Federal Register / Vol. 74, No. 191 / Monday, October 5, 2009 / Proposed Rules 51103 

DEPARTMENT OF VETERANS 

AFFAIRS 

38 CFR Part 36 

RIN 2900–AM87 

Loan Guaranty: Assistance to Eligible 

Individuals in Acquiring Specially 

Adapted Housing 

AGENCY: Department of Veterans Affairs. 

ACTION: Proposed rule. 

SUMMARY: This document proposes to 

amend the Department of Veterans 

Affairs’ (VA’s) Loan Guaranty 

regulations concerning assistance to 

eligible individuals in acquiring 

specially adapted housing. These 

proposed changes would improve the 

readability of the regulations, provide 

further detail about program policies, 

and incorporate legislation, policy 

changes, and a VA Office of the General 

Counsel legal opinion. 

DATES: Comments must be received on 

or before December 4, 2009. 

ADDRESSES: Written comments may be 

submitted through http:// 

www.Regulations.gov; by mail or handdelivery to Director, Regulations 

Management (02REG), Department of 

Veterans Affairs, 810 Vermont Ave., 

NW., Room 1068, Washington, DC 

20420; or by fax to (202) 273–9026. 

Comments should indicate that they are 

submitted in response to RIN 2900– 

AM87 ‘‘Loan Guaranty: Assistance to 

Eligible Individuals in Acquiring 

Specially Adapted Housing.’’ Copies of 

comments received will be available for 

public inspection in the Office of 

Regulation Policy and Management, 

Room 1063B, between the hours of 8 

a.m. and 4:30 p.m., Monday through 

Friday (except holidays). Please call 

(202) 461–4902 (this is not a toll-free 

number) for an appointment. In 

addition, during the comment period, 

comments may be viewed online 

through the Federal Docket Management 

System (FDMS) at http:// 

www.Regulations.gov. 

FOR FURTHER INFORMATION CONTACT: 

Katherine Faliski, Assistant Director for 

Loan Policy and Valuation, Loan 

Guaranty Service (26), Veterans Benefits 

Administration, Department of Veterans 

Affairs, 810 Vermont Avenue, NW., 

Washington, DC 20420, (202) 461–9527. 

(This is not a toll-free telephone 

number.) 

SUPPLEMENTARY INFORMATION: 

I. Introduction 

Veterans and servicemembers with 

severe disabilities may be eligible under 

38 U.S.C. chapter 21 for specially 

adapted housing (SAH) grants. In 

administering the SAH program, VA 

helps these eligible individuals to 

purchase, construct, or adapt a home 

that suits the individual’s living needs. 

This document proposes to amend VA’s 

regulations in 38 CFR Part 36, Subpart 

C, Assistance to Certain Disabled 

Veterans in Acquiring Specially 

Adapted Housing, §§ 36.4400 through 

36.4410, which implement the SAH 

grant program. Because eligibility for 

SAH grants includes certain disabled 

servicemembers, the proposed rule 

would revise the heading of Subpart C 

to refer to ‘‘Eligible Individuals’’ rather 

than ‘‘Certain Disabled Veterans.’’ 

The proposed amendments are 

necessary for three reasons. First, VA 

believes the regulations should be 

written in a reader-focused style. 

Second, detailed guidance about 

program policies and an easy-to-follow 

organizational structure will help 

applicants and eligible individuals (and 

those acting on their behalf) to navigate 

the program. Third, substantive changes 

are necessary to incorporate legislation, 

policy decisions, and a legal decision of 

VA’s Office of the General Counsel. 

Pursuant to 38 U.S.C. 2101(d), the 

Secretary may prescribe regulations 

applicable to the SAH program. In 

revising these regulations, VA intends 

that applicants, eligible individuals, 

other program participants, and other 

interested parties will be better 

informed about the legal requirements 

and Department policies that guide the 

administration of SAH grants. 

II. Regulatory Overview 

The following is a section-by-section 

analysis of VA’s proposed rule. We 

outline briefly for each section the 

current rule and the proposed rule, as 

well as the reasons for the changes, 

noting the objectives and intended 

effects of the proposed rule. VA 

welcomes comments on every aspect of 

its proposal, but is particularly 

interested in drawing attention to three 

sections: (1) § 36.4404, in which VA 

proposes to ease the requirements for 

satisfying the SAH eligibility criteria; (2) 

§ 36.4405, VA’s proposed two-staged 

approval process intended to reduce 

eligible individuals’ out-of-pocket 

expenses, thereby increasing the 

number of eligible individuals who may 

use the SAH program; and (3) § 36.4406, 

a more structured process for 

reimbursing eligible individuals who 

have expended personal funds toward 

authorized grant expenses. 

Section 36.4400 Authority 

Current § 36.4400, ‘‘Applicability,’’ 

states that any references to chapters 21 

and 37 of title 38 U.S.C. are deemed 

where applicable to refer also to the 

prior corresponding provisions of the 

law. At the time the current rule was 

promulgated, Congress had recently 

consolidated into title 38 all of the laws 

administered by the then Veterans 

Administration. Almost 50 years have 

passed since Congress moved the 

statutes governing SAH to 38 U.S.C. 

chapter 21, and VA believes the 

reference to the former provisions may 

confuse readers. Therefore, the 

proposed rule would delete the 

reference to the former codification of 

the SAH authorizing statutes. The 

section’s heading would be changed to 

‘‘Authority’’ to reflect changes in its 

content. The proposed rule would no 

longer contain the current rule’s 

applicability provisions. No substantive 

change is intended by the changes to 

this section. 

Section 36.4401 Definitions 

Currently, definitions of eight terms 

are found in § 36.4401: ‘‘Secretary,’’ 

‘‘chapter 21,’’ ‘‘movable facilities,’’ 

‘‘necessary land,’’ ‘‘special fixtures and 

necessary adaptations,’’ ‘‘housing unit,’’ 

‘‘remodeling,’’ and ‘‘veteran’s family.’’ 

The proposed rule would add 16 terms 

and delete six terms. These changes 

would: (1) Replace certain terms with 

more reader-friendly ones; (2) add new 

terms, providing SAH-specific meanings 

where everyday usage might require 

additional clarification; (3) define 

terminology unique to the SAH 

program; (4) provide new definitions as 

a result of both established and 

proposed VA policies; and (5) delete 

terms that would be rendered 

unnecessary by the new rule. The terms 

would also be reordered to appear in 

alphabetical order. 

First, the definition of ‘‘Housing unit’’ 

would be expanded to make it easier for 

the general public to understand the 

rule. The term ‘‘Housing unit,’’ which 

would be defined to include ‘‘any 

residential unit, including all necessary 

land, improvements, and 

appurtenances, together with such 

movable equipment or special features 

as are authorized by 38 U.S.C. 1717 and 

2101,’’ would incorporate the current 

definitions of ‘‘movable facilities,’’ 

‘‘necessary land,’’ and ‘‘special fixtures 

and necessary adaptations.’’ 

Second, the proposed rule would 

expand the list of definitions and 

provide SAH-specific meanings for 

some commonly-used words. For 

example, the term ‘‘reside,’’ which 

would mean ‘‘to occupy (including 

seasonal occupancy) as one’s 

residence,’’ would reflect VA’s current 

policy of allowing seasonal occupancy 


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under the SAH program. Other new 

terms include: ‘‘Adapt,’’ ‘‘braces,’’ 

‘‘disability,’’ ‘‘eligible individual,’’ and 

‘‘eligible individual’s family.’’ 

