[Federal Register Volume 65, Number 237 (Friday, December 8, 2000)]
[Proposed Rules]
[Pages 76957-76958]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-31291]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 36

RIN 2900-AJ86


Loan Guaranty: Advertising and Solicitation Requirements

AGENCY: Department of Veterans Affairs.

ACTION: Proposed rule.

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SUMMARY: This document proposes to amend the Department of Veterans 
Affairs (VA) loan guaranty regulations by prohibiting advertisements or 
solicitations from lenders that falsely state or imply that they were 
issued by or at the direction of VA or any other entity of the United 
States Government. These provisions appear to be necessary to ensure 
that lenders do not provide misleading information.

DATES: Comments must be received on or before February 6, 2001.

ADDRESSES: Mail or hand-deliver written comments to: Director, Office 
of Regulations Management (02D), Department of Veterans Affairs, 810 
Vermont Ave., NW., Room 1154, Washington, DC 20420; or fax comments to 
(202) 273-9289; or e-mail comments to [email protected]. 
Comments should indicate that they are submitted in response to ``RIN 
2900-AJ86.'' All comments received will be available for public 
inspection in the Office of Regulations Management, Room 1158, between 
the hours of 8:00 a.m. and 4:30 p.m., Monday through Friday (except 
holidays).

FOR FURTHER INFORMATION CONTACT: R. D. Finneran, Assistant Director for 
Loan Policy and Valuation (262), Loan Guaranty Service, Veterans 
Benefits Administration, Department of Veterans Affairs, 810 Vermont 
Avenue, NW, Washington, DC 20420, (202) 273-7368.

SUPPLEMENTARY INFORMATION: Under the authority of 38 U.S.C. chapter 37, 
VA guarantees loans made by private lenders to eligible veterans to 
purchase, construct, improve, or refinance their homes (the term 
veteran as used in this document includes any individual defined as a 
veteran under 38 U.S.C. 101 and 3701 for the purpose of housing loans). 
This document proposes to amend VA's loan guaranty regulations for both 
manufactured homes and conventionally built homes by adding new 
advertising and solicitation disclosure requirements.
    We have become aware of written advertisements and solicitations 
from private lenders that appear to falsely state or imply that they 
came from VA. For example, one solicitation from a private lender 
stated that it was from the ``Government Loans Programs'' and contained 
a reference to a VA case number. Another solicitation from a private 
lender stated that ``[I]n accordance with regulations determined by the 
Department of Veterans Affairs this notice is officially issued to * * 
*'' Another solicitation from a private lender stated that ``The 
Veterans Benefit Administration known as VA, a division of the United 
States Department of Veterans Affairs is working with lenders to inform 
you * * *'' Other solicitations from private lenders stated that they 
were from the ``V.A. Loan Department,'' ``Veterans Department,'' 
``Direct VA Streamline Department,'' ``Authorized VA Loan Center,'' and 
``VA Conversion Center.'' One solicitation from a private lender not 
only stated on the envelope that it was from the ``Department of 
Veterans'' but included the statement ``Official Business, Penalty For 
Private Use, $300.''
    Further, we have recently become aware of written advertisements 
and solicitations from private lenders that appear to falsely state or 
imply that they have been given special authority by VA to offer a 
unique loan product. For example, one solicitation from a private 
lender stated that ``you are now eligible to take advantage of the 
Exclusive VA STREAMLINE refinance program.'' Another solicitation from 
a private lender stated that ``The Veterans Administration in 
conjunction with * * * Mortgage offers a unique program * * *''
    To address these issues regarding advertisements and solicitations, 
we are proposing to establish advertising and solicitation 
requirements. We propose that any advertisement or solicitation in any 
form (e.g., written, electronic, oral) from private lenders concerning 
housing loans to be guaranteed or insured by the Secretary must not 
include information falsely stating or implying that it was issued by 
or at the direction of VA or any other department or agency of the 
United States and must not include information falsely stating or 
implying that the lender has an exclusive right to make loans 
guaranteed or insured by VA.
    If the proposed requirements are adopted, noncompliance may lead to 
suspension, debarment, or limited denial of participation in the VA 
housing loan program pursuant to 38 CFR part 44. Also, under 38 CFR 
part 44, such action could affect the lender's ability to participate 
in other governmental programs.

Regulatory Flexibility Act

    The Secretary hereby certifies that the adoption of the proposed 
rule would not have a significant economic impact on a substantial 
number of small entities as they are defined in the Regulatory 
Flexibility Act, 5 U.S.C. 601-612. The proposed rule would not have 
more than a minuscule effect on any small entities. Therefore, pursuant 
to 5 U.S.C. 605(b), the proposed rule is exempt from the initial and 
final regulatory flexibility analysis requirements of sections 603 and 
604.

    The Catalog of Federal Domestic Assistance Program number is 
64.114.

List of Subjects in 38 CFR Part 36

    Condominiums, Handicapped, Housing, Indians, Individuals with 
disabilities, Loan programs-housing and community development, Loan 
programs-Indians, Loan programs-veterans, Manufactured homes, Mortgage 
insurance, Reporting and recordkeeping requirements, Veterans.

    Approved: October 31, 2000.
Hershel W. Gober,
Acting Secretary of Veterans Affairs.
    For the reasons set out in the preamble, 38 CFR part 36 is proposed 
to be amended as set forth below.

PART 36--LOAN GUARANTY

    1. The authority citation for part 36 continues to read as follows:

    Authority: 38 U.S.C. 501, 3701-3704, 3707, 3710-3714, 3719, 
3720, 3729, 3762, unless otherwise noted.

    2. Section 36.4227 is added immediately after the authority 
citation at the end of Sec. 36.4226 to read as follows:

[[Page 76958]]

Sec. 36.4227  Advertising and solicitation requirements.

    Any advertisement or solicitation in any form (e.g., written, 
electronic, oral) from a private lender concerning manufactured housing 
loans to be guaranteed or insured by the Secretary:
    (a) Must not include information falsely stating or implying that 
it was issued by or at the direction of VA or any other department or 
agency of the United States, and
    (b) Must not include information falsely stating or implying that 
the lender has an exclusive right to make loans guaranteed or insured 
by VA.

(Authority: 38 U.S.C. 3703, 3704)

    3. Section 36.4365 is added immediately after Sec. 36.4364 to read 
as follows:


Sec. 36.4365  Advertising and Solicitation Requirements.

    Any advertisement or solicitation in any form (e.g., written, 
electronic, oral) from a private lender concerning housing loans to be 
guaranteed or insured by the Secretary:
    (a) Must not include information falsely stating or implying that 
it was issued by or at the direction of VA or any other department or 
agency of the United States, and
    (b) Must not include information falsely stating or implying that 
the lender has an exclusive right to make loans guaranteed or insured 
by VA.

(Authority: 38 U.S.C. 3703, 3704)

[FR Doc. 00-31291 Filed 12-7-00; 8:45 am]
BILLING CODE 8320-01-P