for and used in any Veterans Land Board transaction includes a license from the surveyor to the board and the veteran purchaser to copy and use the field notes in that transaction and in any future transactions involving the surveyed property.

(d) Metes and bounds descriptions must be prepared from a survey of the property made on the ground. The survey should be made in such manner to be generally acceptable to title companies in the State of Texas for the purpose of deleting the survey exception clause.

(e) Each corner of the tract of land shall be marked by concrete or metal monuments or other durable monuments generally used in the area. A description of each monument set or found and its location, with witnesses as available, shall be incorporated into the metes and bounds description of the property.

(f) When a roadway or easement crosses a tract, it shall be described sufficiently to enable its location throughout the tract and its area to be determined.

(g) Property descriptions and subdivision plats will be examined by the board for acreage, closure, and sufficiency. The board's determination of these items will control.

(h) The surveyor should be instructed to do a proper boundary survey of the land to be conveyed according to the record boundaries of the tracts involved. Any encroachments by existing perimeter fences into the subject tract or into adjacent tracts should be shown together with the area of any lands lying between the record boundaries and the existing occupation. Any occupation on the ground not conforming to the record boundaries should be shown on a plat of survey and fully explained in an accompanying surveyors report.

(i) The chairman may waive any of the foregoing requirements and accept a survey deemed sufficient by the title company to permit deletion of the survey exception clause.

Comments

Source Note: The provisions of this §175.4 adopted to be effective May 7, 1991, 16 TexReg 2305; amended to be effective June 9, 2003, 28 TexReg 4434

§175.5: Appraisal of Land

(a) Before property is purchased it shall be appraised for the board by an appraiser approved by the board. The exclusive purpose of the appraisal is to assist the board in determining that its investment will be sufficiently secured. Any improvement existing on the land may be considered by the board in making the appraisal. If improvements are considered in determining the value of the property, the board may in accordance with §175.6(d) of this title (relating to Commitment by the Board) require the purchase of an insurance policy covering fire and hazard losses.

(b) If the appraisal amount is less than the purchase price agreed upon, the veteran may cancel the transaction. The veteran must provide a written cancellation notice to the seller and the board and request that the board return the down payment and the unused portion of the fee deposits.

(c) Upon the request of the veteran, the appraiser shall meet with the veteran for a physical inspection of the land to be purchased. Except as provided in subsection (d) of this section, the board may not require that veterans accompany the appraiser. The Board may, by resolution, establish a procedure for veterans to certify they have personally inspected the tracts they are purchasing. This resolution may also provide a procedure for granting a request to permit the veteran's personal representative to inspect the tract for the veteran.

(d) If the veteran believes that the appraisal contains a mistake, the veteran may request that the land be appraised again. The board shall have the land re-appraised if all the following requirements are satisfied:

(1) The request for a re-appraisal must be in writing and describe any mistake the veteran believes was made.

(2) The written request should be accompanied by any documentation supporting the allegation that a mistake was made.

(3) The re-appraisal fee must be remitted to the board.

(4) If the board elects to perform another physical inspection of the tract in connection with the re-appraisal, the board may require that the veteran personally accompany the board's representative on that inspection.

(e) The chairman, or executive secretary, of the board may waive any of the requirements of subsection (d) of this section. The board shall be the sole and final judge regarding any matter associated with the appraisal of the land to be purchased, and the amount of the loan offered to any veteran.

Comments

Source Note: The provisions of this §175.5 adopted to be effective August 12, 2001, 26 TexReg 5838; amended to be effective June 9, 2003, 28 TexReg 4435

§175.6: Commitment by the Board

(a) After reviewing the appraisal, and any other relevant information, the board shall issue a commitment showing the amount it will invest in the land selected. The veteran and seller shall be notified of the commitment amount in writing. The board shall not invest more than the least of the following options:

(1) 95% of the appraised value of the land;

(2) 95% of the final agreed purchase price; or

(3) the maximum loan amount as set by the Board by resolution from time to time, as prescribed by law.

(b) Except for certain Forfeited Land Sales, the board requires the veteran to have at least a five percent ( 5.0%) equity investment in the land. The equity investment is the difference between the commitment amount and the purchase price. The amount of equity required shall be the combination of the initial payment and the down payment(s), as applicable.

(c) If the commitment amount is less than 95% of the purchase price, one of the following should be done:

(1) The veteran may pay to the board the difference between the purchase price and the commitment amount;

(2) The parties may amend the purchase price, with the veteran paying to the board the difference between the amended price and the commitment amount;

(3) The parties may amend the contract to increase the acreage to make up for the difference in value compared to price; or The veteran may cancel the loan application and purchase contract.

(d) In certain cases, special circumstances may require special loan conditions in the commitment terms. The following are two examples, but others may apply:

(1) If improvements on the land are considered by the board in determining the commitment amount, their value may be amortized over their lifetime as determined by the appraiser; and

(2) If the land is situated in an underground irrigation water area, the installments may be accelerated for the purpose of protecting the board's investment against the risk of any diminishment of the water reserve.

(e) Notwithstanding anything to the contrary in these rules, the chairman may establish procedures so that any required initial payment, down payment, or difference money may be paid to the closing agent at closing.

(f) If for any reason a veteran's application is not processed to completion, the down payment will be refunded to the veteran, together with the unused portion of any fees that have been paid by the applicant.

(g) Each application will be considered as a wholly separate transaction, independent of any other agreement, transaction or contingency. The board will not consider an application which contains a provision making it contingent upon the success or completion of another agreement or transaction, except as provided for in §175.54(b)(1) of this chapter.

Comments

Source Note: The provisions of this §175.6 adopted to be effective March 11, 1986, 11 TexReg 1005; amended to be effective May 14, 2002, 27 TexReg 4173; amended to be effective November 23, 2003, 28 TexReg 10253

§175.7: Title Examination

(a) The board will designate an attorney or title company in the county where the land is located to serve as its closing representative. The veteran or seller may submit the name of a closing representative for the board's consideration. The representative will be paid $25 for closing the transaction. The board will also pay up to $30 to cover recording costs. The board will not pay a representative for preparing and filing application papers, drafting instruments, or for rendering services of a similar nature. If an attorney provides such services he is to be paid directly by the veteran or seller.

(b) It is the seller's responsibility to obtain a commitment for title insurance and to provide copies of it to the closing representative and the board.

(c) The seller shall also provide the following, as applicable:

(1) releases of any outstanding liens;

(2) proof that all taxes have been paid through the last taxable year;

(3) evidence that taxes have been prorated as of the date of sale, or that satisfactory arrangements have been made with the veteran regarding taxes, including rollback taxes;

(4) releases of any mineral leases that have expired, or an affidavit of nonproduction and nonpayment of annual delay rentals;

(5) any instruments in the chain of title necessary for the board to make a proper showing of ownership to a lessee under an existing mineral lease; and

(6) fees for recording all instruments other than the deed from the seller to the board and the contract of sale between the board and the veteran.

(d) Among other things, the veteran will be required:

(1) to furnish a fire and hazard insurance policy if there are any improvements on the land which have been considered by the board in determining the amount to be invested, together with a receipt showing the first year's premium has been paid; and

(2) to execute an affidavit showing that he has taken possession of the land, has inspected the land, and found no one in adverse possession and that the taxes have been prorated to his satisfaction.

(e) The staff of the board will prepare a deed sufficient to convey title to the land from the seller to the board. If the seller wishes to have a deed prepared and furnishes it to the board, this deed must:

(1) name the Veterans Land Board of the State of Texas as grantee;

(2) state the full and true consideration to be paid;

(3) specify all reservations of oil, gas, and other minerals affecting the property;

(4) specify all easements, leases, and/or other exceptions which might affect the property; and

(5) contain a general warranty; special warranty deeds are not acceptable, except where specifically authorized by the chairman of the board, chief clerk, executive secretary, or assistant executive secretary.

(f) The staff of the board will prepare the deed upon submission of a title commitment and other closing papers. The seller may at his or her sole expense arrange to have a proposed deed furnished to the board for approval. The board's use of such a deed will in no way reduce any fees charged by the board for title examination and deed preparation.

(g) When the title insurance commitment has been completed and submitted, the closing representative shall forward it, along with the original and one copy of the proposed deed, if any, to the board. The board must also be provided copies of all reservations and exceptions listed in the title insurance commitment or proposed deed. The board's attorneys will examine the closing papers (and draft a warranty deed if needed). If all is in order, the board will request the state comptroller to issue a treasury warrant in the amount of the purchase price. When the warrant is received by the board, it will be forwarded with the other closing materials to the representative so that the transaction can be completed.

(h) When the closing representative is satisfied that all closing requirements have been met, he shall require the seller to execute and tender the deed, and shall, on behalf of the board, tender the consideration to the seller. The closing representative shall also require the veteran to execute the contract of sale and purchase. The veteran must execute this personally, no other person is authorized to execute it for him.

(i) The closing representative shall file the deed and contract of sale and purchase for recording, together with any additional instruments which should be recorded. The recorded originals of the deed to the board and the contract of sale and purchase shall be sent to the board, where they will be made a part of the veteran's permanent file.

(j) The board has obtained a group credit life insurance policy and a group disability policy for the benefit of both veterans and non-veterans who are purchasing land through the program. If the contract holder obtains the group credit life insurance and dies while it is in force, the principal balance of the veteran's account as of the date of death will be paid in full in accordance with the terms of the policy of insurance. If the contract holder obtains the group disability insurance and becomes disabled, the account holders regularly scheduled payments will be made in accordance with the terms of the policy of insurance. The policy or policies will be terminated when the contract holder dies or pays the account in full.

Comments

Source Note: The provisions of this §175.7 adopted to be effective March 11, 1986, 11 TexReg 1005; amended to be effective October 19, 1987, 12 TexReg 3602; amended to be effective March 22, 1991, 16 TexReg 1472

§175.8: Contract of Sale and Purchase

(a) The contract of sale and purchase will be prepared by the board. It is to be executed by both the veteran and the chairman of the board.

(b) The board will specify the terms of the contract for each transaction.

(c) Each contract of sale and purchase shall bear a rate of interest designated by the board and shall not exceed 30 years in duration.

(d) If the tract contains improvements or is located in an underground irrigation water area, the chairman may require accelerated installments for the purpose of protecting the board's investment.

(e) Installment payments on a veteran-purchaser's contract of sale and purchase shall be due and payable in the following manner:

(1) for transactions which have closed before January 1, 1984, installment payments will be made on a semiannual basis, unless the veteran-purchaser elects to change to a monthly payment schedule.

(2) for transactions which close after January 1, 1984, payments will be made on a monthly basis.

(3) the installment dates will be specified in the contract.

(f) Advance payments may be made at any time. When making an advance payment the veteran should provide the board with written instructions as to the nature of the payment (i.e., whether it is an additional payment against principal or an advance installment payment). Making an additional payment against principal will not relieve the veteran of his obligation to make each installment payment as it becomes due.

(g) All taxes (state, school, water district, city, or any other tax) shall be kept current. Evidence of their payment shall be submitted to the board by May 1 of each year.

(h) If there are any material errors in the contract, the chairman may execute a correction contract. This instrument will then be provided to the veteran for his signature.

Comments

Source Note: The provisions of this §175.8 adopted to be effective March 11, 1986 11 TexReg 1005

§175.9: Death of a Purchaser

(a) Upon the death of the purchaser, if the account is insured under the group life insurance plan, the board should be notified at once and furnished with a certified copy of the death certificate and a deed fee, which is not paid under the group insurance plan.

(b) If the account is not insured at the time of the purchaser's death, the board should be furnished:

(1) certified copies of all probate proceedings, if any; or

(2) an affidavit of heirship, if the purchaser dies intestate and no administration is necessary for the estate.

(c) The person or persons acquiring the rights of the deceased purchaser should indicate to the board that they are willing to accept the obligations of the contract of sale and purchase.

(d) Upon receipt of the items listed in subsections (a), (b), and (c) of this section, the records of the board will be changed to reflect the new ownership.

Comments

Source Note: The provisions of this §175.9 adopted to be effective March 11, 1986, 11 TexReg 1005; amended to be effective August 12, 2001, 26 TexReg 5838

§175.10: Insurance Losses

(a) All proceeds received for insurance losses must be deposited with the board. These proceeds may be used to repair or replace the damaged or destroyed improvements, or they may be applied to the principal balance of the veteran's account.

(b) Normally, when there has been a loss the insurance company will issue a check jointly payable to the veteran and the board. The veteran should endorse the check and forward it to the board. The proceeds will be held in a special account until the damaged or destroyed improvement has been repaired or replaced, or until it has been determined that the proceeds are to be applied to the principal balance of the veteran's account.