Third, a few of the proposed 

definitions reflect terminology that has 

developed over time with the SAH 

program: ‘‘Paraplegic housing grant or 

PH grant,’’ ‘‘adapted housing grant or 

AH grant,’’ and ‘‘temporary residence 

adaptations grant or TRA grant,’’ would 

mean grants authorized under 38 U.S.C. 

2101(a), 2101(b), and 2102A, 

respectively. ‘‘Specially adapted 

housing grant’’ would be defined to 

clarify that the term refers collectively 

to PH, AH, or TRA grants. ‘‘Aggregate 

amount of assistance available’’ would 

mean the grant amount available to an 

eligible individual based on the annual 

adjustments required by 38 U.S.C. 

2102(e). 

Fourth, the proposed rule would add 

several definitions that are the result of 

substantive policy decisions. The term 

‘‘ownership interest’’ would: (1) Ensure 

that an eligible individual will not be 

denied SAH benefits because he or she 

chooses a less traditional method of 

property ownership, (2) account for the 

fact that trends in property ownership 

vary based on geographic region, and (3) 

incorporate statutory language expressly 

permitting the Secretary to provide SAH 

grants outside the United States. A 

definition of ‘‘beneficial property 

interest’’ has also been added to 

facilitate provision of SAH grants 

outside the United States by accounting 

for different laws and customs related to 

property ownership in various 

countries. The preamble explanation of 

§ 36.4405 describes more fully the 

effects of this change. 

Note: Though not required by this 

proposed rule, VA recommends that eligible 

individuals seek professional estate planning 

advice when determining the type of legal 

interest that best suits the eligible 

individual’s needs. 

Three other new defined terms would 

be ‘‘construction-related cost,’’ 

‘‘preconstruction cost,’’ and 

‘‘reimburse.’’ VA believes that these 

terms are necessary in explaining VA’s 

policy of reimbursing eligible 

individuals (or, where applicable, their 

estates) for costs related to the 

preparation for adaptations and for the 

actual adaptations. An in-depth 

explanation of this policy is provided 

below, in the discussion of § 36.4406. 

Finally, the proposed rule would 

render certain terms unnecessary. Such 

terms are ‘‘chapter 21,’’ ‘‘movable 

facilities,’’ ‘‘necessary land,’’ and 

‘‘special fixtures and necessary 

adaptations,’’ ‘‘remodeling,’’ which 

would be considered part of the 

definition of ‘‘adapt,’’ and ‘‘veteran’s 

family,’’ which would be replaced with 

‘‘eligible individual’s family.’’ 

Therefore, VA proposes to delete these 

terms. 

Section 36.4402 Grant Types 

Chapter 21 of title 38, U.S.C., 

authorizes the Secretary to provide three 

types of SAH grants. The PH grant is 

available to the most severely disabled 

veterans and servicemembers who meet 

the criteria set forth in section 2101(a). 

The monetary cap on PH grants, 

currently $60,000, is higher than that for 

the other grants. The AH grant is for 

severely disabled veterans and 

servicemembers who satisfy the 

requirements of section 2101(b). Its 

statutory cap is currently $12,000. The 

TRA grant, authorized by Public Laws 

109–233 and 110–289, is a grant that 

allows eligible individuals who 

temporarily reside in a housing unit 

owned by a member of the eligible 

individual’s family to receive assistance 

to adapt that home. 

Currently, the regulations do not 

describe in detail the various SAH grant 

types. Instead, they cite only the basic 

information codified at 38 U.S.C. 2101. 

Moreover, the regulations give few 

particulars about the various grant types 

available to eligible individuals, but 

specifically reference the maximum 

grant amounts, which are subject to 

annual adjustments and, thus, easily 

outdated. 

Therefore, under the proposed rule, 

§ 36.4402, ‘‘Grant types,’’ would explain 

the PH grant, AH grant, and TRA grant. 

More specifically, the section would 

describe the respective plan options 

under which an eligible individual may 

obtain assistance. The statute provides 

formulas for calculating the amount of 

grant assistance, based on the type of 

grant and the nature of the property to 

be adapted. By outlining these detailed 

formulas in the regulation, VA would 

make it easier for the public to 

understand how VA determines the 

amount of assistance it is to provide. VA 

also clarifies its interpretation of 38 

U.S.C. 2102(a)(3), which governs the 

amounts of assistance available for the 

remodeling of a dwelling acquired prior 

to the application for SAH assistance. 

This provision requires the Secretary to 

pay the greater of (A) the cost to the 

veteran of such remodeling or (B) 50 

percent of the cost to the veteran of such 

remodeling, plus other costs as 

prescribed by statute. These other costs 

may be either 50 percent of the costs of 

the dwelling and land or the full 

amount of any unpaid principal loan 

balance, whichever is less. Since 

Congress expressly limited 38 U.S.C. 

2102(a)(2) and (a)(4) to the smaller of 

the available sums, but did not impose 

a similar limitation on option (a)(3). VA 

has always interpreted Congress’s 

omission as being intentional, meaning 

the Secretary should pay the greater of 

the available sums to eligible 

individuals who choose option (a)(3). 

This is consistent with the policy of the 

Specially Adapted Housing program 

which ‘‘is intended to be of the highest 

beneficial character and, within 

reasonable legal bounds, should be 

liberally construed.’’ VAOPGCPREC 13– 

95. The section would also tie the grant 

amount to the ‘‘aggregate amount of 

assistance available’’ rather than 

explicitly mentioning a dollar figure. In 

addition, the section would clarify the 

restrictions on duplication of benefits 

that currently exist in § 36.4402(b)(1) 

and (b)(2). These restrictions are 

intended to reflect the limitations 

imposed by 38 U.S.C. 2104(b) without 

imposing any additional limitation. 

Finally, the section would correct the 

citation of section 1712 by referring 

instead to 38 U.S.C. 1717. 

The proposed changes in § 36.4402 

are necessary for three reasons. First, by 

discussing the specifics of the PH grant, 

AH grant, and TRA grant plans, the 

proposed rule would better inform 

eligible individuals about their SAH 

options. Second, since the TRA grant 

was authorized by Public Laws 109–233 

(‘‘Veterans’ Housing Opportunity and 

Benefits Improvement Act of 2006’’) and 

110–289 (‘‘Housing and Economic 

Recovery Act of 2008’’), which were 

enacted after VA issued the current SAH 

regulations, the proposed rule would 

update the SAH regulations to include 

relevant information about this benefit. 

Finally, eliminating specific dollar 

amounts from the regulatory text would 

allow the Secretary to adjust grant 

amounts, in accordance with applicable 

statutory provisions (38 U.S.C. 2102(e)), 

without amending the regulations. The 

intended effect of this action is clear, 

detailed, accurate regulations that will 

further assist eligible individuals in 

obtaining their SAH benefits. 

Section 36.4403 Subsequent Use 

Currently, the SAH regulations do not 

provide any information about 

subsequent use of SAH grants. Prior to 

the enactment of Public Law 109–233 in 

2006, an individual could receive only 

one grant of assistance under the SAH 

program. Therefore, even if an 

individual had used only half of the 

aggregate amount of assistance 

available, the individual was unable to 

preserve the balance of assistance in 

order to reuse the benefit at a later date. 


