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38 U.S.C. § 3709 — Refinancing of housing loans
Federal law — U.S. Code and appendices · legal_authorities
**(a) Fee Recoupment.—** Except as provided in subsection (d) and notwithstanding [section 3703 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title38-section3703&num=0&edition=prelim) or any other provision of law, a loan to a veteran for a purpose specified in [section 3710 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title38-section3710&num=0&edition=prelim) that is being refinanced may not be guaranteed or insured under this chapter unless—
(1) the issuer of the refinanced loan provides the Secretary with a certification of the recoupment period for fees, closing costs, and any expenses (other than taxes, amounts held in escrow, and fees paid under this chapter) that would be incurred by the borrower in the refinancing of the loan;
(2) all of the fees and incurred costs are scheduled to be recouped on or before the date that is 36 months after the date of loan issuance; and
(3) the recoupment is calculated through lower regular monthly payments (other than taxes, amounts held in escrow, and fees paid under this chapter) as a result of the refinanced loan.
**(b) Net Tangible Benefit Test.—** Except as provided in subsection (d) and notwithstanding [section 3703 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title38-section3703&num=0&edition=prelim) or any other provision of law, a loan to a veteran for a purpose specified in [section 3710 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title38-section3710&num=0&edition=prelim) that is refinanced may not be guaranteed or insured under this chapter unless—
(1) the issuer of the refinanced loan provides the borrower with a net tangible benefit test;
(2) in a case in which the original loan had a fix
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Source file: Laws/federal/codes/united-states-code/title-38/section-3709-refinancing-of-housing-loans--deb4791e94.md
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Source location: Title 38, Chapter 37, § 3709; chapter-037-housing-and-small-business-loans.md
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**(a) Fee Recoupment.—** Except as provided in subsection (d) and notwithstanding [section 3703 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title38-section3703&num=0&edition=prelim) or any other provision of law, a loan to a veteran for a purpose specified in [section 3710 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title38-section3710&num=0&edition=prelim) that is being refinanced may not be guaranteed or insured under this chapter unless—
(1) the issuer of the refinanced loan provides the Secretary with a certification of the recoupment period for fees, closing costs, and any expenses (other than taxes, amounts held in escrow, and fees paid under this chapter) that would be incurred by the borrower in the refinancing of the loan;
(2) all of the fees and incurred costs are scheduled to be recouped on or before the date that is 36 months after the date of loan issuance; and
(3) the recoupment is calculated through lower regular monthly payments (other than taxes, amounts held in escrow, and fees paid under this chapter) as a result of the refinanced loan.
**(b) Net Tangible Benefit Test.—** Except as provided in subsection (d) and notwithstanding [section 3703 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title38-section3703&num=0&edition=prelim) or any other provision of law, a loan to a veteran for a purpose specified in [section 3710 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title38-section3710&num=0&edition=prelim) that is refinanced may not be guaranteed or insured under this chapter unless—
(1) the issuer of the refinanced loan provides the borrower with a net tangible benefit test;
(2) in a case in which the original loan had a fixed rate mortgage interest rate and the refinanced loan will have a fixed rate mortgage interest rate, the refinanced loan has a mortgage interest rate that is not less than 50 basis points less than the previous loan;
(3) in a case in which the original loan had a fixed rate mortgage interest rate and the refinanced loan will have an adjustable rate mortgage interest rate, the refinanced loan has a mortgage interest rate that is not less than 200 basis points less than the previous loan; and
(4) the lower interest rate is not produced solely from discount points, unless—
(A) such points are paid at closing; and
(B) such points are not added to the principal loan amount, unless—
(i) for discount point amounts that are less than or equal to one discount point, the resulting loan balance after any fees and expenses allows the property with respect to which the loan was issued to maintain a loan to value ratio of 100 percent or less; and
(ii) for discount point amounts that are greater than one discount point, the resulting loan balance after any fees and expenses allows the property with respect to which the loan was issued to maintain a loan to value ratio of 90 percent or less.
**(c) Loan Seasoning.—** Except as provided in subsection (d) and notwithstanding [section 3703 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title38-section3703&num=0&edition=prelim) or any other provision of law, a loan to a veteran for a purpose specified in [section 3710 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title38-section3710&num=0&edition=prelim) that is a refinance may not be guaranteed or insured under this chapter until the date that is the later of—
(1) the date on which the borrower has made at least six consecutive monthly payments on the loan being refinanced; and
(2) the date that is 210 days after the first payment due date of the loan being refinanced.
**(d) Cash-out Refinances.—**
(1) Subsections (a) through (c) shall not apply in a case of a loan refinancing in which the amount of the principal for the new loan to be guaranteed or insured under this chapter is larger than the payoff amount of the refinanced loan.
(2) Not later than 180 days after the date of the enactment of this section, the Secretary shall promulgate such rules as the Secretary considers appropriate with respect to refinancing described in paragraph (1) to ensure that such refinancing is in the financial interest of the borrower, including rules relating to recoupment, seasoning, and net tangible benefits.
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Federal law — U.S. Code and appendices · legal_authorities
**(a)**
(1)
(A) Any loan to a veteran eligible for benefits under this chapter, if made for any of the purposes specified in [section 3710 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title38-section3710&num=0&edition=prelim) and in compliance with the provisions of this chapter, is automatically guaranteed by the United States in an amount not to exceed the lesser of—
(i)
(I) in the case of any loan of not more than $45,000, 50 percent of the loan;
(II) in the case of any loan of more than $45,000, but not more than $56,250, $22,500;
(III) except as provided in subclause (IV) of this clause, in the case of any loan of more than $56,250, the lesser of $36,000 or 40 percent of the loan; or
(IV) in the case of any loan of more than $144,000 for a purpose specified in clause (1), (2), (3), (5), (6), or (8) of [section 3710(a) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title38-section3710/a&num=0&edition=prelim), 25 percent of the loan; or
(ii) the maximum amount of guaranty entitlement available to the veteran as specified in subparagraph (B) or (C).