(c) If there has been a partial loss, repairs shall be made in order to prevent further deterioration. If the loss is total, the veteran will have the option of rebuilding the improvement or applying the proceeds to the principal balance of his account. If applying the proceeds to the principal balance of the account pays it in full, any unused funds will be refunded to the veteran, or his or her designee, as soon thereafter as practicable.

(d) When an improvement is repaired or replaced, and the loss is under $500, the veteran should:

(1) submit to the board itemized statements showing the materials and labor furnished; and

(2) submit to the board an affidavit showing that all of the materials and labor specified in the statements were actually used in the repair or replacement of the improvement.

(e) When an improvement is repaired or replaced and the loss is over $500, the veteran should:

(1) submit to the board an itemized statement showing the materials and labor furnished; and

(2) allow sufficient time for the board to make a physical inspection of the repaired or replaced improvement.

(f) Reimbursement from the insurance proceeds may be made directly to the veteran or his creditors. If reimbursement is to be made to the veteran, the itemized statements mentioned in subsections (d)(1) and (e)(1) of this section must show that payment has already been made by the veteran. If reimbursement is to be made to the creditors, the veteran must authorize the board in writing to pay the creditors.

(g) Reimbursement can be made only when the damaged or destroyed improvement has been repaired or restored.

(h) If proceeds from insurance losses are not completely used in restoring improvements to their original condition, the remaining balance on deposit will be applied to the principal balance of the veteran's account.

(i) The application of insurance proceeds to the principal balance of the veteran's account shall not relieve him of the obligation to make the regular installment payments.

Comments

Source Note: The provisions of this §175.10 adopted to be effective March 11, 1986, 11 TexReg 1005

§175.11: Transfer of Contract of Sale and Purchase

(a) After the original veteran-purchaser has been in possession of the tract for at least three years from the date of closing, the contract of sale and purchase may be transferred in one of the following ways:

(1) the contract may be assigned to an eligible veteran without any increase in the interest rate.

(2) the contract may be assigned to a non-veteran, a veteran who has previously participated in the program or a firm or corporation with an increase in the interest rate. The new rate of interest shall be set by the board.

(b) The contract may be transferred before the expiration of the three year period only if the veteran dies, becomes financially incapacitated, or in the event of an involuntary transfer by court order or proceedings, such as bankruptcy, sheriff's sale, or divorce. Affidavits, certified copies of proceedings and other documentation may be requested by the board in connection with this exception.

(c) If the veteran attempts to transfer, sell, or convey the property before the three year period has elapsed, the board may forfeit the account and order the property to be sold. In the alternative, the board may require that the account be paid in full and a penalty paid, or approve the unauthorized transfer upon the payment of the penalty and receipt of such other documentation as may be required. The penalty shall be the difference between the account's interest rate and the interest rate charged to non-veterans at the time the unacceptable transfer or conveyance is discovered.

(d) No assignment shall be effective until approved by the chairman of the board.

(e) Upon request, the board will furnish to the assignor, or to one designated by him, the forms and information necessary to complete a transfer.

(f) An assignment will not be approved if it is executed by an attorney in fact.

(g) If married, the veteran's spouse must join in the assignment.

(h) If the assignor wishes to reserve any interest in the property, he must obtain the approval of the board prior to the assignment. An assignment will not be approved if the assignor attempts to reserve any interest in the contract of sale and purchase.

(i) The board is not responsible for the condition of title subsequent to the execution of the contract of sale and purchase with the original veteran-purchaser. The assignee should satisfy himself as to condition of title before accepting an assignment.

Comments

Source Note: The provisions of this §175.11 adopted to be effective March 11, 1986, 11 TexReg 1005

§175.12: Severances

(a) If a veteran wishes to have clear title to a portion of the land he is purchasing, he may obtain a severance deed from the board for that portion. To accomplish this the following steps should be taken:

(1) A current ground survey of the portion to be severed must be made by a qualified surveyor. The survey requirements of §175.4 of this title (relating to Land Descriptions) must be met. The field notes and plat prepared from the ground survey must be submitted to the board.

(2) Both the tract to be severed and the remaining tract must have access to a public road. If the severed tract includes all of the road frontage, a 60 foot access easement to the portion remaining under contract must be conveyed to the board.

(3) Upon receipt of the field notes and plat, the board will have an appraisal made to determine the amount to be paid for the severed acreage. The veteran will be notified of the result of this appraisal. This amount, which will be applied against the principal of the veteran's account, should be submitted to the board, along with a deed fee. The board will then issue a deed, conveying clear title to the severed portion.

(b) The board will not issue severance deeds listing anyone besides the original veteran purchaser or the last approved assignee as the grantee.

(c) All requests for severances will be subject to the approval of the chairman of the board.

(d) The chairman of the board is authorized to enter into, and execute on behalf of the board, an agreement recognizing that an improvement, when constructed, shall not attach to and become a part of the realty for the duration of any obligation incurred by a purchaser in connection with the erection of such improvement.

Comments

Source Note: The provisions of this §175.12 adopted to be effective March 11, 1986, 11 TexReg 1005; amended to be effective August 12, 2001, 26 TexReg 5838

§175.13: Sale of a Material Asset, and Improvements

(a) Material Assets.

(1) No sale of timber, rock, gravel, sand, chemicals, or other material asset, the loss of which tends to lower the value of the land, shall be effective until approved by the chairman of the board.

(2) The chairman will prescribe the form or forms of instruments necessary to effectuate a sale, and will approve any such sale on behalf of the board.

(3) At least 1/2 of the proceeds from the sale of a material asset shall be paid to the board. This amount will be applied toward the principal balance of the veteran's account.

(b) Improvements.

(1) Before any improvements may be removed from the property the veteran must obtain written permission to do so from the chairman of the board.

(2) The veteran's request should be in writing and addressed to the chairman of the board, and advise the amount to be paid, if any, and the reasons for removal.

Comments

Source Note: The provisions of this §175.13 adopted to be effective March 11, 1986, 11 TexReg 1005

§175.14: Mineral Leases

(a) When applicable, a veteran may execute mineral leases covering the land being purchased through the board. The following conditions must be met:

(1) No oil and gas lease will be accepted unless the board's standard form is used. Copies of this form will be furnished upon request.

(2) The lease must be approved by the chairman of the board.

(3) Each lease must state the actual and true consideration to be paid.

(4) At least 1/2 of all proceeds, including bonus, rentals and royalties received under the terms of such leases, shall be paid to the board and applied toward the principal balance of the account. If an account is delinquent, the board will require that additional payments of bonus, rental and royalty be paid until the delinquency is satisfied. Payments made in this manner will not relieve the veteran of his obligation to make the regular installment payments.

(5) The lease term may not exceed 10 years, except when a lease is held in force by production. However, coal and lignite leases may be executed, with board approval, for terms up to 40 years.

(6) No lease may contain a provision for an option, renewal or release for any term, nor may such provision be provided for by separate instrument.

(b) Each executed mineral lease must be submitted to the board in duplicate. The approved original will be returned for recording with the county clerk. One half of the bonus payment should accompany the lease, along with a lease review fee. If the account is delinquent, all of the bonus payment, or as much as may be required, should be sent to the board to satisfy the delinquency.

(c) At least five acres around and including improvements on a tract must be excluded from all leases executed for iron ore, gravel, coal, or other substances, the mining or development of which tends to destroy the surface value of the land.

(d) The veteran may lease the property for agricultural, hunting or grazing purposes or for other surface uses without obtaining the approval of the board. However, if the tract is forfeited the rights of the lessee are then terminated.

Comments

Source Note: The provisions of this §175.14 adopted to be effective March 11, 1986, 11 TexReg 1005; amended to be effective August 12, 2001, 26 TexReg 5838

§175.15: Approval of Easements

(a) A contract holder may, with the approval of the board, grant easements or rights of way. These are of four general types:

(1) A right of way granted to the state or county for roads, channels, etc. The forms to be used in granting such an easement may be obtained from the board or the State Highway Department of Highways and Public Transportation.

(2) Utility easements for pipelines, electric lines, etc. The board requires use of its form when granting such an easement, except when an easement for a waterline is to be granted. In that case the FHA form may be used. If an FHA form is used, a course and distance description of the waterline must be attached.

(3) Flowage easements granted in connection with dams and reservoir projects. The agency administering the project furnishes the forms for such easements. An elevation contour map of the acreage involved, together with an engineer flood data sheet, may be used in place of a course and distance description.

(4) Easement for right of way purposes. The board does not require the use of a specified form for easements of this type. However, a form that may be used as a guide is available from the board.

(b) If a VLB form is not used, the following paragraph must be inserted into the grant of easement. This paragraph more fully explains the conditions of ownership of the tract of land: "The land herein described is under Contract of Sale and Purchase to grantor herein who will receive a deed to said lands from the Veterans Land Board when all the terms of said contract have been complied with. Grantor executes this instrument with the approval of the Veterans Land Board in accordance with the regulations of said board, which approval is signified by the signature hereon of its chairman." A signature block must be provided at the conclusion of the instrument, as follows: Approved this __________ day of __________, 20__ Veterans Land Board of the State of Texas by: ___________________________Chairman, Veterans Land Board.

(c) The contract holder must submit two original grants of easement to the board. These must be signed by the contract holder and acknowledged by a notary public.

(d) A fee must be paid to the board for review and approval of such easements. This fee is to be submitted to the board, along with the duplicate easement documents and any consideration paid, at the time the board's approval is requested.

(e) The consideration paid for the easement must be stated clearly and accurately. Statements such as "ten dollars and other good and valuable consideration" are not acceptable.

(f) All cash consideration paid for an easement must be submitted to the board. The board will distribute the consideration in light of the account's payment record, the amount of consideration and the effect on the value of the land. At least one-half of the consideration will be retained by the board and applied to the principal balance of the account.

(g) Any payment made to compensate for temporary damage to the land, such as to growing crops or to plowed fields, should be paid directly to the contract holder. The amount of such payment and its purpose must be specifically stated in the grant of easement.

(h) If payment is made for permanent damage to or depletion of the land (such as the cutting of timber), one half of that amount must be paid to the board. This amount is to be applied to the principal of the veteran's account.

(i) If the easement is to be donated, the grant of easement should so state

Comments

Source Note: The provisions of this §175.15 adopted to be effective March 11, 1986, 11 TexReg 1005; amended to be effective August 12, 2001, 26 TexReg 5838

§175.16: Payment in Full

(a) When an account is paid in full the board will draft a deed conveying the land to the original veteran-purchaser or the last approved assignee. If a deed is executed to someone other than the legal owner, the deed and the rights thereto shall inure to the benefit of the legal owner. A fee must be paid to the board for issuance of the deed.

(b) The board will accept a cashier's check, certified check, personal check, money order or cash as final payment.

(c) The board will furnish a final statement to the contract holder at any time upon request.

Comments

Source Note: The provisions of this §175.16 adopted to be effective March 11, 1986, 11 TexReg 1005; amended to be effective August 12, 2001, 26 TexReg 5838

§175.17: Fees and Deposits

(a) Notwithstanding any other references to fees in this chapter to the contrary, the only fees collected by the board shall be those described in this section.

(1) The board shall from time-to-time adopt by resolution a schedule describing the services for which it charges fees. The board's resolution adopting a schedule shall set the specific fee for each service described in the schedule, provided that no fee shall exceed the maximum amounts described in this section. The schedule will be made available to any person upon request and will be published on the board's Internet site.

(2) If another law of the state requires the board to perform a service, the board shall collect the fee authorized by said law.

(3) On a case-by-case basis, the chairman or the executive secretary may waive the collection of any fee described in this section if it serves the best interests of the program.

(b) The board shall collect the following fees when they are applicable:

(1) a fee not to exceed $250 for a regular (or first) appraisal of a tract of land;

(2) a fee not to exceed $100 for the reappraisal of land previously appraised by the board for the same transaction;

(3) a fee for a subdivision pre-appraisal and consultation fee -- $2 per acre, calculated on the gross acreage in the subdivision, with a minimum of $250;

(4) a fee not to exceed $25 for a returned check (NSF);

(5) The board shall collect a fee not to exceed $75 for the preparation, review, or approval of any document, including but not limited to the following:

(A) contract of sale and purchase;

(B) mineral lease or assignment of mineral lease;

(C) easement, including but not limited to utility easements, access right of ways, and recreational;

(D) transfer of contract and sale and purchase;

(E) deed issued when a portion of a tract is severed prior to the full payment of its loan;

(6) a fee for a deed issued when a loan is paid in full, not to exceed:

(A) $75 if the contract incorporates this chapter by reference, or includes a general reference to the rules and/or regulations of the board; or

(B) the amount of the fee that was in effect on the date the contract was executed if the contract contains no reference to the rules and/or regulations of the board.

(c) No fee may be charged in connection with the program to a loan applicant by a third party that has not been approved by the board.