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With the enactment of Public Law 

109–233, the program was expanded to 

allow for up to three grant usages per 

eligible individual, subject to the 

aggregate amount of assistance 

available. Accordingly, we are 

proposing that § 36.4403, ‘‘Subsequent 

use,’’ would describe the restrictions on 

obtaining more than one SAH grant. The 

section would discuss the number of 

times each grant may be used and the 

aggregate amount of assistance 

available. Additionally, the section 

would note that funds from subsequent 

grant usages may not be used 

retroactively; in other words, even if the 

eligible individual has not used the 

aggregate amount of assistance 

available, subsequent use funds may not 

reimburse for costs incurred prior to the 

enactment of the enabling legislation 

(June 15, 2006) or prior to the eligible 

individual’s subsequent use grant 

approval. The intended effect of this 

action is regulations that are up to date 

and that will educate applicants and 

other interested persons about 

opportunities available through the SAH 

program. 

Section 36.4404 Eligibility for 

Assistance 

38 U.S.C. 2101 sets forth the 

eligibility requirements for obtaining 

SAH assistance by dividing such 

requirements into two categories: (i) 

Disability requirements and (ii) 

feasibility and suitability requirements. 

The former prescribes the medical 

criteria necessary for eligibility; the 

latter establishes minimum standards 

for determining whether the proposed 

adaptations are consistent with the 

purpose of the SAH program and the 

applicant’s unique circumstances. 

Applicants must satisfy the 

requirements of both statutory 

categories before being considered 

eligible to receive a grant of assistance. 

Currently, the regulations 

implementing the eligibility 

requirements are found at 38 CFR 

36.4402. In that section, there is no 

discussion of the medical disability 

requirements for SAH eligibility, merely 

a reference to 38 U.S.C. 2101. Current 

§ 36.4402 details the feasibility and 

suitability requirements located at 38 

U.S.C. 2101(a)(3) and (b)(3), but it also 

lists the legal property interests, nondiscrimination certifications, and flood 

insurance certifications that are 

acceptable to VA for the purpose of the 

SAH program. Although these last three 

requirements are important aspects of 

the SAH program, their placement in 

§ 36.4402 may be confusing, as one 

might infer that such considerations 

factor into an applicant’s eligibility. 

Therefore, proposed § 36.4404, 

‘‘Eligibility for assistance,’’ would revise 

current § 36.4402 by limiting its scope 

only to those criteria necessary for SAH 

eligibility: Disability requirements and 

feasibility and suitability requirements. 

In terms of disability requirements, the 

section would outline the statutory 

requirements. In terms of feasibility and 

suitability requirements, this section 

would outline the requirements set forth 

for PH grants in 38 U.S.C. 2101(a)(3), for 

AH grants in section 2101(b)(3), and for 

TRA grants in section 2102A. 

The statutory meaning of PH grant 

feasibility is that an applicant’s medical 

condition does not prevent him or her 

from living in the proposed housing 

unit, in the proposed locality, and that 

the applicant’s present or anticipated 

income and expenses bear a proper 

relation to the proposed housing unit. 

Evidence of such feasibility might 

include, among other things, doctors’ 

orders and credit reports. 

PH grant suitability means that the 

nature and condition of the proposed 

housing unit are suitable to the 

applicant’s living needs. In most cases, 

the proposed rule would simplify the 

evidence one must submit at this stage 

by allowing him or her to provide 

materials as basic as non-scaled 

drawings and a specific list of the 

proposed adaptations. Depending on the 

applicant’s condition and the proposed 

adaptations, however, a determination 

may require more detailed 

documentation, such as scaled plans 

and specifications. Additional aspects of 

this policy are discussed in the analysis 

of §§ 36.4405 and 36.4406. 

Like the PH grant, the AH grant’s 

feasibility and suitability requirements 

in this proposed rule mirror the statute. 

Such requirements are based on 

residency and can be satisfied by the 

applicant certifying that he or she 

resides, and reasonably intends to 

reside, in the proposed housing unit. If 

the applicant’s residence is not yet 

constructed, then the applicant must 

certify that he or she will be residing in, 

and reasonably intends to be residing in, 

the housing unit. An applicant may also 

be eligible for an AH grant if the existing 

housing unit, or the housing unit to be 

constructed, is owned by a member of 

the applicant’s family. 

Proposed § 36.4404 would also 

address another important aspect of 

eligibility. Because ownership interests, 

non-discrimination certifications, and 

flood certifications are not part of the 

eligibility determination, all references 

to such issues would be moved to other 

sections, as explained below. This 

action is necessary for two reasons. 

First, it is important that the SAH 

regulations state as clearly as possible 

which disability conditions make an 

individual eligible for which grant. 

Second, it is necessary to state expressly 

to the public that eligibility cannot be 

established (and, consequently, neither 

preconstruction costs nor construction 

costs may be incurred) until both the 

disability requirements and the 

feasibility and suitability requirements 

have been confirmed and documented. 

VA has authority to take this action 

pursuant to 38 U.S.C. 2101 and 2102A. 

The intended effect of this action is 

regulations that are up to date and that 

accurately describe all of the 

requirements that may make an 

individual eligible for SAH assistance. 

Section 36.4405 Grant Approval 

Currently, the regulations provide 

little information regarding the SAH 

grant approval process. While 

regulations are not always the proper 

medium through which to explain 

detailed administrative procedures, it is 

important for applicants, eligible 

individuals, and other affected members 

of the public to understand the 

chronology of the program and what it 

means to them as far as incurring costs 

and moving forward with planning and 

construction. Thus, VA is proposing 

that the regulations contain details 

about the meanings, requirements, and 

implications of the SAH grant approval 

process. 

Under the current grant approval 

process, SAH agents at field facilities 

counsel applicants, in accordance with 

the program’s operating manual (VBA 

Manual M26–12, ‘‘Specially Adapted 

Housing Grant Processing Procedures, 

Loan Guaranty Operations Regional 

Office Manual,’’ available at http:// 

www.warms.vba.va.gov/M26_12.html), 

at each point in the application process. 

Changes to the SAH program 

(specifically, the subsequent use and 

TRA grant provisions of Public Laws 

109–233 and 110–289) have rendered 

the program complex enough that 

specific regulatory guidance in the area 

of grant approval will simplify the 

process for all participants. 

Under proposed § 36.4405, ‘‘Grant 

approval,’’ VA would formalize a twostaged grant approval process. The first 

stage of the approval process would lead 

to what proposed § 36.4405(a) calls 

‘‘conditional approval,’’ at which point 

the Secretary may authorize certain 

preconstruction costs. The second stage, 

as set forth in proposed § 36.4405(b), 

would culminate in ‘‘final approval,’’ 

and the Secretary’s disbursement of the 

full grant proceeds. 

Conditional approval would be the 

Secretary’s authorization for an 


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applicant to move forward with more 

detailed planning of adaptations. An 

application would be approved 

conditionally on the date the Secretary 

determines that the individual has met 

all eligibility requirements, as set forth 

in proposed § 36.4404, and that the 

applicant has not exceeded the grant 

usage and dollar limitations set forth in 

proposed §§ 36.4402 and 36.4403. 

