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PUBLIC LAW 85-857-SEPT. 2, 1958
[72 S T A T.
(2) the amount of the loan does not exceed the reasonable value of the property or business as determined by the Administrator; and (3) such loan became in default or the delinquency occurred (A) before July 26, 1960, in the case of a World W a r II veteran (or, in the case of a veteran described in section 1801(a)(1)(B) of this title, before the expiration of thirteen years after World W a r II is deemed to have ended with respect to him), or (B) before February 1, 1965, in the case of a Korean conflict veteran. § 1815. Insurance of loans (a) Any loan which might be guaranteed under the provisions of this chapter, when made or purchased by any financial institution subject to examination and supervision by an agency of the United States or of any State may, in lieu of such guaranty, be insured by the Administrator under an agreement whereby he will reimburse any such institution for losses incurred on such loan up to 15 per centum of the aggregate of loans so made or purchased by it. (b) Ix)ans insured under this section shall be made on such other terms, conditions, and restrictions as the Administrator may prescribe within the limitations set forth in this chapter. The Administrator may fix the maximum rate of interest payable on any class of nonreal-estate loans insured under this section at a figure not in excess of a 3 per centum discount rate or an equivalent straight interest rate on nonamortized loans. § 1816. Procedure on default In the event of default in the payment of any loan guaranteed under this chapter, the holder of the obligation shall notify the Administrator who shall thereupon pay to such holder the guaranty not in excess of the pro rata portion of the amount originally guaranteed, and shall be subrogated to the rights of the holder of the obligation to the extent of the amount paid on the guaranty. Before suit or foreclosure the holder of the obligation shall notify the Administrator of the default, and within thirty days thereafter the Administrator may, at his option, pay the holder of the obligation the unpaid balance of the obligation plus accrued interest and receive an assignment of the loan and security. Nothing in this section shall preclude any forbearance for the benefit of the veteran as may be agreed upon by the parties to the loan and approved by the Administrator. The Administrator may establish the date, not later than the date of judgment and decree of foreclosure or sale, upon which accrual of interest or charges shall cease. § 1817. Release from liability under guaranty "Whenever any veteran disposes of residential property securing a guaranteed, insured, or direct loan obtained by him, the Administrator, upon application made by such veteran and by the transferee incident to such disposal, shall issue to such veteran in connection with such disposal a release relieving him of all further liability to the Administrator on account of such loan (including liability for any loss resulting from any default of the transferee or any subsec^uent purchaser of such property) if the Administrator has determined, after such investigation as he may deem appropriate, that (1) the loan is current, and (2) the purchaser of such property from such veteran (A) has obligated himself by contract to purchase such property and to assume full liability for the repayment of the balance of the loan remaining unpaid, and has assumed by contract all of the obligations of the veteran under the terms of the instruments creating and securing the loan, and (B) qualifies from a credit standpoint, to the same extent as if he were a veteran eligible under section 1810 of this title, for a guaranteed or insured or direct loan in an amount equal to the unpaid balance of the obligation for which he has assumed liability.
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