Comments

Source Note: The provisions of this §175.17 adopted to be effective August 12, 2001, 26 TexReg 5839

§175.18: Resale of Forfeited Land

(a) Definitions. The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Bid--A bid is an offer to purchase a Type I or Type II tract submitted in the manner prescribed by the board.

(2) Highest bidder--The person who submits the best and highest bid which satisfies all the terms, conditions, and guidelines set by the board for any sale of any tract.

(3) Minimum bid amount--The minimum acceptable selling price set by the board for each Type I and Type II tract.

(4) Type I land tract--When a tract is forfeited and first ordered for sale or lease by the board, it is automatically classified as Type I land.

(5) Type II land tract--When Type I land has been made available for sale or lease and is not sold or leased by the board for any reason, it is automatically reclassified as Type II land at the moment the board determines that no acceptable bid was received.

(b) Costs of sale.

(1) All property taxes which are, in the opinion of the board, lawfully due and owing on a Type I or Type II tract on the date it is resold by the board, may be paid from the proceeds of the issuance of bonds.

(2) All costs to the board associated with selling a Type I or Type II tract, including administrative expenses, road construction, surveying, legal fees, real estate commissions, advertising expenses, and other similar costs, may be paid from the proceeds of the issuance of bonds.

(c) Sale of forfeited tracts.

(1) Qualified purchasers.

(A) Type I tracts shall be first offered for sale or lease only to veterans who meet the eligibility requirements of §175.2 of this title (relating to Application/Eligibility). Bids on Type I tracts shall be submitted to the board on or before the bid deadline set by the board. These bids shall be reviewed by the board and the board may, in its discretion, award any Type I tract to the highest bidder.

(B) Any Type I tract not awarded by the board on the bid deadline date shall be immediately reclassified as Type II land. Type II tracts may be offered for sale or lease to both nonveterans and eligible veterans. Bids on Type II tracts may be reviewed by the chairman who may, in his or her sole discretion, award any Type II tract to the highest bidder.

(2) Terms of sale.

(A) The board may, in its sole discretion, set terms, conditions, and guidelines governing the sale of any tract.

(B) The board may combine or subdivide Type I or Type II land to form individual Type I or Type II tracts.

(C) Any tract formed by combining Type I and Type II shall be classified as Type I until it has been offered for sale or lease and is not sold or leased by the board for any reason. Thereafter, it shall be reclassified as Type II land.

(3) Deposit. Each bidder shall be required to deposit, in cash, an amount designated by the board.

(4) Duration. The land shall be sold under contract of sale and purchase or under a note and deed of trust not to exceed 30 years in duration.

(5) Additional terms and conditions. Each contract of sale and purchase or note and deed of trust shall conform to the provisions of the Natural Resources Code and shall be in such form, and contain such terms and conditions, as the chairman of the board may prescribe.

(6) Bid rejection. The board may reject any and all bids on Type I tracts. The chairman of the board may reject any and all bids on Type II tracts.

(7) Forfeiture. If a successful bidder refuses to execute a contract of sale and purchase or a note and deed of trust, the money submitted with his bid may be forfeited and shall be deposited in the state treasury and credited to the fund.

(d) Bids.

(1) Minimal amount. The board shall, in its sole discretion, set the minimum amount for which offers will be accepted for each Type I and Type II tract. Any costs to the board associated with selling a Type I or Type II tract, including road construction, surveying, advertising, legal fees, property taxes, real estate commissions, advertising expenses, and other similar costs, may be made part of the minimum bid amount.

(2) Bid deadline.

(A) The board may set a specific time and date on or before which bids pertaining to any tract must be submitted. In such event, no bid shall be awarded by the board prior to that time.

(B) The board may elect to set no specific time and date on which bids pertaining to any tract must be submitted. In such event, the chairman of the board shall be authorized to review bids when and as received, and accept the first acceptable bid on any such tract.

Comments

Source Note: The provisions of this §175.18 adopted to be effective March 11, 1986, 11 TexReg 1005; amended to be effective October 11, 1988, 13 TexReg 4785; amended to be effective September 15, 1989, 14 TexReg 4473; amended to be effective June 9, 2003, 28 TexReg 4436

§175.19: Subdivision Loan Processing

(a) To qualify for subdivision loan processing a seller must:

(1) have, or plan to have at least five tracts of land available for sale to veterans in the same subdivision or development;

(2) agree to comply with all local ordinances and regulations regarding the subdivision or resubdivision of land; and

(3) agree to provide the services and materials described in this rule to interested veterans in order to facilitate the board's processing of loans.

(b) A written request for subdivision loan processing of an existing or proposed subdivision must be submitted to the board.

(c) Those sellers who qualify for subdivision loan processing may request the board to perform a preliminary appraisal of the subdivision. This preliminary appraisal process will include:

(1) Establishing high and low per acre values for the subdivision. The board will use these valuations in determining how much it will loan for the purchase of tracts in the subdivision.

(2) Advising the seller, when appropriate, of the best subdivision plan, so as to maximize land values of the gross acreage for sale.

(3) Discussing requirements for roads, easements, water sources and other factors affecting land values. Recommendations will be made if appropriate.

(d) A fee is charged for the preliminary subdivision appraisal.

(e) After the preliminary appraisal has been completed and the seller indicates that tracts within a subdivision are ready for sale to veterans, the seller may make arrangements with the board for appraisals of specific tracts. The board will commit itself to a loan value based upon these appraisals even though a specific veteran purchaser has not yet been identified. To obtain these appraisals, the seller must:

(1) Supply a ground survey of each tract of land by a registered surveyor.

(2) Submit to the board a certified copy of a recorded subdivision plat, if the tracts are to be sold by lot and block numbers. This plat must contain evidence that it has been approved and accepted by the county commissioners.

(3) Obtain a title insurance commitment for each tract;

(4) Request a field appraisal of each tract by the board. A fee is charged in advance for each appraisal. This fee will be refunded to the seller if the tract is sold to a veteran through the Veterans Land Program; and

(5) Furnish a recorded subdivision plat, if requested by the board.

(f) Sellers may arrange to obtain application packets from the board.

(g) Sellers using the subdivision loan processing system should help veterans complete all forms and documents required for processing and closing loans. Sellers will also be responsible for having veterans:

(1) submit the correct amounts for down payments and fees required by the board; and

(2) provide any missing documentation needed in order to qualify, process, or close a loan.

(h) Completed application packets must be received by the board within 30 days of the date the application contract is signed.

(i) Application packets are to be submitted by the seller and must include:

(1) a copy of the recorded subdivision plat or other evidence of compliance with local regulations and ordinances; and

(2) a title insurance commitment for the tract to be purchased.

(j) Due to the nature and purpose of the subdivision loan processing program, it is the seller's responsibility to work with the veteran and the board to expedite the processing of the loan. For this reason it is suggested that the seller designate one individual to serve as a contact person with the board. This person should be familiar with the board's forms, rules, procedures, and any other requirements necessary for successful processing of the loan. In this regard it is also suggested that the contact person familiarize himself and maintain regular contacts with the board's field staff, local veterans' service officers, and the title company providing insurance.

Comments

Source Note: The provisions of this §175.19 adopted to be effective March 11, 1986, 11 TexReg 1005; amended to be effective August 12, 2001, 26 TexReg 5838; amended to be effective September 18, 2003, 28 TexReg 7998

§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.

§175.21: Prizes and Inducements

(a) The Texas Natural Resources Code, §161.222(a) requires veterans to make an initial payment in an amount set by the board's rules. Sections 161.233(a) and 161.283(b) require that Veterans make additional down payment(s) under certain circumstances. In order to carry out the intent of the requirement that veterans have equity in any tract purchased through the program, it is the policy of the Veterans Land Board to approve no transaction, the net effect of which involves the seller, realtor, or any party to the transaction other than the veteran directly or indirectly paying the initial payment or down payment(s). This includes inducements such as zero coupon bonds, savings bonds, etc.

(b) Subsection (a) of this section shall not be construed to prevent a veteran from contracting with the seller or any other party to a transaction for the payment of other expenses associated with closing the transaction such as survey costs, title examination, and attorney's fees.

(c) Subsection (a) of this section shall not be construed to prohibit privileges incidental to the ownership of land and available to all purchasers in the same subdivision and/or joint ownership of recreational areas such as parks, lakes, etc.

Comments

Source Note: The provisions of this §175.21 adopted to be effective March 11, 1986, 11 TexReg 1005; amended to be effective October 19, 1987, 12 TexReg 3602; amended to be effective May 14, 2002, 27 TexReg 4173

§175.22: Duties and Responsibilities of Chairman, Executive Secretary, and Assistant Executive Secretary

(a) The commissioner of the General Land Office is chairman of the board and administrator of the Veterans Land Program as provided in the Texas Constitution, Article III, §49-b, as amended, the Natural Resources Code, Chapter 161, as amended, and shall perform the duties and functions of the board prescribed by law except for those duties and functions reserved to the board as provided in the Natural Resources Code, §161.061 which shall be performed by the board.

(b) The chief clerk of the General Land Office may perform any of the duties of the chairman if the chairman is sick, absent, dies, or resigns.

(c) The board shall select an executive secretary and an assistant executive secretary, each of whom shall be nominated by the chairman and approved by a majority of the board. The executive secretary and assistant executive secretary shall perform all duties required of them by the board.

(1) The chairman of the board may delegate any of his nondiscretionary responsibilities to the executive secretary and the assistant executive secretary, including the execution of veterans' purchase contracts, easements, and deeds when loans are paid in full.

(2) The assistant executive secretary may perform any of the duties of the executive secretary, when and as requested by the chairman or executive secretary.

Comments

Source Note: The provisions of this §175.22 adopted to be effective March 17, 1988, 13 TexReg 1149

§175.23: County Committees

The commissioners court of each county may appoint a committee of up to three resident real property owners, who are knowledgeable and active in veterans' affairs, to serve as a local county advisory committee to the board. The committee shall perform all duties requested by the board, including, but not limited to, providing information about the programs to veterans and veterans' groups, and collecting and reporting relevant information to the board. In the event a county chooses to appoint members to an advisory committee, the county shall notify the board of the names and address of those appointed.

Comments

Source Note: The provisions of this §175.23 adopted to be effective August 18, 1992, 17 TexReg 5460; amended to be effective September 18, 2003, 28 TexReg 7998

Subchapter B

§175.51: Construction of Subchapter B

(a) The purpose of this subchapter is to implement the authority granted to the board by Natural Resources Code, Chapter 161, Subchapter K. The board shall only make loans under this subchapter that are secured by mortgages, deeds of trust, or other liens.

(b) Unless otherwise provided in this subchapter, the rules of the Veterans Land Board set forth in TAC, Title 40, Part 5, Chapter 175, Subchapter A, relating to General Rules and Contract Financing, shall apply to all loan transactions made by the board that are secured by a mortgage, deed of trust, or other lien on the land to be purchased. When applying any provision of Subchapter A to a mortgage loan transaction, those provisions shall be construed as necessary and appropriate for a mortgage loan transaction rather than a contract of sale transaction. The board may, by resolution, clarify the construction of any provision of Subchapter A in its application to a mortgage loan transaction.

(c) Any requirement of this subchapter that is not otherwise required by the constitution or statutes of this state may be waived on a case-by-case basis by the board. Any waiver request must be in writing and must describe the circumstances surrounding the request, including all of the reasons why the waiver is requested.

(d) Definitions.

(1) "Borrower" means a person presently obligated to make payments to the board:

(A) For a loan made, or purchased, by the board as provided by this subchapter;

(B) For a purchase of land from the board under a contract of sale as provided by Subchapter A, relating to General Rules and Contract Financing, of this chapter; or

(C) For a loan or contract of sale that the person assumed from the original borrower with the written consent of the board.

(2) "Contract of sale" means those transactions described in Subchapter A, relating to General Rules and Contract Financing, in which the board takes fee title to property as security and sells to the borrower on a contract of sale and purchase. Title is conveyed to the borrower when all terms and conditions of the contract of sale have been satisfied.

(3) "Lending institution" means a bank, savings bank, savings and loan association, credit union, trust company, mortgage bank, mortgage company, life insurance company, or other financial institution that customarily provides service or aids in the financing of mortgages on single-family residential housing, or a holding company for one of those institutions.

(4) "Loan" or "mortgage loan" means a veterans' land loan made or acquired by the board under Natural Resources Code, Chapter 161, Subchapter K, relating to Land Loans, secured by a mortgage, deed of trust, or other lien on the land purchased with the proceeds of the loan.

Comments

Source Note: The provisions of this §175.51 adopted to be effective January 8, 2002, 27 TexReg 286

§175.52: Borrower's Eligibility and Number of Loans

(a) The Board shall be the final authority in defining and interpreting all eligibility requirements, and whether a prospective borrower has actually satisfied those requirements. The Board may by resolution prescribe the procedures and forms to be used in mortgage loan transactions.