Once an applicant has obtained 

conditional approval, the Secretary may 

authorize him or her, in writing, to 

incur certain preconstruction costs 

pursuant to § 36.4406. Such 

preconstruction costs could include 

architectural services, land surveys, 

attorneys’ fees, and other costs or fees 

necessary to plan for grant use and 

would be limited to no more than 20 

percent of the eligible individual’s grant 

amount. Conditional approval must be 

granted before an applicant would be 

authorized to incur any preconstruction 

costs. Should an applicant incur 

preconstruction costs prior to 

conditional approval, he or she would 

not be reimbursed for those costs. This 

is because, pursuant to the authorizing 

statute, an applicant must be deemed 

eligible for grant assistance before the 

Secretary may approve the 

disbursement of any grant funds. 

An applicant who has obtained 

conditional approval would need to 

satisfy all requirements of § 36.4405(b) 

before the Secretary would authorize 

final approval. One such requirement 

would be to provide the Secretary 

scaled plans and specifications for the 

planned adaptations. The Secretary 

must determine that the plans and 

specifications meet the minimum 

property and design requirements of the 

SAH program. VA’s review of plans at 

this stage would differ from the 

feasibility and suitability determination 

under § 36.4404. Under proposed 

§ 36.4404, plans may be preliminary and 

need not be scaled, which would allow 

VA to determine eligibility without 

requiring a veteran or servicemember to 

expend personal funds in advance of the 

grant. The plans and specifications 

required at this stage, however, would 

need to be more detailed than those 

required to determine eligibility, as they 

would be relied upon during the 

inspection process and for the release of 

funds. In other words, at the beginning 

of this second and final stage, the 

Secretary already would have 

determined that the planned 

adaptations were suitable and feasible 

for the purposes of eligibility; 

nevertheless, the Secretary still would 

need to determine that the adaptations 

also met minimum property and design 

requirements before granting final 

approval and disbursing the remaining 

grant proceeds. 

Another important requirement in 

this stage is that an applicant who has 

obtained conditional approval must 

provide the Secretary evidence of 

sufficient ownership interest in the 

proposed housing unit. Though this 

requirement is not new, it would change 

substantially from current practice. As 

stated above, existing title requirements 

for PH grants, which are found at 38 

CFR 36.4402, do not necessarily reflect 

the vast choices available to an 

applicant when planning an estate. For 

instance, a life-estate is a commonly 

used tool in estate-planning, yet VA’s 

current regulations do not include the 

life-estate as an acceptable form of title. 

Under the proposed rule, an applicant 

would have more freedom in the type of 

estate that he or she chooses to obtain. 

Moreover, since the applicant would 

already be conditionally approved for a 

grant at this stage, meaning that the 

applicant’s eligibility status would have 

been determined, he or she would be 

authorized to use a portion of the grant 

proceeds for attorneys’ and other legal 

fees. VA believes that this change will 

open the door to SAH assistance for a 

number of veterans and servicemembers 

who might not otherwise be able to 

afford the upfront costs associated with 

the SAH program. 

In addition to the proposed new 

portions of the regulation described 

above, the final grant approval section 

would contain the joint ownership 

provisions, non-discrimination 

certifications, flood insurance 

requirements, and geographical 

limitations in current §§ 36.4402(a)(5), 

36.4402(a)(6), 36.4403, and 36.4411, 

respectively. The current rule on joint 

ownership would be revised in 

accordance with the statute in 38 U.S.C. 

2102(c), making it clear that an eligible 

individual’s available grant assistance 

would not be reduced simply because of 

a shared interest in a property. The nondiscrimination and flood insurance 

provisions would not contain new 

provisions, but they would be more 

intuitively located. The provisions 

relating to geographical limitations 

would be revised to eliminate specific 

references to Guam and American 

Samoa, because they are included 

within the meaning of the term 

‘‘Territories.’’ This provision would also 

incorporate the provisions of Public 

Law 110–289 expressly permitting the 

Secretary, in his or her discretion, to 

provide SAH grants to otherwise eligible 

individuals residing outside the United 

States. 

The proposed amendments to the 

SAH grant approval process are 

necessary to reduce the possible 

confusion surrounding the process 

created by current regulations. Since 

numerous determinations must be made 

at various points on the SAH timeline, 

and since certain financial 

considerations (for example, 

reimbursements for preconstruction 

costs) are dependent upon the stage of 

an applicant’s grant approval, it is 

important that the regulations are clear 

about exactly how such stages are 

structured. VA has authority to take this 

action pursuant to 38 U.S.C. 2101 and 

2102A. The intended effect of this 

action is more detailed regulations that 

make clear to the public the aspects of 

and practical differences between 

conditional approval and final approval 

of SAH grants. 

Section 36.4406 Reimbursement of 

Costs and Disbursement of Grant Funds 

With the exception of current 

§§ 36.4406 and 36.4410, current 

regulations provide little information 

about what costs an eligible individual 

may incur with SAH grant funds and 

when these costs may be incurred. 

Furthermore, since VA is proposing to 

include in the regulations the two-stage 

approval process, VA believes that the 

regulations also should explain more 

fully what costs may be incurred, when 

costs will be reimbursed, and when and 

how grant funds will be disbursed, 

depending on the status of conditional 

approval and final approval. 

Section 36.4406, ‘‘Reimbursement of 

costs and disbursement of grant funds,’’ 

would revise and expand upon current 

§ 36.4406 to explain how grant funds 

will be disbursed, and would set forth 

specific requirements for incurring and 

reimbursing certain preconstruction 

costs. The section would re-emphasize 

that conditional approval must be 

obtained in order for an applicant to 

incur allowable preconstruction costs 

and that there would be a 20 percent 

cap on such costs to preserve the 

remaining grant funds for construction, 

in the event that final approval is 

granted. 

The section also would substitute the 

broader framework of ‘‘constructionrelated costs’’ for current § 36.4404’s 

limitations on costs allowable for grant 

computation. Construction-related costs, 

as defined under proposed § 36.4401 

would mean ‘‘[a]n expense incurred for 

the purpose of or directly related to 

building, modifying, or adapting a 

housing unit by using specially adapted 

housing grant proceeds.’’ Since each 

eligible individual would require 

different adaptations, VA believes that 

the broader framework would allow an 

eligible individual to achieve maximum 


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use of his or her grant proceeds and 

adapted property. 

In terms of grant disbursement after 

final approval, proposed § 36.4406 

would be similar to current regulations 

in stating that the Secretary determines 

the method on a case-by-case basis. 

Currently, the Secretary generally 

requires that funds either be deposited 

into an escrow account so that an 

escrow agent can disburse funds 

directly to a contractor or that the funds 

be disbursed to a mortgage holder to 

reduce the outstanding principal 

indebtedness. This practice would 

remain in effect under the proposed 

rule. 

Finally, proposed § 36.4406 would 

note that, in the event that an eligible 

individual dies at some point during the 

SAH grant timeline, the estate may be 

reimbursed for authorized 

preconstruction and construction 

related costs, but must submit requests 

for reimbursement that are timely under 

the proposed rule. Unfortunately, some 

eligible individuals will die before the 

adaptations to their housing units are 

finished. VA’s new two-staged process 

will make it easier for eligible 

individuals’ estates to recover costs 

where the individual had been 

determined eligible and had already 

expended personal funds. At the same 

time, a limitation on the timeframe in 

which an eligible individual’s estate 

may seek such reimbursement is 

necessary. VA believes that one year 

from the date on which the Loan 

Guaranty Service becomes aware of the 

eligible individual’s death would 

provide the estate sufficient time in 

which to submit the necessary 

documentation. Under the proposed 

rule, VA would require that requests for 

reimbursement be submitted within one 

year, except when the Secretary 

determines that equity and good 

conscience require otherwise. 

