**§36.4321 Computation of guaranty claims; subsequent accounting.**

\(a\) Subject to the limitation that the total amounts payable shall in
no event exceed the amount originally guaranteed, the amount payable on
a claim for the guaranty shall be the percentage of the loan originally
guaranteed applied to the indebtedness computed as of the earliest of
the following dates:

\(1\) The date of the liquidation sale; or

\(2\) The cutoff date established under paragraph (f) of §36.4319 of
this part; or,

\(3\) The cutoff date established under paragraph (b) of this section.

Deposits or other credits or setoffs legally applicable to the
indebtedness on the date of computation shall be applied in reduction of
the indebtedness on which the claim is based. Any escrowed or earmarked
funds not subject to superior claims of third persons must likewise be
so applied.

\(b\) In any case in which there is a delay in the liquidation sale
caused by:

\(1\) The holder of the loan extending forbearance in excess of 30 days
at the request of the Secretary, the cutoff date for computation of the
indebtedness shall be 30 days after the date the Secretary determines
the liquidation sale would have taken place if there had been no such
delay, provided: the net value of the real property securing the loan
does not exceed the unguaranteed portion of the indebtedness as of the
actual liquidation sale date *and* such net value will exceed the
unguaranteed portion of the indebtedness as of the cutoff date;

\(2\) The Secretary, including the Secretary's failure to provide the
holder with advice as to the net value of the security within two
working days prior to a scheduled liquidation sale but excluding
forbearance exercised at the request of the Secretary, with respect to a
holder which has complied with the provisions of §36.4319(b) of this
part, the cutoff date for computation of the indebtedness shall be the
date the liquidation sale would have taken place if there had been no
such delay;

\(3\) A voluntary case commenced under Title 11, United States Code
(relating to bankruptcy), the cutoff date for computation of the
indebtedness shall be 30 days after the date the Secretary determines
the liquidation sale would have taken place if there had been no such
delay, provided: the net value of the real property securing the loan
does not exceed the unguaranteed portion of the indebtedness as of the
actual liquidation sale date *and* such net value will exceed the
unguaranteed portion of the indebtedness as of the cutoff date.

\(c\) Adjustment of cutoff dates:

\(1\) Any cutoff date established under §36.4319(f) of this part or
paragraph (b) of this section will be adjusted by a period of months
corresponding to the number of installment payments, if any, received by
the holder and credited to the indebtedness after the cutoff date is
established.

\(2\) When a cutoff date is established under paragraph (b)(2) of this
section the actual liquidation sale date will be used for purposes of
computing the indebtedness in any subsequent accounting between the
holder and the Secretary; if an earlier cutoff date is in effect at the
time delay in a liquidation sale is caused by the Secretary, such date
will not be modified by application of the provisions of paragraph
(b)(2) of this section, but will be extended by an interval
corresponding to the delay in the liquidation sale caused by the
Secretary for purposes of computing the indebtedness in any subsequent
accounting between the holder and the Secretary.

\(3\) Any cutoff date established under §36.4319 of this part or
paragraph (b) of this section will be considered to be the liquidation
sale date. Such date will be modified in accordance with paragraph (b)
of this section if the provisions of that paragraph are applicable after
such date has been established. (Authority: 38 U.S.C. 501(a))

\(d\) Credits accruing from the proceeds of a sale or other disposition
of the security subsequent to the date of computation, and prior to the
submission of this claim, shall be reported to the Secretary incident to
such submission, and the amount payable on the claim shall in no event
exceed the remaining balance of the indebtedness. (Authority: 38 U.S.C.
501(a))

\(e\) The claimant shall be deemed to have received as trustee for the
benefit of the United States any amounts received on account of the
indebtedness after the date of the claim, from the proceeds of a sale of
the security or otherwise, to the extent such credits exceed the balance
of the indebtedness unsatisfied by the payment of the guaranty. The
claimant shall immediately pay such amounts to the Secretary to the
extent of the debtor's liability to the Secretary as guarantor.

\(f\) (1) (i) Except as provided in paragraph (f)(1)(ii) of this
section, a holder shall file a claim for payment under the guaranty no
later than 1 year after the completion of the liquidation sale. For
purposes of this section, the liquidation sale will be considered
completed when:

\(A\) The last act required under State law is taken to make the
liquidation sale final, but excluding any redemption period permitted
under State law;

\(B\) If a holder accepts a voluntary conveyance of the property in lieu
of foreclosure, the date of recordation of the deed to the holder or the
holder's designee; or

\(C\) In the case of a sale of the property to a third party for an
amount less than is sufficient to repay the unpaid balance on the loan
where the holder has agreed in advance to release the lien in exchange
for the proceeds of such sale, the date of settlement of such sale.

\(ii\) With respect to any liquidation sale completed prior to February
1, 2008, all claims must be submitted no later than February 2, 2009.

\(2\) If additional information becomes known to a holder after the
filing of a guaranty claim, the holder may file a supplemental claim
provided that such supplemental claim is filed within the time period
specified in paragraph (f)(1) of this section.

\(3\) No claim under a guaranty shall be payable unless it is submitted
within the time period specified in paragraph (f)(1) of this section.

\(4\) In the event that VA does not approve payment of any item
submitted under a guaranty claim, VA shall notify the holder what items
are being denied and the reasons for such denial. The holder may, within
30 days after the date of such denial notification, submit a request to
VA that one or more items that were denied be reconsidered. The holder
must present any additional information justifying payment of items
denied. (Authority: 38 U.S.C. 501(a))

\[54 FR 27163, June 28, 1989, as amended at 73 FR 6308, Feb. 1, 2008\]

**Supplement *Highlights* reference**: 32(1)

Reserved