(b) A person is eligible to apply for a loan under the provisions of this subchapter if he or she satisfies the requirements of §175.2(c), relating to Loan Eligibility Requirements.

(c) A person may only have one loan at a time as a veteran. However, once that loan is paid in full he or she may apply for an additional loan as a veteran. The foregoing notwithstanding, an individual who is currently participating in the program as a veteran may assume a loan, or take an assignment of a contract of sale as a non-veteran and may bid on a tract or tracts at a forfeited land sale as a non-veteran.

(d) Notwithstanding anything to the contrary in this chapter, a purchaser under an executory Veterans Land Board Contract of Sale and Purchase may refinance the obligation represented by the Contract of Sale and Purchase by substituting a purchase money Veterans Land Board mortgage loan. No additional funds may be advanced except for expenses incident to the transaction, as provided in Tex. Nat. Res. Code §161.508(b). The chairman may establish procedures, documents, and policies to accomplish transactions authorized by this section. To the maximum extent possible, the substitute loans must retain the terms of the original Contracts of Sale and Purchase and must comply with the requirements for new Veterans Land Board mortgage loans. All liens securing the substitute loans relate back to the date of the original Contracts of Sale and Purchase.

Comments

Source Note: The provisions of this §175.52 adopted to be effective January 8, 2002, 27 TexReg 286; amended to be effective April 20, 2003, 28 TexReg 3068

§175.53: Eligibility and Description of Land

(a) The board shall only make, or purchase, loans under this subchapter that are secured by tracts of land that meet all the requirements of §175.3, relating to Land Selection, of this chapter.

(b) For every loan made under this subchapter, the board must be furnished a survey and legal description for its review that satisfies all the requirements set forth in §175.4, relating to Land Description, of this chapter.

(c) For every loan made under this subchapter, the board must be furnished an appraisal that conforms to the requirements of §175.5, relating to Appraisal of Land, of this chapter.

(d) Notwithstanding the provisions of subsections (b) and (c) to the contrary, the board may, by resolution, establish requirements and specifications for surveys and appraisals that conform to the prudent lending practices prevalent in the mortgage lending industry.

Comments

Source Note: The provisions of this §175.53 adopted to be effective January 8, 2002, 27 TexReg 286

§175.54: Protection of Security Interests

(a) An approved loan must be secured by a mortgage, deed of trust, or other lien on the land prior to any disbursement of funds. All paperwork associated with the note and lien shall be deposited for safekeeping with the board, or as the board may direct.

(b) The security for the board's loan will be provided by:

(1) A first lien mortgage with the board as mortgagee, or the board and a participating lending institution joining as mortgagees, each receiving the payment as provided by its note.

(2) Hazard insurance on any improvements securing the loan. The policy must name the board loss payee in at least the amount of the board's loan.

(c) The board shall adopt credit, underwriting, and appraisal standards that protect the best interest of the program and limit the exposure of the fund to any losses.

Comments

Source Note: The provisions of this §175.54 adopted to be effective January 8, 2002, 27 TexReg 286; amended to be effective March 18, 2008, 33 TexReg 2319

§175.55: Loan Approval

(a) After reviewing the appraisal, and any other relevant information, the board shall notify the prospective borrower whether or not it approves the loan application. If the board disapproves a loan application, it shall notify the prospective borrower, in writing, of the reason for the disapproval.

(b) The board may approve a loan for a lesser amount than was requested by the prospective borrower. In that event, the prospective borrower shall do one of the following:

(1) negotiate an amended purchase price that conforms to the approved loan amount;

(2) increase the down payment to include the difference between the purchase price and the approved loan amount; or

(3) cancel the loan application.

(c) The board reserves the right to refuse to approve any loan application when it deems it protects the best interests of the program to do so.

(d) The board may, by resolution, establish general exceptions to the provisions of §175.6(g), relating to Commitment by the Board, of this chapter pertaining to contingent transactions. These exceptions shall be limited to those transactions described in Natural Resources Code, Chapter 161, Subchapter K, relating to Land Loans.

Comments

Source Note: The provisions of this §175.55 adopted to be effective January 8, 2002, 27 TexReg 286; amended to be effective November 23, 2003, 28 TexReg 10254

§175.56: Fees, Loan Amount, Interest Rate, and Down Payment

(a) In addition to the fees described in §175.17, relating to Fees and Deposits, of this chapter, the board shall collect a fee for the preparation, review, or approval of any document relating to a loan made under this subchapter, including but not limited to the following:

(1) notes;

(2) deeds of trust;

(3) subordination agreements;

(4) transfers and/or assignments of liens; or

(5) release of liens.

(b) No fee may be charged in connection with a loan made under this subchapter to a borrower by a third party that has not been approved by the board. Fees and expenses approved by the board may be made a part of the borrower's loan installment payments.

(c) The board will specify the terms and conditions of the loan for each transaction.

(d) Each loan shall bear a rate of interest designated by the board.

(e) Each loan shall not exceed 30 years in duration.

(f) The chairman, in compliance with §175.6 and §175.55 of this chapter, shall set the amount of the down payment required of borrowers. This down payment shall be paid to the closing agent at or before closing.

Comments

Source Note: The provisions of this §175.56 adopted to be effective January 8, 2002, 27 TexReg 286; amended to be effective March 18, 2008, 33 TexReg 2319

§175.57: Title Insurance and Closing Requirements

(a) The board may designate an attorney or title company in the county where the land is located to serve as a closing agent. The board shall furnish written instructions to the closing agent describing all conditions that must be satisfied before loan funds are released to the seller.

(b) The board, by resolutions, shall provide for the selection of persons who shall be authorized to act as a trustee for any mortgage loan made or purchased by the board. The resolutions shall either name specific individuals, or describe classes of individuals, who may act as trustees. The resolutions shall explicitly describe the powers that may be exercised by persons authorized to act as trustees.

(c) The borrower must personally sign the loan documents.

(d) The board shall be provided a mortgagee's title insurance policy and the borrower must be furnished an owner's title insurance policy in which item #2 of Schedule B has been amended to read only "shortages in area."

(e) Notwithstanding any other provision of this chapter to the contrary, all loans made under this subchapter shall be secured by first, or co-first, liens.

(f) No fees or expenses in connection with closing a transaction may be charged to the board without its prior written consent. The board may require that a closing agent furnish the board an insured closing letter from its underwriter before the board shall release funds for a transaction.

Comments

Source Note: The provisions of this §175.57 adopted to be effective January 8, 2002, 27 TexReg 286

§175.58: Removal of Material Assets, Releases, and Payment in Full

(a) The borrower is liable to the board for any decrease in value of the land due to any sale or removal of timber, rock, gravel, sand, chemicals, or other material assets, the loss of which tends to lower the value of the land.

(b) If a borrower wishes to obtain a partial release of lien to clear title to a portion of the land, the borrower shall submit a request in writing to the board. The procedures for granting a partial release are identical to those for obtaining a severance as provided in §175.12, relating to Severances, of this chapter, except that the board will issue a partial release of lien, instead of a deed, for a portion of the tract.

(c) When a loan is paid in full, the board will execute a release of lien in favor of the borrower identified in the records of the board.

Comments

Source Note: The provisions of this §175.58 adopted to be effective January 8, 2002, 27 TexReg 286; amended to be effective March 18, 2008, 33 TexReg 2319

§175.59: Easements and Mineral Leases

A borrower may grant easements or rights of way, or execute mineral leases over or covering the land being purchased with a loan from the board. Borrower is liable to the board for any decrease in value of the land due to any grant of easement or lease of minerals by the borrower.

Comments

Source Note: The provisions of this §175.59 adopted to be effective January 8, 2002, 27 TexReg 286; amended to be effective March 18, 2008, 33 TexReg 2319

§175.60: Purchasing Loans from Lending Institutions

(a) Notwithstanding any provisions of this chapter to the contrary, the board may, by resolution, provide for the purchase of notes, mortgages, deeds of trust, or other liens from lending institutions. In any such resolutions, the board shall, to the maximum extent possible, establish procedures and requirements that are consistent with the prudent lending practices prevalent in the mortgage lending industry.

(b) The board, may by resolution, establish a schedule of fees, charges, and interest rates that may be charged by a lending institution in connection with a loan that will be sold to the board.

Comments

Source Note: The provisions of this §175.60 adopted to be effective January 8, 2002, 27 TexReg 286

§175.61: Delinquencies, Acceleration and Foreclosures

(a) The chairman is authorized to enter into any modification of the debtor's obligation if it is in the best interest of the program.

(b) The terms of each note and deed for trust or any other lien document shall determine acceleration and foreclosure requirements and procedures, unless modified under section (a) of this section.

(c) The chairman must approve the initiation of all foreclosure proceedings. All foreclosures shall be conducted in strict compliance with applicable federal and state laws and the note and the deed of trust or other lien document, or any modification thereof.

Comments

Source Note: The provisions of this §175.61 adopted to be effective April 20, 2003, 28 TexReg 3068

§175.62: Trustee's Sale

(a) The chairman may bid for the land at any trustee's sale for any amount that the chairman deems to be in the best interest of the program. All land purchased by the Board at a foreclosure sale shall be resold by private sale according to the practices prevalent in the mortgage industry, or, in the same manner as forfeited land under §175.18 of this title.

(b) The chairman may collect any deficiencies as allowed by law.

(c) "Trustee's sale" means any foreclosure sale under this subchapter.

Comments

Source Note: The provisions of this §175.62 adopted to be effective April 20, 2003, 28 TexReg 3068; amended to be effective March 18, 2008, 33 TexReg 2319

Subchapter C

§175.100: Applicability

(a) This subchapter applies to internal and external disputes before the Texas Veterans Land Board (VLB), including those referred by the State Office of Administrative Hearings (SOAH), which is subject to the Administrative Procedures Act (APA), Chapter 2001, Texas Government Code.

(b) Sections 175.100 - 175.111 of this subchapter supplement the procedures required by the APA, Chapter 2001, Texas Government Code.

(c) In accordance with Chapter 2009 of the Texas Government Code and it is the VLB's policy that disputes with the VLB be resolved as fairly and expeditiously as possible. To encourage this policy, the VLB has adopted the use of Alternative Dispute Resolution (ADR).

(d) All ADR procedures shall be consistent with Chapters 2001 and 2009 of the Texas Government Code and Chapter 154 of the Civil Practice and Remedies Code. Chapter 2009 of the Texas Government Code is referred to as the Governmental Dispute Resolution Act or "GDRA".

(e) ADR procedures developed and used by the VLB do not limit other dispute resolution procedures available for the VLB.

(f) Consistent with this ADR policy, the VLB shall endeavor to educate its staff and persons who are subject to the VLB's jurisdiction concerning the availability of ADR to resolve disputes.

(g) The use of ADR may not be applied in a manner that denies a person a right granted under other state or federal law including a right to an administrative or judicial hearing that is allowed or mandated by the VLB or by laws of more general application.

(h) Any resolution reached as a result of the ADR procedure should be achieved through the voluntary agreement of the parties.

Comments

Source Note: The provisions of this §175.100 adopted to be effective April 20, 2009, 34 TexReg 2543

§175.101: Definitions

The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Alternative Dispute Resolution (ADR)--A procedure or combination of procedures that uses an impartial third party to assist individuals in voluntarily resolving disputes, including procedures described in §§154.023 - 154.027, Civil Practice and Remedies Code. The GDRA does not grant the GLO authority to engage in binding arbitration.

(2) Board (VLB)--The Veterans Land Board of the State of Texas.

(3) Commissioner--The Commissioner and also chairman of the Veterans Land Board.

(4) Contested case--Shall have the same meaning as such term is defined in the Administrative Procedure Act (Texas Government Code, Chapter 2001).

(5) Executive Secretary--The executive secretary of the board.

(6) GDRA--The Governmental Dispute Resolution Act, Texas Government Code, Chapter 2009.

(7) Impartial Third Party (ITP)--A person who meets the qualifications and conditions of Texas Government Code §2009.053, GDRA.

(8) Party--Shall have the same meaning as such term is defined in the Administrative Procedure Act (Texas Government Code, Chapter 2001).

(9) Person--Shall have the same meaning as such term is defined in the Administrative Procedure Act (Texas Government Code, Chapter 2001).

(10) Rule--Shall have the same meaning as such term is defined in the Administrative Procedure Act (Texas Government Code, Chapter 2001).

(11) State Agency--Shall have the same meaning as such term is defined in the Administrative Procedure Act (Texas Government Code, Chapter 2001).

Comments

Source Note: The provisions of this §175.101 adopted to be effective April 20, 2009, 34 TexReg 2543

§175.102: Referral of Pending Disputes for Adr

The Commissioner, the ADR Coordinator, a Texas veteran or an assignee of VLB land may seek to resolve an internal or external dispute through any ADR procedure. Such procedures may include, but are not limited to, those applied to resolve matters pending in the state's district courts.