These actions are necessary in order 

to clarify what specific preliminary 

costs may be incurred, to detail the 

administrative requirements that must 

be followed in order to be properly 

reimbursed, and to explain the options 

regarding grant disbursement. This 

section takes into account the fact that, 

to obtain a grant, an eligible individual 

may have to incur certain reasonable 

expenses; and that, although SAH grants 

are made for the benefit of the eligible 

individual not his or her family, VA has 

a longstanding administrative practice 

of making an eligible individual’s estate 

whole. In developing this section, we 

were also guided by a 1995 legal 

decision of the VA Office of the General 

Counsel (VAOPGCPREC 13–95), which 

held: 

The Veterans Benefits Administration 

(VBA) should issue regulations establishing 

what constitutes the final approval for 

granting SAH assistance. These regulations 

should also provide that VA may authorize 

a veteran who meets all initial qualifying 

criteria to incur certain preliminary costs 

prior to final grant approval. They may also 

permit VA to reimburse these costs to the 

estate of a veteran who dies prior to final 

approval if VA determines it is likely 

approval would have been given had the 

veteran lived. 

VA has authority to take this action 

pursuant to 38 U.S.C. 2101(d). The 

intended effect of this action is more 

detailed regulations that make clear to 

the public the costs that may be 

incurred and the temporal requirements 

for their reimbursement. 

Section 36.4407 Guaranteed and 

Direct Loans 

Section 36.4407, ‘‘Guaranteed and 

direct loans,’’ would revise current 

§ 36.4409 to clarify its requirements. No 

substantive change to § 36.4409 is 

intended. 

Section 36.4408 Submission of Proof 

to the Secretary 

Proposed § 36.4408, ‘‘Submission of 

proof to the Secretary,’’ would renumber 

current § 36.4405. The change would be 

structural only. 

Section 36.4409 Delegations of 

Authority 

Proposed § 36.4409, ‘‘Delegations of 

authority,’’ would renumber current 

§ 36.4408. In addition, VA proposes 

updates to the list of positions with 

delegated authority to reflect changes in 

position titles and to add the Deputy 

Director, Loan Guaranty Service. VA has 

authority to take this action pursuant to 

38 U.S.C. 501, 512, and 2101. 

Section 36.4410 Supplementary 

Administrative Action 

Proposed § 36.4410, ‘‘Supplementary 

administrative action,’’ would renumber 

previous § 36.4407. It would also 

rephrase current § 36.4407 in a readerfocused style. No substantive change is 

intended to current § 36.4407. 

Unfunded Mandates 

The Unfunded Mandates Reform Act 

of 1995 requires, at 2 U.S.C. 1532, that 

agencies prepare an assessment of 

anticipated costs and benefits before 

issuing any rule that may result in 

expenditure by State, local, and tribal 

governments, in the aggregate, or by the 

private sector, of $100 million or more 

(adjusted annually for inflation) in any 

year. This proposed rule would have no 

such effect on State, local, and tribal 

governments, or on the private sector. 

Paperwork Reduction Act of 1995 

Although this document contains 

provisions constituting collections of 

information, under the provisions of the 

Paperwork Reduction Act of 1995 (44 

U.S.C. 3501–3521), no new or proposed 

revised collections of information are 

associated with this proposed rule. The 

information collection provisions for 

§ 36.4400 et seq. are currently approved 

by the Office of Management and 

Budget (OMB) and have been assigned 

OMB control numbers 2900–0031, 

2900–0047, 2900–0132, and 2900–0300. 

Executive Order 12866 

Executive Order 12866 directs 

agencies to assess all costs and benefits 

of available regulatory alternatives and, 

when regulation is necessary, to select 

regulatory approaches that maximize 

net benefits (including potential 

economic, environmental, public health 

and safety, and other advantages; 

distributive impacts; and equity). The 

Executive Order classifies a regulatory 

action as a ‘‘significant regulatory 

action,’’ requiring review by the Office 

of Management and Budget (OMB) 

unless OMB waives such review, if it is 

a regulatory action that is likely to result 

in a rule that may: (1) Have an annual 

effect on the economy of $100 million 

or more or adversely affect in a material 

way the economy, a sector of the 

economy, productivity, competition, 

jobs, the environment, public health or 

safety, or State, local, or tribal 

governments or communities; (2) create 

a serious inconsistency or otherwise 

interfere with an action taken or 

planned by another agency; (3) 

materially alter the budgetary impact of 

entitlements, grants, user fees, or loan 

programs or the rights and obligations of 

recipients thereof; or (4) raise novel 

legal or policy issues arising out of legal 

mandates, the President’s priorities, or 

the principles set forth in the Executive 

Order. 

The economic, interagency, 

budgetary, legal, and policy 

implications of this proposed rule have 

been examined, and it has been 

determined to be a significant regulatory 

action under Executive Order 12866. 

Regulatory Flexibility Act 

The Secretary hereby certifies that 

this 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. This 

proposed rule would directly affect only 

individuals. Therefore, pursuant to 5 

U.S.C. 605(b), this proposed rule is 

exempt from the initial and final 


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regulatory flexibility analysis 

requirements of sections 603 and 604. 

Catalog of Federal Domestic Assistance 

The Catalog of Federal Domestic 

Assistance numbers and titles for the 

programs affected by this document are 

64.106, Specially Adapted Housing for 

Disabled Veterans; and 64.118, Veterans 

Housing—Direct Loans for Certain 

Disabled Veterans. 

Lists of Subjects in 38 CFR Part 36 

Condominiums, 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: June 26, 2009. 

John R. Gingrich, 

Chief of Staff, Department of Veterans Affairs. 

For the reasons stated in the 

preamble, the Department of Veterans 

Affairs proposes to amend 38 CFR part 

36 (subpart C) 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 and as otherwise 

noted. 

2. Revise Subpart C to read as follows: 

Subpart C—Assistance to Certain 

Individuals in Acquiring Specially Adapted 

Housing 

Sec. 

36.4400 Authority. 

36.4401 Definitions. 

36.4402 Grant types. 

36.4403 Subsequent use. 

36.4404 Eligibility for assistance. 

36.4405 Grant approval. 

36.4406 Reimbursement of costs and 

disbursement of grant funds. 

36.4407 Guaranteed and direct loans. 

36.4408 Submission of proof to the 

Secretary. 

36.4409 Delegations of authority. 

36.4410 Supplementary administrative 

action. 

Subpart C—Assistance to Certain 

Individuals in Acquiring Specially 

Adapted Housing 

§ 36.4400 Authority. 

The Secretary’s authority to provide 

assistance in acquiring specially 

adapted housing is set forth in 38 U.S.C. 

chapter 21. 

(Authority: 38 U.S.C. 501, 2101(d)) 

§ 36.4401 Definitions. 

The following definitions of terms 

apply to this subpart: 

Adapt: To make a housing unit 

suitable to, or fit for, the residential 

living needs of an eligible individual. 

(Authority: 38 U.S.C. 501, 2101) 

Adapted housing grant or AH grant: A 

grant authorized under 38 U.S.C. 

2101(b), 2102(b). 

