B-155317, OCT. 21, 1964

B-155317: Oct 21, 1964

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THE HOME WAS SOLD BY YOU AND YOUR WIFE TO WALLACE N. THE VETERANS ADMINISTRATION WAS REQUIRED. THE CORPORATION HAD FORECLOSED THE LOAN SECURED BY THE PROPERTY AT 9411 MONTGOMERY DRIVE BECAUSE MONTHLY PAYMENTS WERE NOT PAID AS AGREED. YOU WERE NOTIFIED OF THIS INDEBTEDNESS BY LETTER OF THE VETERANS ADMINISTRATION REGIONAL OFFICE DATED NOVEMBER 16. WHO ARE CO-OBLIGORS. HAVE NOT BEEN LOCATED. IT IS YOUR CONTENTION THAT THIS SALE RELIEVED YOU OF ALL LIABILITY IN CONNECTION WITH THE PROPERTY. IT IS CLEAR. HAS SAID: "THE LANGUAGE OF THIS PROVISION (36.4323 (E) ( IS CLEAR AND THERE CAN BE NO QUESTION THEREFROM OF THE INTENT OF THE CONGRESS TO MAKE ANY PAYMENTS MADE BY THE GOVERNMENT UNDER THE GUARANTEE OF THE ACT AN ENFORCEABLE DEMAND UNTIL FULL SATISFACTION IS OBTAINED.

B-155317, OCT. 21, 1964

TO SFC RAYMOND J. MCALLISTER, JR., RA 56065610:

YOUR LETTER OF AUGUST 26, 1964, PROTESTS THE FINDINGS OF OUR CLAIMS DIVISION SETTLEMENT DATED MAY 11, 1964. THE SETTLEMENT RELATED TO YOUR INDEBTEDNESS IN THE AMOUNT OF $1,302.63, PLUS INTEREST AT THE RATE OF 4 PERCENT FROM NOVEMBER 14, 1962.

THE RECORD DISCLOSES THAT IN 1961 YOU OBTAINED GI HOME LOAN NO. LH 89463 TEX L TO BE USED IN THE PURCHASE OF A HOME AT 9411 MONTGOMERY DRIVE, EL PASO, TEXAS. ON DECEMBER 13, 1961, THE HOME WAS SOLD BY YOU AND YOUR WIFE TO WALLACE N. AND RUBYE J. COOPER UNDER A GENERAL WARRANTY DEED. THE VETERANS ADMINISTRATION WAS REQUIRED, IN NOVEMBER 1962, TO PAY A CLAIM TO GULF COAST INVESTMENT CORPORATION. THE CORPORATION HAD FORECLOSED THE LOAN SECURED BY THE PROPERTY AT 9411 MONTGOMERY DRIVE BECAUSE MONTHLY PAYMENTS WERE NOT PAID AS AGREED. THIS RESULTED IN AN INDEBTEDNESS OF $1,302.63, THE DIFFERENCE BETWEEN THE PROCEEDS OF THE FORECLOSURE SALE AND THE UNPAID BALANCE OF THE LOAN AT THE TIME OF FORECLOSURE, PLUS INTEREST AT THE RATE OF 4 PERCENT FROM NOVEMBER 14, 1962. YOU WERE NOTIFIED OF THIS INDEBTEDNESS BY LETTER OF THE VETERANS ADMINISTRATION REGIONAL OFFICE DATED NOVEMBER 16, 1962, AND ON MANY SUBSEQUENT OCCASIONS. MR. AND MRS. COOPER, WHO ARE CO-OBLIGORS, HAVE NOT BEEN LOCATED.

YOUR LETTER SETS FORTH AS A DEFENSE TO THIS INDEBTEDNESS THE SALE OF THE PROPERTY TO MR. AND MRS. COOPER. IT IS YOUR CONTENTION THAT THIS SALE RELIEVED YOU OF ALL LIABILITY IN CONNECTION WITH THE PROPERTY.

YOUR OBLIGATION TO THE UNITED STATES DOES NOT ARISE SOLELY FROM THE SALE OF THE PROPERTY AT THE FORECLOSURE SALE. WHEN YOU OBTAINED THE GI HOME LOAN IN 1961 YOU EXECUTED A FORM IN WHICH YOU AGREED THAT THE REGULATIONS PROMULGATED PURSUANT TO TITLE III, SERVICEMAN'S READJUSTMENT ACT OF 1944, AS AMENDED, AND IN EFFECT ON THE DATE OF THE LOAN WOULD GOVERN THE RIGHTS, DUTIES AND LIABILITIES OF THE PARTIES TO THE LOAN. VETERANS ADMINISTRATION REGULATIONS, 38 CFR 36.4323 (E) PROVIDED, AND STILL PROVIDES:

"SUBROGATION AND INDEMNITY.

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

IT IS CLEAR, THEREFORE, THAT YOUR DEBT ARISES UNDER THE LAW AND REGULATIONS THEN IN EFFECT. THE SUBSEQUENT SALE OF THE PROPERTY CONTAINED NO PROVISIONS RELIEVING YOU OF THIS OBLIGATION. THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF IOWA, IN THE CASE OF UNITED STATES V. HENDERSON, 121 F.SUPP. 343, 344, HAS SAID:

"THE LANGUAGE OF THIS PROVISION (36.4323 (E) ( IS CLEAR AND THERE CAN BE NO QUESTION THEREFROM OF THE INTENT OF THE CONGRESS TO MAKE ANY PAYMENTS MADE BY THE GOVERNMENT UNDER THE GUARANTEE OF THE ACT AN ENFORCEABLE DEMAND UNTIL FULL SATISFACTION IS OBTAINED. FORECLOSURE PROCEEDINGS COULD ONLY EXTINGUISH THE DEBT (AS THE ENTIRE LOAN COULD BE A POTENTIAL DEBT UNDER THE REGULATION), FOR THAT AMOUNT CREDITED ON THE LOAN AS A RESULT OF SUCH ACTION. DEFENDANT'S TRANSFER OF THE MORTGAGED PROPERTY TO ANOTHER GAVE HIM NO IMMUNITY FROM LIABILITY FOR ANY AMOUNTS THAT THE GOVERNMENT MIGHT HAVE TO ADVANCE ON ITS GUARANTEE TO SATISFY THE UNPAID DEMANDS OF THE LENDER. DEFENDANT'S LIABILITY, CREATED WHEN HIS LOAN APPLICATION WAS MADE OUT AND THE NOTE AND MORTGAGE EXECUTED, REMAINS A DIRECT AND SUBSISTING OBLIGATION UNTIL THE GOVERNMENT HAS BEEN REPAID. EXHAUSTION OF THE SECURITY IS INCIDENTAL.'

IT IS REQUESTED THAT YOU MAKE ARRANGEMENTS FOR THE PAYMENT OF THE INDEBTEDNESS WITHOUT FURTHER DELAY.