Comments

Source Note: The provisions of this §175.102 adopted to be effective April 20, 2009, 34 TexReg 2543

§175.103: Required Training for Adr Coordinator and Impartial Third Party

Eligibility for designation as an ADR Coordinator or appointment as an ITP depends upon the following qualifications being met:

(1) completion of a minimum of 40 classroom hours of training in dispute resolution techniques in a course conducted by an alternative dispute resolution system or other dispute resolution approved by the VLB; and

(2) in appropriate circumstances the VLB may waive the training required in this section if a person has professional training or experience in dispute resolution processes related to a particular matter.

Comments

Source Note: The provisions of this §175.103 adopted to be effective April 20, 2009, 34 TexReg 2543

§175.104: Appointment of Adr Coordinator

(a) The Commissioner shall appoint an ADR Coordinator as soon as practicable following:

(1) initial adoption of this subchapter; or

(2) an ADR Coordinator's vacation of this office.

(b) The ADR Coordinator shall, as soon as practicable after appointment, complete the minimum training standards set forth in §154.052 of the GDRA.

Comments

Source Note: The provisions of this §175.104 adopted to be effective April 20, 2009, 34 TexReg 2543

§175.105: Responsibilities of Adr Coordinator

The ADR Coordinator shall have the following responsibilities:

(1) Establish a method of choosing ITPs who possess the minimum qualifications described in §154.052 of the GDRA;

(2) Establish a pool of ITPs to resolve contested matters through ADR procedures;

(3) Coordinate the implementation of the ADR policies and procedures;

(4) Provide information about available ADR processes to agency employees, and to both potential and current users of the ADR program;

(5) Serve as a resource for any training and education needed to implement procedures and processes for the ADR program;

(6) Establish a system and collect data concerning the effectiveness of the ADR program in order to evaluate the ADR program and the ITPs that the VLB has used; and

(7) Maintain necessary agency records while maintaining the confidentiality of participants.

Comments

Source Note: The provisions of this §175.105 adopted to be effective April 20, 2009, 34 TexReg 2543

§175.106: Selection and Payment of Impartial Third Parties

(a) For each matter referred for ADR procedures, the ADR Coordinator shall assign an ITP selected by the parties from the GLO's list of potential ITPs unless the parties agree upon the use of a private ITP.

(b) A private ITP may be hired for commission of ADR procedures provided that:

(1) the parties unanimously agree to the selection and use of a private ITP; and

(2) the private ITP agrees to be subject to the direction of the GLO's ADR Coordinator and to all time limits imposed by the Commissioner, the ADR Coordinator, the judge, or by statute or agency rule.

(c) If a private ITP is used, the costs for the services of the ITP shall be apportioned pro rata among the parties, unless otherwise agreed upon by the parties, and shall be paid directly to the ITP.

(d) If the parties select a GLO ITP for ADR procedures, the costs for the services of the ITP shall be apportioned pro rata among the parties, unless otherwise agreed upon by the parties, and shall be paid directly to the ITP.

Comments

Source Note: The provisions of this §175.106 adopted to be effective April 20, 2009, 34 TexReg 2543

§175.107: Responsibilities of Impartial Third Parties

(a) The ITP shall complete the minimum training standards set forth in §154.052 of the GDRA, prior to starting any ADR procedure for the VLB through programs approved by the ADR Coordinator, unless the required training is waived by the ADR Coordinator.

(b) The ITP shall have the following responsibilities:

(1) to facilitate the ADR procedure; and

(2) to encourage and assist the parties in reaching a voluntary settlement of their dispute.

Comments

Source Note: The provisions of this §175.107 adopted to be effective April 20, 2009, 34 TexReg 2543

§175.108: Commencement of the Adr Process and Adr Procedures

(a) To initiate the ADR process, a party to a contested matter must submit a written ADR proposal form to the ADR Coordinator. The ADR proposal form can be found on the VLB's website at www.glo.state.tx.us/vlb/. Upon completion of the form, it should be submitted to the ADR Coordinator at the website address or fax number listed with copies sent to any other parties to the dispute.

(b) ADR procedures under this subchapter may begin, at the discretion of the ADR Coordinator, anytime after a party to a contested matter submits a written ADR proposal requesting the use of ADR procedures to resolve a dispute with the VLB.

(c) The ADR Coordinator shall provide the Commissioner a copy of the ADR proposal for review, discuss it with the interested parties, as appropriate, and assess whether ADR would assist in fairly and expeditiously resolving the dispute.

(d) If the parties, including the Commissioner and the ADR Coordinator, cannot agree on whether the ADR procedure should be used or on the particulars of the ADR procedure, the ADR Coordinator will notify the affected parties of that outcome and the proposal will be dismissed without opportunity for resubmission to the ADR Coordinator in the future.

(e) The ADR Coordinator will promptly notify all affected parties within ten (10) business days of receiving the ADR proposal, or as soon as reasonably possible if a pertinent or impending deadline is indicated in the ADR proposal, whether or not the dispute will be referred for the ADR process. If the ADR Coordinator determines not to refer the dispute to ADR, the notice shall include the reasons that the dispute was not referred. If the ADR Coordinator determines to refer the dispute to ADR, the notice shall include the starting date for the selected ADR.

Comments

Source Note: The provisions of this §175.108 adopted to be effective April 20, 2009, 34 TexReg 2543

§175.109: Partial Settlement Agreements through Adr

When ADR procedures do not result in the full settlement of a contested matter, the parties, in conjunction with the ITP, shall limit the contested issues through the entry of written stipulations. Such stipulations shall be forwarded or formally presented to the judge assigned to conduct the hearing on the merits and shall be included in the hearing record.

Comments

Source Note: The provisions of this §175.109 adopted to be effective April 20, 2009, 34 TexReg 2543

§175.110: Complete Settlement Agreements through Adr

(a) All parties participating in an ADR procedure are expected to make a good faith effort to reach agreement.

(b) All parties participating must have the authority to reach an agreement to make a final recommendation to resolve the dispute.

(c) The Commissioner will abide by an agreed upon resolution to the dispute and either approve the agreement or offer the recommendation to the VLB, if Board authorization is needed.

(d) The decision to reach an agreement by all parties is voluntary.

(e) Each party to a resolution resulting from ADR must execute a written agreement reflecting the resolution. The agreement is enforceable in the same manner as any other written agreement of the same nature with the State.

(f) The Commissioner must approve a written agreement, to which the VLB Executive Secretary or the VLB Board members are signatories resulting from the ADR procedure and it is subject to the Public Information Act, Chapter 552, Texas Government Code.

Comments

Source Note: The provisions of this §175.110 adopted to be effective April 20, 2009, 34 TexReg 2543

§175.111: Confidentiality of Communications in Adr Procedures

(a) Except as provided in subsections (c) and (d) of this section, communications, records, conduct and demeanor of an ITP and parties relating to the subject matter made by a party in an ADR procedure, whether before or after the initiation of formal proceedings, is confidential, is not subject to disclosure, and may not be used as evidence in any further proceeding.

(b) Any notes or record made of an ADR procedure are confidential, and parties, including the ITP, may not be required to testify in any proceedings relating to or arising out of the matter in dispute or be subject to processes requiring disclosure of confidential information or data relating to or arising out of the matter in dispute.

(c) An oral communication or written material used in or made a part of an ADR procedure is admissible or discoverable only if it is admissible or discoverable independent of the procedure.

(d) If this section conflicts with other legal requirements for disclosure of communications or materials, the issue of confidentiality may be presented to the judge to determine, in camera, whether the facts, circumstances, and context of the communications or materials sought to be disclosed warrant a protective order or whether the communications or materials are subject to disclosure.

(e) The ITP may not, directly or indirectly, communicate with anyone on any aspect of ADR negotiations made confidential by this section unless all the parties consent to the disclosure, or upon issuance of an opinion from the Office of the Attorney General that the evidence is subject to the Public Information Act.

Comments

Source Note: The provisions of this §175.111 adopted to be effective April 20, 2009, 34 TexReg 2543

Chapter 176

§176.1: Definitions

The following words and terms when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise:

(1) Board--The Veterans Land Board of the State of Texas.

(2) Bona fide resident--An individual living within the State of Texas, with the intent to remain in Texas.

(3) Chairman--The commissioner of the General Land Office who is also chairman of the Veterans Land Board.

(4) Covenants--The bond covenants undertaken by the Veterans Land Board in association with the sale of bonds.

(5) Fund--The State Veterans Home Fund, which is comprised of the proceeds from the sale of bonds issued for the purpose of acquisition, construction, operation and maintenance of a state veterans home or homes, revenues derived from the operation of one or more state veterans homes, and the proceeds from other sources which are used for the acquisition, construction, operation and maintenance of a state veterans home or homes.

(6) Operator--The entity under contract with the Board to manage a State Veterans Home or Homes.

(7) Spouse --Means a person of the opposite sex who is a wife or husband.

(8) Surviving spouse--A person of the opposite sex who was the spouse of a veteran at the time of the veteran's death, and who lived with the veteran continuously from the date of marriage to the date of the veteran's death (except where there was a separation which was due to the misconduct of, or procured by, the veteran without fault of the spouse) and who has not remarried or (in cases not involving remarriage) has not since the death of the veteran, and after September 19, 1962, lived with another person and held himself or herself out openly to the public to be the spouse of such other person.

(9) State Veterans Home (SVH)--Retirement home, retirement village, home for the aging, or other facility that furnishes shelter, food, medical attention, nursing services, medical services, social activities, or other personal services or attention to veterans.

(10) DADS--Texas Department of Aging and Disability Services.

(11) USDVA--The United States Department of Veterans Affairs or any successor thereto.

Comments

Source Note: The provisions of this §176.1 adopted to be effective November 24, 1997, 22 TexReg 11092; amended to be effective April 12, 2001, 26 TexReg 2750; amended to be effective March 19, 2008, 33 TexReg 2320

§176.2: Authority

Texas Natural Resources Code, §164.005 authorizes the Board, in conjunction with other state or federal agencies, to acquire by purchase, gift, devise, lease or a combination thereof, construct, operate, enlarge, improve, furnish, or equip one or more state veterans homes. Funding for the construction, acquisition, operation and maintenance of a state veterans home or homes shall come in part from the sale of revenue bonds. The Board is authorized by Texas Natural Resources Code, §164.004 to adopt rules for the construction, acquisition, ownership, operation, maintenance, enlargement, improvement, or furnishing or equipping of veterans homes.

Comments

Source Note: The provisions of this §176.2 adopted to be effective November 24, 1997, 22 TexReg 11092.

§176.3: Sale of Bonds

The procedure for the issuance and sale of bonds will be set by resolution of the Board. The chairman and the executive secretary of the Board are authorized to work with the bond counsel and financial advisor selected by the Board in ascertaining the elements of security permissible under the law, maturities, option provisions, paying agency provisions, and all other matters pertaining to the bonds which affect the bonds' acceptability in the market, to the end that such elements may be incorporated into the bonds and resolution. The chairman, executive secretary of the Board, and bond counsel will prepare a draft of the official notice of sale of bonds. After the notice of sale is approved, it will be published, either in full or abbreviated form, in the manner prescribed by law. The Board has the right to reject any and all bids received.

Comments

Source Note: The provisions of this §176.3 adopted to be effective November 24, 1997, 22 TexReg 11092.

§176.4: Administration of the State Veterans Home Fund

(a) The proceeds from each bond sale shall be part of the State Veterans Home Fund and shall first be used for the following purposes:

(1) to satisfy the reserve requirements of the particular covenants associated with the sale; and

(2) to set up the initial debt repayment associated with each sale.

(b) After the requirements of subsection (a) of this section have been satisfied, the Board shall monitor the cash flow requirements of the program and shall administer the fund to:

(1) meet all bond repayment requirements; and

(2) make money available as needed to construct, equip and/or maintain state veterans homes as provided by the Natural Resources Code, Chapter 164.00 et seq, and this chapter.

(c) The Board may use money in the fund attributable to bonds issued and sold to pay:

(1) expenses incidental and necessary to the sale and delivery of the bonds, including, but not limited to, the following:

(A) fees for legal and financial advice;

(B) the expense of publishing notice of sale;

(C) the expense of printing the bonds;

(D) the expense of delivering the bonds, including the costs of travel, lodging, and meals of officers or employees of the Board, the state comptroller, and the attorney general, that are necessary in the opinion of the Board to effectuate the delivery of bonds;

(E) remuneration to any agent employed by the Board to pay the principal and interest on the bonds; and

(F) any other expenses deemed by the Board to be reasonable and necessary;

(2) capital expenditures by the operator which involve items not described in the Board's contract with the operator and which are not part of the operator's standard services. These additional expenses must not be in conflict with any existing covenants or any Board resolutions affecting the sale of bonds or administration of the fund. All such additional expenditures must also be authorized and requested by a resolution of the Board.