(Authority: 38 U.S.C. 501, 2101, 2102) 

Aggregate amount of assistance 

available: The amounts specified at 38 

U.S.C. 2102(d) as adjusted in 

accordance with 38 U.S.C. 2102(e). 

(Authority: 38 U.S.C. 501, 2101, 2102) 

Beneficial property interest: An 

interest deemed by the Secretary as one 

that provides (or will provide) an 

eligible individual a meaningful right to 

occupy a housing unit as a residence. 

(Authority: 38 U.S.C. 501, 2101) 

Braces: Orthopedic appliances, 

including prosthetic devices, used for 

support. 

(Authority: 38 U.S.C. 501, 2101) 

Construction-related cost: An expense 

incurred for the purpose of or directly 

related to building, modifying, or 

adapting a housing unit by using 

specially adapted housing grant 

proceeds. 

(Authority: 38 U.S.C. 501, 2101) 

Disability: A compensable physical 

impairment, as determined by a 

Department of Veterans Affairs rating 

decision, that meets the criteria of 38 

U.S.C. 2101(a)(2) or (b)(2). 

(Authority: 38 U.S.C. 501, 2101) 

Eligible individual: For specially 

adapted housing purposes, a person 

who has served or is currently serving 

in the active military, naval, or air 

service, and who has been determined 

by the Secretary to be eligible for 

benefits pursuant to 38 U.S.C. chapter 

21. 

(Authority: 38 U.S.C. 501, 2101, 2101A) 

Eligible individual’s family: Persons 

related to an eligible individual by 

blood, marriage, or adoption. 

(Authority: 38 U.S.C. 501, 2101, 2102A) 

Housing unit: Any residential unit, 

including all necessary land, 

improvements, and appurtenances, 

together with such movable equipment 

or special features as are authorized by 

38 U.S.C. 1717 and 2101. For the 

purposes of this definition, movable 

facilities is defined as such exercising 

equipment and other aids as may be 

allowed or required by the Chief 

Medical Director or designee; necessary 

land is defined as any plot of land the 

cost and area of which are not 

disproportionate to the type of 

improvements thereon and which is in 

keeping with the locality; and special 

fixtures and necessary adaptations is 

defined as construction features which 

are specially designed to overcome the 

physical limitations of the individual 

beneficiary and which are allowed or 

required by the Chief Medical Director 

or designee as necessary by nature of the 

qualifying disability. 

(Authority: 38 U.S.C. 501, 1717, 2101) 

Ownership interest: An undivided 

property interest that the Secretary 

determines is a satisfactory: 

(1) Fee simple estate; 

(2) Life estate; 

(3) Functional equivalent of a life 

estate, such as that created by a valid 

trust, a long-term lease, or a land 

installment contract that will convert to 

a fee simple estate upon satisfaction of 

the contract’s terms and conditions; 

(4) Ownership of stock or membership 

in a cooperative housing corporation 

entitling the eligible individual to 

occupy for dwelling purposes a single 

family residential unit in a 

development, project, or structure 

owned or leased by such corporation; 

(5) Lease, under the terms of a valid 

and enforceable Memorandum of 

Understanding between a tribal 

organization and the Secretary; or 

(6) Beneficial property interest in a 

housing unit located outside the United 

States. 

(Authority: 38 U.S.C. 501, 2101, 3762) 

Paraplegic housing grant or PH grant: 

A grant authorized under 38 U.S.C. 

2101(a). 

(Authority: 38 U.S.C. 501, 2101) 

Preconstruction cost: An authorized 

expense incurred by an eligible 

individual in anticipation of receiving 

final approval for a specially adapted 

housing grant. 

(Authority: 38 U.S.C. 501, 2101) 

Reimburse: To pay specially adapted 

housing grant funds directly to an 

eligible individual (or an eligible 

individual’s estate) for preconstruction 

costs or for construction-related costs. 

(Authority: 38 U.S.C. 501, 2101) 

Reside: To occupy (including seasonal 

occupancy) as one’s residence. 

(Authority: 38 U.S.C. 501, 2101) 

Secretary: The Secretary of the United 

States Department of Veterans Affairs or 

any employee or agent authorized in 

§ 36.4409 of this part to act on behalf of 

the Secretary. 

(Authority: 38 U.S.C. 501, 2101) 


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Specially adapted housing grant: A 

PH grant, AH grant, or TRA grant made 

to an eligible individual in accordance 

with the requirements of 38 U.S.C. 

chapter 21 and this subpart. 

(Authority: 38 U.S.C. 501, 2101) 

Temporary residence adaptations 

grant or TRA grant: A grant, the specific 

requirements and amount of which are 

outlined in 38 U.S.C. 2102A and 

2102(d). 

(Authority: 38 U.S.C. 501, 2101, 2102A) 

§ 36.4402 Grant types. 

(a) PH grant. The PH grant provides 

monetary assistance for the purpose of 

acquiring specially adapted housing 

pursuant to one of the following plans: 

(1) Where an eligible individual elects 

to construct a dwelling on land to be 

acquired by the eligible individual, the 

Secretary will pay, up to the aggregate 

amount of assistance available for PH 

grants, not more than 50 percent of the 

eligible individual’s total costs for 

acquiring the land and constructing the 

dwelling. 

(2) Where an eligible individual elects 

to construct a dwelling on land already 

owned by the eligible individual, the 

Secretary will pay, up to the aggregate 

amount of assistance available for PH 

grants, not more than the lesser of: 

(i) 50 percent of the eligible 

individual’s costs for the land and the 

construction of the dwelling, or 

(ii) 50 percent of the eligible 

individual’s costs for the dwelling, plus 

the full amount of the unpaid balance, 

if any, of the cost to the individual of 

the necessary land. 

(3) Where an eligible individual elects 

to adapt a housing unit already owned 

by the eligible individual, to conform to 

the requirements of the eligible 

individual’s disability, the Secretary 

will pay, up to the aggregate amount of 

assistance available for PH grants, the 

greater of: 

(i) The eligible individual’s costs for 

making such adaptation(s), or 

(ii) 50 percent of the eligible 

individual’s costs for making such 

adaptation(s), plus the lesser of: 

(A) 50 percent of the eligible 

individual’s costs for acquiring the 

housing unit, or 

(B) The full amount of the unpaid 

balance, if any, of the cost to the 

individual of the housing unit. 

(4) Where an eligible individual has 

already acquired a suitably adapted 

housing unit, the Secretary will pay, up 

to the aggregate amount of assistance 

available for PH grants, the lesser of: 

(i) 50 percent of the eligible 

individual’s cost of acquiring such 

housing unit, or 

(ii) The full amount of the unpaid 

balance, if any, of the cost to the 

individual of the housing unit. 

(b) AH grant. (1) The AH grant 

provides monetary assistance for the 

purpose of acquiring specially adapted 

housing pursuant to one of the 

following plans: 

(i) Where an eligible individual elects 

to construct a dwelling on land to be 

acquired by the eligible individual or a 

member of the eligible individual’s 

family; 

(ii) Where an eligible individual elects 

to construct a dwelling on land already 

owned by the eligible individual or a 

member of the eligible individual’s 

family; 

(iii) Where an eligible individual 

elects to adapt a housing unit already 

owned by the eligible individual or a 

member of the eligible individual’s 

family; or 

(iv) Where an eligible individual 

elects to purchase a housing unit that is 

already adapted to the requirements of 

the eligible individual’s disability. 