(B) With respect to loans described in subclauses (I), (II), or (III) of subparagraph (A)(i), the maximum amount of guaranty entitlement available to a veteran for purposes specified in [section 3710 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title38-section3710&num=0&edition=prelim) shall be $36,000, reduced by the amount of entitlement previously used by the veteran under this chapter and not restored as a result of the exclusion in [section 3702(b) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title38-section3702/b&num=0&edition=prelim).
(C)
(i) W
Source: Supplied U.S. Code snapshot — release unconfirmed · 38 U.S.C. § 3703
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Federal law — U.S. Code and appendices · legal_authorities
**(a)** Except as provided in [section 3704(c)(2) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title38-section3704/c/2&num=0&edition=prelim), any loan to a veteran, if made pursuant to the provisions of this chapter, is automatically guaranteed if such loan is for one or more of the following purposes:
(1) To purchase or construct a dwelling to be owned and occupied by the veteran as a home.
(2) To purchase a farm on which there is a farm residence to be owned and occupied by the veteran as the veteran’s home.
(3) To construct on land owned by the veteran a farm residence to be occupied by the veteran as the veteran’s home.
(4) To repair, alter, or improve a farm residence or other dwelling owned by the veteran and occupied by the veteran as the veteran’s home.
(5) To refinance existing mortgage loans or other liens which are secured of record on a dwelling or farm residence owned and occupied by the veteran as the veteran’s home.
(6) To purchase a one-family residential unit in a condominium housing development or project, if such development or project is approved by the Secretary under criteria which the Secretary shall prescribe in regulations.
(7) To improve a dwelling or farm residence owned by the veteran and occupied by the veteran as the veteran’s home through energy efficiency improvements, as provided in subsection (d).
(8) To refinance in accordance with subsection (e) of this section an existing loan guaranteed, insured, or made under this chapter.
(9)
(A)
(i) To purchase a manufactured home to be permanently affixed to a lot that is owned by the veteran.
(ii) To purchase a manufactured home and a lot to which the home will be permanently affixed.
(B)
(i) To refinance, in accordance with the terms
Source: Supplied U.S. Code snapshot — release unconfirmed · 38 U.S.C. § 3710
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Federal law — U.S. Code and appendices · legal_authorities
### Statutory Notes
Section, act June 27, 1934, ch. 847, title II, § 210, as added by act Feb. 3, 1938, ch. 13, § 3, 52 Stat. 22, related to additional housing insurance.
#### Applications Prior to Repeal
Act June 3, 1939, ch. 175, § 13, 53 Stat. 807, which repealed this section, also provided: “That the Administrator is authorized to insure under said section [this section] any mortgage for the insurance of which an application has been filed with him prior to the effective date of this act [June 3, 1939].”
Source: Supplied U.S. Code snapshot — release unconfirmed · 12 U.S.C. § 1721
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Federal law — U.S. Code and appendices · legal_authorities
This chapter may be cited as the “National Housing Act.”
Source: Supplied U.S. Code snapshot — release unconfirmed · 12 U.S.C. § 1702
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Federal law — U.S. Code and appendices · legal_authorities
Page 895
TITLE 38—VETERANS’ BENEFITS
§ 3709
(d) The Secretary shall promulgate under-
writing standards for loans for which the inter-
est rate assistance payments may be made
under subsection (a). Such standards shall be
based on the interest rate for the second year of
the loan.
(e) The Secretary or lender shall provide com-
prehensive prepurchase counseling to eligible
veterans explaining the features of interest rate
buy downs under subsection (a), including a hy-
pothetical payment schedule that displays the
increases in monthly payments to the mort-
gagor over the first five years of the mortgage
term. For the purposes of this subsection, the
Secretary may assign personnel to military in-
stallations referred to in subsection (b)(2).
(f) There is authorized to be appropriated
$3,000,000 annually to carry out this section.
(g) The Secretary may not guarantee a loan
under this chapter after September 30, 1998, on
which the Secretary is obligated to make pay-
ments under this section.
(Added Pub. L. 104–106, div. B, title XXVIII,
§ 2822(b)(1), Feb. 10, 1996, 110 Stat. 556.)
Statutory Notes and Related Subsidiaries
AUTHORITY OF SECRETARY OF DEFENSE
Pub. L. 104–106, div. B, title XXVIII, § 2822(c), Feb. 10,
1996, 110 Stat. 557, directed the Secretary of Defense to
reimburse the Secretary of Veterans Affairs for inter-
est rate buy down costs paid to mortgagees under this
section and authorized the Secretary of Defense to des-
ignate housing shortage areas with respect to housing
loans guaranteed on or before Sept. 30, 1998.
§ 3709. Refinancing of housing loans
(a) FEE RECOUPMENT.—Except as provided in
subsection (d) and notwithstanding section 3703
of this title or any other provision of law, a loan
to a veteran for a purpose specified in sec
Source: Supplied 2024 U.S. Code historical extraction · 38 U.S.C. § 3709
Stored review status: historical_2024_not_currentness_verified. Same stored citation; legal effect and authority still require review.