(d) Any money in the fund not immediately needed for the purposes described in subsections (b) and (c) of this section nor immediately committed to paying principal of and interest on the bonds, nor the payment of expenses, may be invested in bonds or obligations as determined by the Board.

(e) The Board may, by resolution, make provisions for the administration of the Fund.

Comments

Source Note: The provisions of this §176.4 adopted to be effective November 24, 1997, 22 TexReg 11092.

§176.5: Appointment of Operator

(a) The Board will appoint an operator who will be responsible for maintenance and operation of a veterans home or homes built under the provisions of this chapter. An operator may be an individual, partnership, corporation or other business entity, as well as a state or federal agency.

(b) The Board will set qualifications, requirements, terms and conditions, and all contract specifications to be met by the operator. No appointment of an operator shall be effective until a contract has been awarded and duly executed by the Board and the operator. The functions of the operator will be provided for in their contract. These functions shall include, but are not limited to, the following:

(1) management and operation of the Texas state veterans home(s) in compliance with all applicable federal, state and local laws, rules, regulations, standards and policies.

(2) to develop, implement, and maintain policies and procedures for all aspects of the management and operation of the state veterans home(s). All such policies and procedures shall be reviewed and approved by the Board. All such policies and procedures shall remain the property of the Board in the event of cancellation or termination of the contract for any reason.

(3) to secure and retain all licenses and certifications required to operate the state veterans home as a skilled nursing care facility with an Alzheimer's/dementia care unit. Ensure that all personnel employed at the state veterans home(s) are properly licensed or certified for the work they are performing. Secure and retain such other licenses and certifications as may be required by the Veterans Land Board.

(4) be fully responsible for the management and supervision of the daily operations of the home, including the development, implementation and operation of all necessary administrative systems, including, but not limited to, accounting, personnel, reporting, administrative records, medical records, and purchasing.

(5) providing annual operating statements and budget estimates to the Board.

(6) making available at reasonable times and for reasonable periods books, records, and supporting documents kept current by the operator pertaining to the state veterans home for purposes of inspecting, monitoring, auditing, or evaluating by the Board and its representatives, and representatives of TDHS, USDVA, the state auditor, and the comptroller of public accounts.

(7) to notify the Veterans Land Board, immediately following notifications required by law, of any abuse or suspected abuse of a resident, any unexpected or unexplained injury or death of a resident, or any immediate threat to the health or safety of a resident.

(c) The contract between the operator and the Board shall contain guidelines and standards for assessing the performance of the operator. The contract will also describe the circumstances and conditions under which the Board may dismiss the operator. The operator's performance may be subject to an annual review by the Board's staff.

Comments

Source Note: The provisions of this §176.5 adopted to be effective November 24, 1997, 22 TexReg 11092.

§176.6: Operator Qualifications

(a) An operator may be a person, partnership, corporation, or other business or governmental entity.

(b) The operator must be duly organized, validly existing, and in good standing under the laws governing its creation and existence, and must be duly authorized and qualified to transact all business contemplated by these rules and any contract with the Board.

(c) Must be in compliance with the nondiscrimination provision of the Civil Rights Act of 1964 and the regulations pursuant to such act, and the Americans with Disabilities Act (ADA).

(d) Shall satisfy any other qualification requirements which the Board may adopt by resolution from time to time.

Comments

Source Note: The provisions of this §176.6 adopted to be effective November 24, 1997, 22 TexReg 11092.

§176.7: Admissions Requirements

(a) The purpose of this section is to set forth the requirements for admittance of applicants to a SVH. USDVA requires that the program only admit to a SVH those applicants who satisfy all medical, financial, and military service requirements set forth in USDVA regulations, as they are amended from time-to-time.

(b) For purposes of this section, the term "veteran" means a person who meets the requirement of veteran as defined in §161.001(a)(7) Texas Natural Resources Code.

(c) To be eligible for admission to a SVH, an applicant must satisfy one of the following:

(1) be a veteran who:

(A) satisfies the USDVA guidelines and regulations relating to the need for nursing home care; and

(B) is in one of the following categories:

(i) veterans with service-connected disabilities;

(ii) veterans who are former prisoners of war;

(iii) veterans who were discharged or released from active military service for a disability incurred or aggravated in the line of duty;

(iv) veterans who receive disability compensation under 38 U.S.C.A. §1151;

(v) veterans whose entitlement to disability compensation is suspended because of the receipt of retired pay;

(vi) veterans whose entitlement to disability compensation is suspended pursuant to 38 U.S.C.A. §1151, but only to the extent that such veterans' continuing eligibility for nursing home care is provided for in the judgment or settlement described in 38 U.S.C.A. §1151;

(vii) veterans who USDVA determines are unable to defray the expenses of necessary care as specified under 38 U.S.C.A. §1722(a);

(viii) veterans of the Mexican border period or of World War I;

(ix) veterans solely seeking care for a disorder associated with exposure to a toxic substance or radiation or for a disorder associated with service in the Southwest Asia theater of operations during the Persian Gulf War, as provided in 38 U.S.C.A. §1710(e); or

(x) veterans who agree to pay to the United States the applicable co-payment determined under 38 U.S.C.A. §1710(f) and §1710(g).

(2) is a spouse, or surviving spouse, of a veteran if the spouse is at least eighteen (18) years of age and has been a bona fide resident of Texas continuously for at least one (1) year immediately before applying for admission; or

(3) is a parent, all of whose children died while serving in the armed forces of the United States, and who has resided in Texas continuously for at least one year immediately before applying for admission.

(4) is a veteran residing out of state who:

(A) resides currently at an out-of-state nursing home;

(B) desires transfer to a SVH;

(C) is otherwise an eligible veteran under this section but for the fact that they reside out-of-state;

(D) has not lived in Texas continuously for at least one year immediately before applying for admission to a SVH; and can be accommodated with a space in the desired SVH.

(d) The Board may establish, by resolution from time-to-time, procedures for processing applications for admission to each SVH. Based on the availability of space, the Board may also establish a priority system for admitting applicants according to one or more factors, including, but not limited to:

(1) the priority of a veteran over the spouse or parent of a veteran;

(2) the necessity to comply with USDVA regulations governing a SVH, including, but not limited to, the requirement that 75 percent (75%) of a SVH's residents be veterans. However, if the facility was constructed or renovated solely with State funds, only 50 percent (50%) of the residents must be veterans;

(3) whether an applicant meets the eligibility criteria in 40 TAC, Part 5, Chapter 175, §175.2 relating to Loan Eligibility Requirements, and is thereby eligible for other Board benefits;

(4) the date upon which the application for admission was made;

(5) whether the applicant's spouse is also an applicant or a current resident of a SVH;

(6) a request to transfer a resident from one SVH to another to be nearer to family members;

(7) the level of medical treatment and care required by the applicant;

(8) the characteristics and extent of financial resources available to the applicant; and

(9) such other criteria as the Board may determine are in the best interest of the program.

Comments

Source Note: The provisions of this §176.7 adopted to be effective November 24, 1997, 22 TexReg 11092; amended to be effective May 18, 2000, 25 TexReg 4353; amended to be effective April 12, 2001, 26 TexReg 2750; amended to be effective August 4, 2005, 30 TexReg 4335; amended to be effective March 19, 2008, 33 TexReg 2320

§176.8: Qualifying Homes

(a) A state veterans home may be newly constructed or it may be located in an existing structure.

(b) Each state veterans home must meet all applicable federal, state and local laws and regulations, including, but not limited to the rules and regulations of the United States Department of Veterans Affairs, and the Texas Department of Human Services, whose rules and regulations are incorporated herein and made a part hereof, and the Americans with Disabilities Act.

(c) Each home shall be licensed as a nursing home, and may be licensed as a long term or acute care facility.

(d) The Board may, in its discretion, adopt other requirements as it deems appropriate.

Comments

Source Note: The provisions of this §176.8 adopted to be effective November 24, 1997, 22 TexReg 11092.

§176.9: Fees and Expenses

(a) All fees, expenses and charges to be paid by a resident of a state veterans home must be approved by the Board. The imposition and amount of any fee or charge shall be consistent with or lower than industry standards.

(b) Within a reasonable period of time, the Board shall either approve or disapprove all fees and expenses to be charged. The operator shall incorporate in its guidelines the maximum fees and expenses which may be charged.

Comments

Source Note: The provisions of this §176.9 adopted to be effective November 24, 1997, 22 TexReg 11092.

§176.10: Rights of Board

The Board is the final authority in determining the interpretation and application of these rules on a case by case basis.

Comments

Source Note: The provisions of this §176.10 adopted to be effective November 24, 1997, 22 TexReg 11092.

§176.11: Construction Requirements

The following procedures shall be applicable to bidding and awarding of contracts for the design and construction of the veterans homes provided for in this rule.

(1) The Board may request proposals from individuals, firms, partnerships, corporations or a joint venture, or other similar business arrangement, of such entities interested in the design, construction and operation and management of one or more of the state veterans homes provided for in this rule.

(2) The Board shall award the design, construction and operation and management of the veterans home(s) on the basis of the proposers demonstrated competence and qualifications to perform the requested job at fair and reasonable prices.

(3) The selected proposer must be a registered architect or registered professional engineer or the selected proposer must employ a registered architect or registered professional engineer that would be responsible for the design and construction of the state veterans home(s).

(4) The selected proposer will be required to supervise and coordinate all architects, engineers, subcontractors during the design and construction of the state veterans home(s).

(5) Each state veterans home must be a skilled nursing care facility, certified for dementia/Alzheimer's care, which meets the requirements for licensure by the State of Texas as a nursing care facility and the requirements for recognition by the USDVA as a state veterans home. The facility should be modular in nature, so as to allow for incremental changes in size and types of care with a minimum of redesign. The facility should also be designed to avoid an institutional atmosphere by creating a supportive, therapeutic, home-like environment. Additional requirements may be specified in the Request for Proposals.

(6) The Board may require the proposers to submit separate pricing proposals for the construction phase and the operations phase of the state veteran home(s). The Board may consider the pricing proposals together or individually.

(7) Each request for proposal approved by the Board shall contain detailed instructions of the procedure the proposer must follow when developing the pricing proposal for the construction phase.

(8) Pricing proposals for the construction phase shall be evaluated based on the dollar amount of the proposal, the proposers financial resources, surety and insurance experience, construction experience, completion ability, personnel available, equipment available, work load, and client relationship. The contract will be awarded based on the proposal most advantageous to the Board after evaluation of all proposals.

(9) Once a contract is awarded the proposer shall provide all necessary insurance certificates and bonds. The selected proposer will then begin design of the state veterans home(s) and shall be paid in accordance with the terms of its contract with the Board.

(10) The Board may contract with an individual, firm, partnership or corporation to act as the Board's representative in all aspects of the proposal process, construction phase and operation phase of the state veterans home(s). The representative must be a registered architect or registered professional engineer or the representative must employ a registered architect or registered professional engineer that would be responsible for the functions of the representative. The functions of the representative include, but are not limited to, the following:

(A) Providing expertise and professional advice to the Board regarding the proposals, proposer selection process, design and construction and operation and management of the state veterans homes.

(B) Monitoring the design and construction of the state veterans home(s) to insure that the construction quality and standards agreed to by the Board are implemented by the selected proposer.

(C) Completing periodic reports to the Veterans Land Board on the progress of the design and construction of the state veterans home(s).

(D) Fulfilling any other requirements or services outlined with its contract with the Board.

Comments

Source Note: The provisions of this §176.11 adopted to be effective February 15, 1998, 23 TexReg 1117.

Chapter 177

§177.1: Definitions

The following words and terms when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Administrator--The entity appointed by the board to assist the board in administering the processing of loan applications under these sections.

(2) Board--The Veterans Land Board of the State of Texas.

(3) Bona fide resident--An individual actually living within the State of Texas with the intention to so remain.

(4) Chairman--The commissioner of the General Land Office who is also chairman of the Veterans Land Board.

(5) Covenants--The bond covenants undertaken by the Veterans Land Board in association with the sale of bonds.

(6) FHA--The Federal Housing Administration of the Department of Housing and Urban Development of the United States of America or any successor thereto.

(7) FHLMC--Federal Home Loan Mortgage Corporation or any successor thereto.

(8) FNMA--Federal National Mortgage Association or any successor thereto.

(9) FSLIC--The Federal Savings and Loan Insurance Corporation.

(10) Fund--The veterans housing assistance fund.