(2) Regardless of the plan chosen 

pursuant to paragraph (b)(1) of this 

section, the Secretary will pay the lesser 

of: 

(i) The actual cost, or, in the case of 

an eligible individual acquiring a 

housing unit already adapted with 

special features, the fair market value, of 

the adaptations determined by the 

Secretary to be reasonably necessary, or 

(ii) The aggregate amount of 

assistance available for AH grants. 

(c) TRA grant. The TRA grant 

provides monetary assistance for the 

purpose of adapting a housing unit 

owned by a member of the eligible 

individual’s family, in which the 

eligible individual intends to reside 

temporarily. The Secretary will pay, up 

to the amounts specified at 38 U.S.C. 

2102A(b) for TRA grants, the actual cost 

of the adaptations. 

(d) Duplication of benefits. (1) If an 

individual is determined eligible for a 

PH grant, he or she may not 

subsequently receive an AH grant. 

(2) If an individual is determined 

eligible for an AH grant, and becomes 

eligible for a PH grant, he or she may 

receive PH grants and TRA grants up to 

the aggregate amount of assistance 

available for PH grants. However, any 

AH or TRA grants received by the 

individual before he or she was 

determined eligible for the PH grant will 

count towards the three grant limit in 

§ 36.4403. 

(3) If the Secretary has provided 

assistance to an eligible individual 

under 38 U.S.C. 1717, the Secretary will 

not provide assistance under this 

subpart that would result in duplicate 

payments for the same adaptations. 

However, nothing in this subpart 

prohibits an eligible individual from 

utilizing the assistance authorized 

under 38 U.S.C. 1717 and 38 U.S.C. 

chapter 21 simultaneously, provided 

that no duplicate payments result. 

(Authority: 38 U.S.C. 2102, 2102A, 2104) 

§ 36.4403 Subsequent use. 

An eligible individual may receive up 

to three grants of assistance under 38 

U.S.C. chapter 21, subject to the 

following limitations: 

(a) The aggregate amount of assistance 

available to an eligible individual for PH 

grant and TRA grant usage will be 

limited to the aggregate amount of 

assistance available for PH grants; 

(b) The aggregate amount of assistance 

available to an eligible individual for 

AH grant and TRA grant usage will be 

limited to the aggregate amount of 

assistance available for AH grants; 

(c) The TRA grant may only be 

obtained once and will be counted as 

one of the three grant usages; and 

(d) Funds from subsequent PH grant 

or AH grant usages may only pay for 

reimbursing specially adapted housingrelated costs incurred on or after June 

15, 2006 or the date on which the 

eligible individual is conditionally 

approved for subsequent assistance, 

whichever is later. 

(Authority: 38 U.S.C. 2102, 2102A) 

(The Office of Management and Budget has 

approved the information collection 

provisions in this section under control 

number 2900–0132.) 

§ 36.4404 Eligibility for assistance. 

(a) Disability requirements. (1) The PH 

grant is available to individuals with 

permanent and total service-connected 

disability who are entitled to 

compensation under 38 U.S.C. chapter 

11 for any of the following conditions: 

(i) Loss, or loss of use, of both lower 

extremities so as to preclude locomotion 

without the aid of braces, crutches, 

canes, or a wheelchair; 

(ii) Blindness in both eyes having 

only light perception, plus loss or loss 

of use of one lower extremity; 

(iii) Loss, or loss of use, of one lower 

extremity, together with— 

(A) Residuals of organic disease or 

injury; or 

(B) The loss or loss of use of one 

upper extremity, which so affect the 

functions of balance or propulsion as to 

preclude locomotion without the aid of 

braces, crutches, canes, or a wheelchair; 

(iv) Loss, or loss of use, of both upper 

extremities so as to preclude use of the 

arms at or above the elbows; or 


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(v) Any other injury identified as 

eligible for assistance under 38 U.S.C. 

2101(a). 

(2) The AH grant is available to 

individuals with permanent and total 

service-connected disability who are 

entitled to compensation under 38 

U.S.C. chapter 11 for any of the 

following conditions: 

(i) Blindness in both eyes with 5/200 

visual acuity or less; 

(ii) Anatomical loss, or loss of use, of 

both hands; or 

(iii) Any other injury identified as 

eligible for assistance under 38 U.S.C. 

2101(b). 

(3) The TRA grant is available to 

individuals with permanent and total 

service-connected disability who are 

entitled to compensation under 38 

U.S.C. chapter 11 for any of the 

conditions described under paragraph 

(a)(1) of this section for the PH grant or 

paragraph (a)(2) of this section for the 

AH grant. 

(b) Feasibility and suitability 

requirements. (1) In order for an 

individual to be eligible for PH grant 

assistance, the Secretary must determine 

that: 

(i) It is medically feasible for the 

individual to reside outside of an 

institutional setting; 

(ii) It is medically feasible for the 

individual to reside in the proposed 

housing unit and in the proposed 

locality; 

(iii) The nature and condition of the 

proposed housing unit are suitable for 

the individual’s residential living needs; 

and 

(iv) The cost of the proposed housing 

unit bears a proper relation to the 

individual’s present and anticipated 

income and expenses. 

(2) In order for an individual to be 

eligible for AH grant assistance, the 

Secretary must determine that: 

(i) The individual is residing in and 

reasonably intends to continue residing 

in a housing unit owned by the 

individual or a member of the 

individual’s family; or 

(ii) If the individual’s housing unit is 

to be constructed or purchased, the 

individual will be residing in and 

reasonably intends to continue residing 

in a housing unit owned by the 

individual or a member of the 

individual’s family. 

(Authority: 38 U.S.C. 501, 2101, 2102, 

2102A) 

§ 36.4405 Grant approval. 

(a) Conditional approval. (1) The 

Secretary may provide written 

notification to an eligible individual of 

conditional approval of a specially 

adapted housing grant if the Secretary 

has determined that: 

(i) Disability requirements have been 

satisfied pursuant to § 36.4404(a); 

(ii) Feasibility and suitability 

requirements have been satisfied 

pursuant to § 36.4404(b); and 

(iii) The eligible individual has not 

exceeded the usage and dollar 

limitations prescribed by §§ 36.4402(d) 

and 36.4403. 

(2) Once conditional approval has 

been granted, the Secretary may 

authorize, in writing, an eligible 

individual to incur certain 

preconstruction costs pursuant to 

§ 36.4406. 

(b) Final approval. In order to obtain 

final approval for a specially adapted 

housing grant, the Secretary must 

determine that the following property 

requirements are met: 

(1) Proposed adaptations. The plans 

and specifications of the proposed 

adaptations demonstrate compliance 

with minimum property and design 

requirements of the specially adapted 

housing program. 

(2) Ownership. 

(i) In the case of PH grants, the 

eligible individual must have, or 

provide satisfactory evidence that he or 

she will acquire, an ownership interest 

in the housing unit. 

(ii) In the case of AH grants, the 

eligible individual or a member of the 

eligible individual’s family must have, 

or provide satisfactory evidence that he 

or she will acquire, an ownership 

interest in the housing unit. 

(iii) In the case of TRA grants: 

(A) A member of the eligible 

individual’s family must have, or 

provide satisfactory evidence that he or 

she will acquire, an ownership interest 

in the housing unit, and 

(B) The eligible individual and the 

member of the eligible individual’s 

family who has or acquires an 

ownership interest in the housing unit 

must sign a certification as to the 

likelihood of the eligible individual’s 

temporary occupancy of such residence. 

