B-145982, JUN. 14, 1961

B-145982: Jun 14, 1961

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THE GOVERNMENT'S CLAIM IS FOR $4. PLUS INTEREST UNTIL THE DEBT IS PAID IN FULL. THE LOAN WAS IN THE AMOUNT OF $8. PURSUANT TO YOUR REQUEST THE LOAN WAS GUARANTEED BY THE VETERANS ADMINISTRATION TO THE EXTENT OF $4. F. NEWMAN AND THEN IN 1954 THE SECURITY (PROPERTY) WAS TRANSFERRED TO MR. DEFAULTED ON THE PAYMENT REQUIRED ON THE LOAN AND THE SECURITY WAS THEN SOLD UNDER LOCAL FORECLOSURE PROCEEDINGS. THE SUM THEY PAID BECAME A DEBT DUE AND OWING TO THE UNITED STATES BY YOU UNDER APPLICABLE VA REGULATIONS (38 C.F.R. 36.4323 (E) ( WHICH WERE INCORPORATED BY REFERENCE IN YOUR APPLICATION FOR GUARANTY OF THE LOAN. TAKES THE POSITION THAT YOU ARE ENTITLED TO HAVE THE FORECLOSURE SALE SET ASIDE UNDER SECTION 300 OF THE SOLDIER'S AND SAILOR'S CIVIL RELIEF ACT OF 1940.

B-145982, JUN. 14, 1961

TO SERGEANT PALMER T. NEWMAN:

LETTER DATED AUGUST 19, 1960, FROM G. GORDON WHITMAN, TO THE CLAIMS DIVISION OF OUR OFFICE IN YOUR BEHALF, CONCERNS THE GOVERNMENT'S CLAIM AGAINST YOU ARISING OUT OF A DEFAULT ON GUARANTEED LOAN NO. LHG-65159 TEX- H. THE GOVERNMENT'S CLAIM IS FOR $4,308.25, PLUS INTEREST UNTIL THE DEBT IS PAID IN FULL.

THE RECORD SHOWS THAT ON JANUARY 24, 1952, PRIOR TO YOUR RE-ENTRY INTO THE MILITARY SERVICE YOU OBTAINED A LOAN FROM THE MARILAND MORTGAGE COMPANY, HOUSTON, TEXAS, FOR THE PURCHASE OF A HOME. THE LOAN WAS IN THE AMOUNT OF $8,175, PAYABLE AT $43.16 PER MONTH BEGINNING MARCH 1, 1952, AND BEARING INTEREST AT 4 PERCENT PER ANNUM. PURSUANT TO YOUR REQUEST THE LOAN WAS GUARANTEED BY THE VETERANS ADMINISTRATION TO THE EXTENT OF $4,905 IN ACCORDANCE WITH THE PROVISION OF SECTION 500, TITLE III, SERVICEMEN'S READJUSTMENT ACT OF 1944, AS AMENDED, 38 U.S.C. 1803.

PRIOR TO YOUR REENLISTMENT IN THE SERVICE YOU TRANSFERRED TITLE TO THE SECURITY (PROPERTY) FOR THE LOAN TO A. F. NEWMAN AND THEN IN 1954 THE SECURITY (PROPERTY) WAS TRANSFERRED TO MR. AND MRS. JAMES H. PRATT. THE PRATTS, WHO HAD ASSUMED YOUR MORTGAGE (DEED OF TRUST), DEFAULTED ON THE PAYMENT REQUIRED ON THE LOAN AND THE SECURITY WAS THEN SOLD UNDER LOCAL FORECLOSURE PROCEEDINGS. THEREUPON THE VETERANS ADMINISTRATION PURSUANT TO ITS GUARANTY AGREEMENT PAID THE CITIZENS NATIONAL BANK AND TRUST COMPANY, BAYTOWN, TEXAS THE LEGAL HOLDER OF THE MORTGAGE, THE SUM OF $4,308.25. THE SUM THEY PAID BECAME A DEBT DUE AND OWING TO THE UNITED STATES BY YOU UNDER APPLICABLE VA REGULATIONS (38 C.F.R. 36.4323 (E) ( WHICH WERE INCORPORATED BY REFERENCE IN YOUR APPLICATION FOR GUARANTY OF THE LOAN. THE PERTINENT REGULATION PROVIDES:

"ANY AMOUNTS PAID BY THE ADMINISTRATOR ON ACCOUNT OF THE LIABILITIES OF ANY VETERAN GUARANTEED OR INSURED UNDER THE PROVISIONS OF THE ACT SHALL CONSTITUTE A DEBT OWING TO THE UNITED STATES BY SUCH VETERAN.'