(11) Missing/Missing in Action--To have an official designation of "missing status" as provided by Title 37, Chapter 10 of the United States Code. The term "missing status" means the status of members of a uniformed service who are officially carried or determined to be absent in a status of missing; missing in action; interned in a foreign country; captured, beleaguered, or besieged by a hostile force; or detained in a foreign country against their will.

(12) Participating lending institution--Any bank, trust company, savings bank, national banking association, savings and loan association, building and loan association, mortgage banker, mortgage company, credit union, life insurance company, or other financial institution that customarily provides services or aids in the financing of mortgages on single-family residential housing, including a holding company for any of the foregoing, which has sought and received approval to participate in the Veterans Housing Assistance Program.

(13) Program--The Veterans Housing Assistance Program.

(14) VA--The United States Department of Veterans Affairs or any successor thereto.

(15) VA guaranty--A guaranty of a mortgage loan by the VA under the Serviceman's Readjustment Act of 1944 as amended.

Comments

Source Note: The provisions of this §177.1 adopted to be effective May 4, 1984, 9 TexReg 2263; amended to be effective October 22, 2000, 25 TexReg 10375

§177.2: Sale of Bonds

Procedure for issuance and sale of bonds will be set by resolution of the board. The chairman and the executive secretary of the board are authorized to work with the bond counsel and financial advisor selected by the board in ascertaining the elements of security permissible under the law, maturities, option provisions, paying agency provisions, and all other matters pertaining to the bonds which affect the bonds' acceptability in the market, to the end that such elements may be incorporated into the bonds and resolution. The chairman, executive secretary of the board, and bond counsel will prepare a draft of the official notice of sale of bonds for the approval of the attorney general of Texas and subsequently by the board. After the notice of sale is approved, it will be published, either in full or abbreviated form, in the manner prescribed by law. The board has the right to reject any and all bids received.

Comments

Source Note: The provisions of this §177.2 adopted to be effective May 4, 1984, 9 TexReg 2263.

§177.3: Administration of Fund

(a) The veterans housing assistance fund is defined by Natural Resources Code, §162.002, and Subchapter C (§§162.031-162.050).

(b) The proceeds from each bond sale shall be part of the fund and shall first be used for the following purposes:

(1) to satisfy the reserve requirements of the particular covenants associated with the sale;

(2) to set up the initial debt repayment associated with each sale.

(c) After the requirements of subsection (b) of this section have been satisfied, the board, with the assistance of the administrator, shall monitor the cash flow requirements of the program and shall administer the fund to:

(1) meet all bond repayment requirements; and

(2) make money available as needed by the program to make or acquire home loans as provided by Natural Resources Code, Chapter 162, and this Chapter; and

(3) make money available as needed by the program to make home improvement loans as provided by § 177.8 of this title (relating to Qualifying Homes).

(d) Any money in the fund not immediately needed for the purposes described in subsections (b) and (c) of this section, nor immediately committed to paying principal of and interest on the bonds, nor the payment of expenses as provided in Natural Resources Code, Chapter 162, or this chapter, may be invested in bonds or obligations of the United States or in any other way not in conflict with the covenants or the Constitution and laws of the State of Texas until needed for these purposes.

(e) The board may use money in the fund attributable to bonds issued and sold to pay:

(1) expenses incidental and necessary to the sale and delivery of the bonds, including but not limited to the following:

(A) fees for legal and financial advice;

(B) the expense of publishing notice of sale of an installment of bonds;

(C) the expense of printing the bonds;

(D) the expense of delivering the bonds, including the costs of travel, lodging, and meals of officers or employees of the board, the state comptroller, the state treasurer, and the attorney general, that are necessary in the opinion of the board to effectuate the delivery of bonds;

(E) remuneration to any agent employed by the board to pay the principal and interest on the bonds; and

(F) any other expenses deemed by the board to be reasonable and necessary.

(2) expenses and fees of the administrator for any additional services requested by the board which are not described in the board's contract with the administrator as part of the administrator's standard services. These additional services must not be in conflict with any existing covenants or any board resolutions affecting the sale of bonds or administration of the fund. All such additional services must be authorized and requested by a resolution of the board.

(f) Money in the fund that is not spent for the purposes provided in Natural Resources Code, Chapter 162, or this chapter, shall remain in the fund until there is sufficient money to retire fully bonds issued and sold by the board.

(g) The board may by resolution make provisions for the administration of the fund. In the event of any conflict between these rules and the provisions of a resolution of the board pertaining to the administration of the fund, the provisions of the board's resolution shall control.

Comments

Source Note: The provisions of this § 177.3 adopted to be effective May 4, 1984, 9 TexReg 2263; amended to be effective August 28, 1985, 10 TexReg 3090.

§177.4: Appointment of Administrator

(a) The board will set qualifications and requirements, terms, and conditions, and all contract specifications to be met by the administrator. No appointment of an administrator shall be effective until a contract has been awarded by sealed bid and duly executed by the board and the administrator. The functions of the administrator may include, but are not limited to, the following:

(1) preparing guidelines for participation in the program by participating lending institutions and distributing these guidelines to all interested parties;

(2) preparing loan application forms and information brochures for use by potential veteran loan applicants;

(3) reviewing applications by lending institutions to participate in the program and recommending approval or disapproval to the board;

(4) maintaining a list of all approved participating lending institutions and updating this list by the first day of January, April, July, and October of each year and making this list available upon request to any interested party for the actual cost of reproducing and mailing said list;

(5) reviewing title and loan papers for each transaction under these rules and recommending approval or disapproval of them to the board;

(6) assuring compliance by participating lending institutions with qualification, eligibility, and loan servicing guidelines and reviewing at least annually the performance of each approved participating lending institution and recommending whether the board's approval should be continued or revoked;

(7) overseeing fees and charges made by participating lending institutions;

(8) acting as clearinghouse for loan paperwork, including processing of loan payments by veterans;

(9) overseeing forfeiture, foreclosure, and collection procedures;

(10) preparing the provisions and terms of the contracts between the board and participating lending institutions;

(11) consulting with the appropriate state and federal authorities to obtain approval of the program by the VA, FHA, FNMA, and FHLMC;

(12) providing all data processing services required by the program; and

(13) making available at reasonable times and for reasonable periods books, records, and supporting document kept current by the administrator pertaining to the program for purposes of inspecting, monitoring, auditing, or evaluating by the board, its representatives, and representatives of the Office of the State Auditor.

(b) The contract between the administrator and the board shall contain guidelines and standards for assessing the performance of the administrator. The contract shall also described the circumstances and conditions under which the board may dismiss the administrator. The administrator's performance may be subject to an annual review by the board's staff.

Comments

Source Note: The provisions of this §177.4 adopted to be effective May 4, 1984, 9 TexReg 2263.

§177.5: Loan Eligibility Requirements

(a) The Board shall be the final authority in defining and interpreting all eligibility requirements, and whether an applicant has actually satisfied those requirements. The Board may by resolution prescribe the procedures and forms to be used by applicants.

(b) For purposes of this program a veteran is a person who satisfies the requirements of Title 40, Part 5, Chapter 175, §175.2(c)(1) of the Texas Administrative Code relating to Loan Eligibility Requirements, as amended from time-to-time. The unmarried surviving spouse of a veteran shall be eligible to participate in this program if he or she satisfies the requirements of Title 40, Part 5, Chapter 175, §175.2(c)(2) relating to Loan Eligibility Requirements, as amended from time-to-time.

(c) A veteran may be able to obtain more than one housing assistance loan under this chapter, provided that all previous Veterans Housing Assistance Program loans have been repaid in full and that only one home may be financed by a veteran at any time. However, for purposes of this chapter, an eligible veteran may obtain both a purchase money loan and a home improvement loan under the Veterans Housing Assistance Program. An eligible veteran may also receive a loan under the land program.

(d) If both a husband and wife are individually eligible to participate in the program, nothing herein shall be construed to prohibit them from applying for a loan to jointly purchase the same home. The Board may make a loan for the purchase of the same home by two veterans who are husband and wife, but only in the event that both spouses together satisfy the loan qualification requirements of the participating lending institution. The total amount of this loan shall not exceed the maximum amount allowable for a home mortgage loan through the United States Department of Veterans Affairs or any successor agency.

Comments

Source Note: The provisions of this §177.5 adopted to be effective May 4, 1984, 9 TexReg 2263; amended to be effective November 10, 1986, 11 TexReg 4487; amended to be effective June 11, 1990, 15 TexReg 2917; amended to be effective December 10, 1993, 18 TexReg 8797; amended to be effective February 3, 1995, 20 TexReg 355; amended to be effective August 24, 1999, 24 TexReg 6517; amended to be effective October 22, 2000, 25 TexReg 10375; amended to be effective April 12, 2001, 26 TexReg 2752; amended to be effective November 23, 2003, 28 TexReg 10254

§177.6: Application Procedures

(a) The administrator shall distribute to participating lenders all application materials required for the program by the board. Participating lending institutions may only charge fees that have been approved by the board. The board may establish by resolution any procedures for obtaining the board's approval of fees.

(b) The board shall establish by resolution all policies, procedures, and requirements for the submission and review of loan applications, including the certification of eligibility of the veteran.

(c) If the veteran has previously participated in the program, the veteran must have satisfactorily paid in full all prior program loans in order to be eligible to participate in the program again. If the veteran has an active Veterans Land Program loan at the time of application, it must be in good standing.

(d) The board may establish by resolution all other procedures and policies relating to the submission, review, processing, approval, and funding of program loans. In doing so, the board shall review the prudent lending practices prevalent in the residential mortgage lending industry and shall follow such practices to the maximum extent practical.

Comments

Source Note: The provisions of this §177.6 adopted to be effective May 4, 1984, 9 TexReg 2263; amended to be effective August 24, 1999, 24 TexReg 6517; amended to be effective October 22, 2000, 25 TexReg 10375

§177.7: Qualifying Lending Institutions

(a) Any entity wishing to apply to be a participating lending institution may obtain application information and forms from the administrator. The applicant shall submit the completed application and application fee to the administrator who shall review it and recommend approval or disapproval of the application to the board. The board shall consider the recommendation of the administrator and shall notify the applying lending institution of its decision. Approval of the application of a lending institution to participate shall not be withheld unreasonably.

(b) No application shall be approved unless the applicant:

(1) is duly organized, validly existing, and in good standing under the laws governing its creation and existence and is duly authorized and qualified to originate and service residential housing loans in the State of Texas and transact all business contemplated by Chapter 177 of this title and the Natural Resources Code, Chapter 162;

(2) is, at the time of the origination of any conventional mortgage loan, an FNMA or FHLMC approved seller and servicer of conventional mortgages, or an institution, the deposits of which are insured by FDIC or FSLIC, and will continue to be so approved at all times thereafter, so long as the applicant shall continue to serve in the capacity contemplated by the program;

(3) is, at the time of origination of any mortgage loan which has FHA insurance, an FHA-approved mortgagee and an FNMA or FHLMC approved seller and servicer of FHA insured mortgages, and will continue to be so approved at all times thereafter, so long as the applicant shall continue to serve in the capacity contemplated by the program;

(4) is, at the time of origination of any mortgage loan which has a VA guaranty, an eligible lender for mortgages guaranteed by the VA and an FNMA or FHLMC approved seller and servicer of VA guaranteed mortgages, and will continue to be so approved at all times thereafter, so long as the applicant shall continue to serve in the capacity contemplated by the program;

(5) is in compliance with the nondiscrimination provisions of the Civil Rights Act of 1964 (78 Statutes 252) and the regulations pursuant to such Act;

(6) has a delinquency and foreclosure experience for the last three years which does not materially exceed the experience for similar institutions as determined by the administrator; and

(7) shall satisfy any other qualification requirements which the board may adopt by resolution from time to time.

(c) The board shall review the list of approved participating lending institutions maintained by the administrator no later than March 1 of each year and may request the administrator to make further recommendations concerning previously approved participating lending institutions. The board may, as part of its annual review or at any other time, revoke its approval of a participating lending institution but shall not do so unreasonably.

(d) Upon approval of a lending institution to participate in the program, the institution and the board shall execute a contract containing terms formulated by the administrator and approved by the board. The contract's terms shall reflect the prudent lending practices prevalent in the lending industry.

Comments

Source Note: The provisions of this §177.7 adopted to be effective May 4, 1984, 9 TexReg 2263.

§177.8: Qualifying Homes

(a) The home the veteran wishes to purchase must meet all requirements established by the participating lending institution to whom the veteran has made application.

(b) In addition to other qualification requirements, the home must be occupied by the veteran within 60 days of closing and must be maintained as the veteran's principal residence for three consecutive years from date of purchase, except as hereinafter provided. The administrator and the participating lending institution servicing the veteran's loan will verify that the three years residency requirement is satisfied and report any violation to the board. In the event of a violation, the board may increase the interest rate on its loan to a higher rate or may accelerate all principal and interest on its loan. The board may, in its discretion, adopt any other remedy it deems appropriate.