YOUR ATTORNEY IN HIS LETTER OF AUGUST 19, 1960, TAKES THE POSITION THAT YOU ARE ENTITLED TO HAVE THE FORECLOSURE SALE SET ASIDE UNDER SECTION 300 OF THE SOLDIER'S AND SAILOR'S CIVIL RELIEF ACT OF 1940, AS AMENDED, 50 U.S.C. APP. 530, AND BE REINSTATED AS OWNER OF THE PROPERTY. HE OFFERS ON YOUR BEHALF TO DELIVER A PROPERLY EXECUTED WAIVER OF YOUR RIGHTS UNDER THE LAST CITED ACT IN RETURN FOR A FULL RELEASE FROM ANY CLAIMS ARISING OUT OF THE LOAN TRANSACTION.

IN VIEW OF 38 U.S.C. 1820 (C), WHICH PROVIDES THAT THE FINANCIAL TRANSACTIONS OF THE ADMINISTRATOR OF VETERANS AFFAIRS INCIDENT TO OR ARISING OUT OF THE GUARANTY OR INSURANCE OF LOANS SUCH AS HERE INVOLVED SHALL BE FINAL AND CONCLUSIVE ON ALL OFFICERS OF THE GOVERNMENT, YOUR ATTORNEY'S OFFER WAS REFERRED TO THE VETERANS ADMINISTRATION FOR ITS CONSIDERATION.

THE VETERANS ADMINISTRATION IS OF THE VIEW THAT SECTION 300 OF THE SOLDIER'S AND SAILOR'S CIVIL RELIEF ACT (50 U.S.C. APP. 530) IS NOT FOR APPLICATION IN YOUR CASE, SINCE THAT SECTION PROVIDES PROTECTION AGAINST EVICTION ACTION AND DISTRESS WARRANTS. IN OTHER WORDS SECTION 300 PERTAINS TO STAYING PROCEEDINGS TO ENFORCE OBLIGATIONS OF RENT. FURTHER, THE VETERANS ADMINISTRATION POINTS OUT THAT THE PROTECTION PROVIDED PERSONS IN THE MILITARY SERVICE BY SECTION 302 (50 U.S.C. APP. 532) OF THE ACT IN CONNECTION WITH OBLIGATIONS SECURED BY MORTGAGES AND DEEDS OF TRUST IS LIMITED BY SUBSECTION 1 OF SECTION 302 TO OBLIGATIONS SECURED BY PROPERTY OWNED BY A PERSON IN THE MILITARY SERVICE AFTER THE COMMENCEMENT OF THE PERIOD OF THE MILITARY SERVICE AND STILL SO OWNED BY HIM. HENCE, THE VETERANS ADMINISTRATION TAKES THE POSITION THAT THE BENEFITS OF SECTION 302 DO NOT ACCRUE TO YOU, SINCE PRIOR TO YOUR RE-ENTRY INTO THE MILITARY SERVICE YOU CONVEYED TO ANOTHER THE PROPERTY WHICH WAS THE SUBJECT OF THE FORECLOSURE ACTION. ACCORDINGLY, THE VETERANS ADMINISTRATION IS OF THE VIEW THAT IT WOULD NOT BE PROPER TO WAIVE THE GOVERNMENT'S CLAIM AGAINST YOU IN RETURN FOR A WAIVER OF WHATEVER RIGHTS YOU MAY HAVE UNDER THE SOLDIER'S AND SAILOR'S CIVIL RELIEF ACT OF 1940, AS AMENDED.

IN VIEW OF THE FOREGOING IT IS INCUMBENT ON US TO CONTINUE COLLECTION PROCEEDINGS. HOWEVER, IT IS NOT OUR POLICY TO PLACE UNDUE HARDSHIP ON A DEBTOR. HENCE, WE WILL INTERPOSE NO OBJECTION TO YOUR AUTHORIZING A REGULAR MONTHLY ALLOTMENT FROM YOUR SERVICE PAY OF AN AMOUNT COMMENSURATE WITH YOUR FINANCIAL STATUS AND ABILITY TO PAY, WHICH WILL LIQUIDATE THE DEBT WITHIN A REASONABLE TIME. UNLESS ACTION IS TAKEN WITHIN A REASONABLE TIME TO LIQUIDATE THIS DEBT IT WILL BE NECESSARY TO REFER IT TO THE DEPARTMENT OF JUSTICE FOR APPROPRIATE ACTION.