(c) The board's loan must be a new mortgage; no refinancing shall be permissible under the program. The home does not have to be of new construction.

(d) In addition to any requirements or specifications placed on the type and quality of home by the participating lending institution, the home must be on a permanent foundation that is part of the real estate. "HUD-code manufactured homes," as defined by Texas Civil Statutes, Article 5221f, §3, are eligible under the program if they meet FNMA or FHLMC guidelines; however, "mobile homes," as defined by Texas Civil Statutes, Article 5221f, §3, are not eligible. Any other type of home will be considered on a case by case basis by the administrator under guidelines approved by the board.

(e) The home in which a veteran actually resides may be eligible for a home improvement loan (as such loans are commonly defined in the real estate lending industry) if the home and the veteran meet the qualification requirements established by the board for a home improvement loan. The board will adopt guidelines setting forth the requirements for obtaining a home improvement loan through the program, whether FHA Title I or other. The guidelines will be provided to all participating lending institutions.

Comments

Source Note: The provisions of this §177.8 adopted to be effective May 4, 1984, 9 TexReg 2263; amended to be effective August 28, 1985, 10 TexReg 3090; amended to be effective November 29, 1991, 16 TexReg 6649.

§177.9: Fees, Expenses, and Interest

(a) The board must approve all fees and interest rates charged in connection with the program, by any party. These include, but are not limited to:

(1) All fees charged by any party to a veteran receiving a loan under this program must be approved by the board, including fees, expenses, and interest rates charged by the participating lending institution on its portion of the loan to the veteran. Fees and expenses approved by the board may be made a part of the veteran's loan installment payments.

(2) All fees and expenses charged to a participating lending institution under this program by the administrator.

(b) The board finds that it protects the best interests of the program if all fees, expenses, and interest rates are set by resolutions adopted by the board from time-to-time as it deems advisable.

(1) Within a reasonable period of time, the board shall either approve or disapprove any proposed changes to any fees, expenses, and interest rates charged by a participating lending institution.

(2) All fees, expenses, and interest rates shall be limited to the maximum extent practical to those that would be collected by the participating lending institution in the normal course of its residential mortgage lending business.

(3) The administrator shall incorporate in the program and servicing guide (the "guide") for participating lending institutions provisions for the maximum that may be charged. In the alternative, the administrator shall incorporate in the guide the procedures for computing the maximum fees, expenses, and interest rates which participating lending institutions may charge veterans. The contracts between the board and the participating lending institutions shall incorporate the guide.

(4) Violation by a participating lending institution of the board's requirements as to maximum fees, expenses, and interest rates may result in revocation of the board's approval of the lending institution as a participant in the program, or such other remedies as may be available to the board.

(c) The board may require that the veteran make a down payment not to exceed 5.0% of the total purchase price of the home. This down payment shall be paid to the participating lending institution at closing. In the alternative, the board may require a down payment not to exceed 5.0% of the board's portion of the loan to be paid to the board. In this event, the veteran shall satisfy the participating lending institution's requirements as to down payment for the particular type of loan being made by the participating lending institution.

(d) Principal and interest that becomes delinquent shall be subject to a penalty fixed by the board on its portion of the loan. The participating lending institution may set late payment penalties as permitted by law on its portion of the loan.

Comments

Source Note: The provisions of this §177.9 adopted to be effective August 12, 2001, 26 TexReg 5840

§177.10: Loan Security

(a) An approved loan must be secured by a mortgage, deed of trust, or other lien on the home prior to any disbursement of funds to the participating lending institution by the board. All paperwork associated with the note and lien shall be deposited for safekeeping with the administrator.

(b) The security for the board's loan will be provided by:

(1) a participation first lien mortgage with the board and the participating lending institution joining as mortgagees, each receiving a share of the mortgage payment in proportion to each's loan, or a second lien and deed of trust securing the full amount of the board's loan;

(2) mortgage insurance providing for repayment of at least 50% of the total outstanding principal balances of all loans, or repayment of at least 50% of all anticipated losses, based upon the administrator's analysis and forecast of potential losses shown by the actual experience of the mortgage lending industry on similar types of loans. The board may contract with a mortgage insurance company for pooled coverage or with individual companies for insurance on each loan, or the board may elect to be self insured in part or in whole in order to meet the requirements of the Natural Resources Code, §162.011(d);

(3) hazard insurance on the structure naming the board loss payee in at least the amount of the board's loan.

(c) When the board has determined that a transaction under this program has been completed and the board's loan is secured as provided in subsections (a) and (b) of this section, the board shall disburse funds to the participating lending institution for the board's portion of the mortgage.

(d) The board may establish a master policy for group insurance which will be made available to all purchasers under this program for payment of the outstanding principal balance of the board's portion of the loan upon the death of the borrower.

Comments

Source Note: The provisions of this §177.10 adopted to be effective May 4, 1984, 9 TexReg 2263.

§177.11: Servicing Loans

(a) Payments of principal and interest on the board's loan will be made on a monthly basis directly to the participating lending institution agreeing to service the veteran's loan. The board's portion of this loan will be forwarded to the board in accordance with the contract between the board and the participating lending institution. The installment payments collected by the participating lending institution may include installments on taxes and insurance and other fees and expenses approved by the board.

(b) In the event that a veteran becomes delinquent and defaults, it shall be the responsibility of the administrator and the participating lending institution servicing the loan to determine if foreclosure on the loan is necessary. If foreclosure is necessary, the participating lending institution shall initiate foreclosure actions under the provisions of the deed of trust.

(c) The participating lending institution shall verify that during the course of the loan the hazard insurance and mortgage repayment insurance are current. In the event of default or occurrence of any condition covered by the insurance, the participating lending institution will notify the insurer and file a claim under the provisions of the applicable policies. The board's portion of the proceeds shall be computed as a percentage of the board's principal balance to the total principal balance. The participating lending institution shall forward to the board its portion of the proceeds under the policy.

(d) The veteran may prepay his loan with the participating lending institution or the board at any time in whole or in part with no penalty. The veteran must contact the participating lending institution to make arrangements for partial prepayment, and the veteran may designate how the payment shall be applied as between the board's loan and the participating lending institution's loan. The board shall not require that any portion of a partial prepayment be applied to the board's loan.

(e) The administrator shall incorporate into the guidelines for participating lending institutions and the contracts between the board and the participating lending institutions provisions governing servicing of loans, including procedures for determining default and foreclosure.

Comments

Source Note: The provisions of this §177.11 adopted to be effective May 4, 1984, 9 TexReg 2263.

§177.12: Assumptions

(a) A loan under this program may be assumed after obtaining approval of the board and the participating lending institution in writing and by complying with the following requirements.

(1) The original veteran borrower must have occupied the home as a principal residence for at least three years from the date of purchase.

(2) All mature interest, principal, and taxes must have been paid.

(3) The party wishing to assume the loan must meet the qualification requirements of the participating lending institution.

(4) The assumption agreement must be on forms approved by the administrator and the board and must be executed by the chairman of the board.

(b) The board may in its discretion waive the requirement that the original veteran occupy the home as a principal residence for three consecutive years if it deems a waiver to be in the best interests of the program or upon receiving and approving evidence of one of the following circumstances:

(1) death of the veteran purchaser;

(2) bankruptcy of the veteran purchaser;

(3) financial incapacity of the veteran purchaser; or

(4) forced sale of the home due to:

(A) divorce and property settlement;

(B) move required by change in the employment of the veteran or veteran's spouse;

(C) condemnation of the property through no fault of the veteran.

(c) The board may prescribe any forms or methods by which the required evidence shall be submitted to the board. If the veteran shall attempt to violate the three-year limitation on assignments, the board may accelerate all principal and interest on the loan. The board, in its discretion, may adopt any other remedy it deems appropriate. The participating lending institution and the administrator shall monitor to the extent practically possible each loan during its first three years to determine if a violation of the three-year limitation on assumptions or residence occurs.

(d) The veteran shall not make any other attempt to sell, convey, rent, or lease the property purchased under this program except in the manner prescribed in these rules and the Natural Resources Code, Chapter 162. Any attempt to sell, assign, transfer, convey, rent, or lease the property purchased under this program without the express written approval of the board shall be deemed a violation of these rules and the Veterans Housing Assistance Act and will be subject to the provisions of the Natural Resources Code, §162.016(d).

Comments

Source Note: The provisions of this §177.12 adopted to be effective May 4, 1984, 9 TexReg 2263.

§177.13: Rights of Board

The board may reject any veteran's loan application and shall not be liable for any loss resulting from such rejection. The board is the final authority is determining the interpretation and application of these rules on a case by case basis.

Comments

Source Note: The provisions of this §177.13 adopted to be effective May 4, 1984, 9 TexReg 2263.

§177.14: Loan Amounts

The maximum amount that an individual will be able to borrow under this chapter will be established by resolution of the board, from time to time. Provided however, the maximum loan amount may not exceed the maximum allowable loan amount under the United States Department of Veterans Affairs Home Loan Guaranty Program. In the case of a home improvement loan, the board shall establish the maximum loan amount by resolution.

Comments

Source Note: The provisions of this §177.14 adopted to be effective August 24, 1999, 24 TexReg 6518; amended to be effective June 9, 2003, 28 TexReg 4436

Chapter 178

§178.1: Definitions

The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise:

(1) Board--The Veterans Land Board of the State of Texas.

(2) Chairman--The commissioner of the General Land Office who is also chairman of the Veterans Land Board.

(3) Committee--Veterans Cemetery Committee, consisting of the Board, the Chairman of the Texas Veterans Commission, and two members of the veteran's community appointed by the Chairman of the Texas Veterans Committee.

(4) Eligible Relative--As by the USDVA rules governing State Cemetery Grants, 38 C.F.R §39.2(a) to include a veteran's wife, husband, surviving spouse, minor children, and unmarried adult children who were physically or mentally disabled and incapable of self-support.

(5) TSVC--Texas State Veterans Cemetery, a burial ground operated solely for the burial of veterans and the eligible relatives.

(6) USDVA--The United States Department of Veterans Affairs or any successor thereto.

(7) Veteran--As defined by defined 38 U.S.C. §101(2) and the USDVA rules governing State Cemetery Grants, 38 C.F.R. §39.1(h) meaning a person who served in the active military, naval, or air service and who died while in service or was discharged or released therefrom under conditions other than dishonorable.

Comments

Source Note: The provisions of this §178.1 adopted to be effective May 23, 2004, 29 TexReg 4894

§178.2: Authority

(a) Any requirement of this chapter, which is not otherwise required by the constitution or statutes of this state, or any federal law, may be waived by the Board. Any waiver request must be in writing and must describe the circumstances surrounding the request, including all of the reasons why the waiver is requested.

(b) The Board is the final authority in determining the interpretation and application of these rules.

Comments

Source Note: The provisions of this §178.2 adopted to be effective May 23, 2004, 29 TexReg 4894

§178.3: Funding

Funding to operate, maintain, enlarge or improve a TSVC shall come in part from the veterans' land fund, the veterans' housing assistance fund and the veterans' housing assistance fund II, not to exceed $7,000,000 for each fiscal year.

Comments

Source Note: The provisions of this §178.3 adopted to be effective May 23, 2004, 29 TexReg 4894

§178.4: Requirements

(a) A TSVC must be newly constructed.

(b) Each TSVC must meet all applicable federal regulations, including but not limited to any and all regulations and requirements for the funding of a State Veterans Cemetery. These rules, regulations, and requirements are incorporated herein and made a part hereof for all purposes.

(c) Each TSVC must meet all state and local laws and regulations.

Comments

Source Note: The provisions of this §178.4 adopted to be effective May 23, 2004, 29 TexReg 4894

§178.5: Burial Eligibility Criteria

In order to qualify for all funding available from the USDVA through the State Cemetery Program, the Board, for each TSVC, will allow only the interment of veterans and eligible relatives as defined by the USDVA laws and regulations, as they may be amended from time-to-time.

Comments

Source Note: The provisions of this §178.5 adopted to be effective May 23, 2004, 29 TexReg 4894

§178.6: Fees

(a) The Board must approve all fees, expenses and charges for interment, disinterment, and related services for the TSVC.

(b) Fees charged for the interment of eligible relatives will be the equivalent of the USDVA reimbursement for the plot allowance for veterans as established in its laws and regulations as they may be amended from time-to-time. A TSVC shall apply no charges for disinterment or related interment services for eligible relatives of veterans.

(c) Each TSVC shall seek reimbursement from the USDVA of the plot allowance for interment of veterans. A TSVC shall apply no additional charges for interment, disinterment, or related services for veterans.

Comments

Source Note: The provisions of this §178.6 adopted to be effective May 23, 2004, 29 TexReg 4894