(iv) If the ownership interest in the 

housing unit is or will be vested in the 

eligible individual and another person, 

the Secretary will not for that reason 

reduce by percentage of ownership the 

amount of a specially adapted housing 

grant. However, to meet the ownership 

requirement for final approval of a 

specially adapted housing grant, the 

eligible individual’s ownership interest 

must be of sufficient quantum and 

quality, as determined by the Secretary, 

to ensure the eligible individual’s quiet 

enjoyment of the property. 

(3) Certifications. The eligible 

individual must certify, in such form as 

the Secretary will prescribe, that: 

(i) Neither the eligible individual, nor 

anyone authorized to act for the eligible 

individual, will refuse to sell or rent, 

after receiving a bona fide offer, or 

refuse to negotiate for the sale or rental 

of, or otherwise make unavailable or 

deny the housing unit acquired by this 

benefit, to any person because of race, 

color, religion, sex, familial status, 

disability, or national origin; 

(ii) The eligible individual, and 

anyone authorized to act for the eligible 

individual, recognizes that any 

restrictive covenant on the housing unit 

relating to race, color, religion, sex, 

familial status, disability, or national 

origin is illegal and void, and any such 

covenant is specifically disclaimed; and 

(iii) The eligible individual, and 

anyone authorized to act for the eligible 

individual, understands that civil action 

for preventative relief may be brought 

by the Attorney General of the United 

States in any appropriate U.S. District 

Court against any person responsible for 

a violation of the applicable law. 

(4) Flood insurance. The eligible 

individual’s housing unit, if it is or 

becomes located in an area identified by 

the Federal Emergency Management 

Agency as having special flood hazards 

and in which flood insurance has been 

made available under the National 

Flood Insurance Act, as amended, must 

be covered by flood insurance. The 

amount of flood insurance must be at 

least equal to the lesser of the full 

insurable value of the housing unit or 

the maximum limit of coverage 

available for the particular type of 

housing unit under the National Flood 

Insurance Act, as amended. The 

Secretary will not approve any financial 

assistance for the acquisition or 

construction of a housing unit located in 

an area identified by the Federal 

Emergency Management Agency as 

having special flood hazards unless the 

community in which such area is 

situated is then participating in the 

National Flood Insurance Program. 

(Authority: 38 U.S.C. 501, chapter 21, 42 

U.S.C. 4012a, 4106(a)). 

(5) Geographical limits. Any real 

property purchased, constructed, or 

adapted with the proceeds of a specially 

adapted housing grant must be located: 

(i) Within the United States, which, 

for purposes of 38 U.S.C. chapter 21, 

includes the several States, Territories, 

and possessions, including the District 

of Columbia, and the Commonwealths 

of Puerto Rico and the Northern 

Mariana Islands; or, 


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(ii) If outside the United States, in a 

country or political subdivision which 

allows individuals to have or acquire a 

beneficial property interest, and in 

which the Secretary, in his or her 

discretion, has determined that it is 

reasonably practicable for the Secretary 

to provide assistance in acquiring 

specially adapted housing. 

(Authority: 38 U.S.C. 2101, 2101A, 2102A) 

(The Office of Management and Budget has 

approved the information collection 

provisions in this section under control 

numbers 2900–0031, 2900–0132, and 2900– 

0300.) 

§ 36.4406 Reimbursement of costs and 

disbursement of grant funds. 

(a) After providing conditional 

approval of a specially adapted housing 

grant for an eligible individual pursuant 

to § 36.4405, the Secretary may 

authorize the incurrence, prior to 

obtaining final specially adapted 

housing grant approval, of 

preconstruction costs of the types and 

subject to the limits specified in this 

paragraph. 

(1) Preconstruction costs to be 

incurred may not exceed 20 percent of 

the eligible individual’s aggregate 

amount of assistance available, unless 

the individual is authorized by the 

Secretary in writing to incur specific 

preconstruction costs in excess of this 

20 percent limitation. Preconstruction 

costs may include the following items: 

(i) Architectural services employed 

for preparation of building plans and 

specifications. 

(ii) Land surveys. 

(iii) Attorneys’ and other legal fees. 

(iv) Other costs or fees necessary to 

plan for specially adapted housing grant 

use, as determined by the Secretary. 

(2) If the Secretary authorizes final 

approval, the Secretary will pay out of 

the specially adapted housing grant the 

preconstruction costs that the Secretary 

authorized in advance. If the specially 

adapted housing grant process is 

terminated prior to final approval, 

preconstruction costs incurred that the 

Secretary authorized in advance will be 

reimbursed to the eligible individual, or 

the eligible individual’s estate pursuant 

to paragraph (c) of this section, but will 

be deducted from the aggregate amount 

of assistance available and the 

reimbursement will constitute one of 

the three permitted grant usages (see 

§ 36.4403). 

(b) After final approval, the Secretary 

will determine a method of 

disbursement that is appropriate and 

advisable in the interest of the eligible 

individual and the Government, and 

will pay the specially adapted housing 

grant accordingly. Disbursement of 

specially adapted housing grant 

proceeds generally will be made to third 

parties who have contracted with the 

veteran, to an escrow agent, or to the 

eligible individual’s lender, as the 

Secretary deems appropriate. If the 

Secretary determines that it is 

appropriate and advisable, the Secretary 

may disburse specially adapted housing 

grant funds directly to an eligible 

individual where the eligible individual 

has incurred authorized preconstruction 

or construction-related costs and paid 

for such authorized costs using personal 

funds. 

(c) Should an eligible individual die 

before the Secretary disburses the full 

specially adapted housing grant, the 

eligible individual’s estate must submit 

to the Secretary all requests for 

reimbursement within one year of the 

date the Loan Guaranty Service learns of 

the eligible individual’s death. Except 

where the Secretary determines that 

equity and good conscience require 

otherwise, the Secretary will not 

reimburse an eligible individual’s estate 

for a request that has not been received 

by the Department of Veterans Affairs 

within this timeframe. 

(Authority: 38 U.S.C. 2101(d)) 

§ 36.4407 Guaranteed and direct loans. 

(a) In any case where, in addition to 

using the benefits of 38 U.S.C. chapter 

21, the eligible individual will use his 

or her entitlement to the loan guaranty 

benefits of 38 U.S.C. chapter 37, the 

complete transaction must be in accord 

with applicable regulations found in 

this part. 

(b) In any case where, in addition to 

using the benefits of 38 U.S.C. chapter 

21, the eligible individual will use a 

direct loan under 38 U.S.C. 3711(i), the 

complete transaction must be in accord 

with the requirements of § 36.4503 and 

the loan must be secured by the same 

housing unit to be purchased, 

constructed, or adapted with the 

proceeds of the specially adapted 

housing grant. 

(c) In any case where, in addition to 

using the benefits of 38 U.S.C. chapter 

21, the eligible individual will use the 

Native American Direct Loan benefit 

under 38 U.S.C. chapter 37, subchapter 

V, the eligible individual’s ownership 

interest in the housing unit must 

comport with the requirements found in 

§§ 36.4501, 36.4512, and 36.4527 and in 

the tribal documents approved by the 

Secretary, which include, but may not 

be limited to, the Memorandum of 

Understanding, the residential lease of 

tribal-owned land, the tribal lending 

ordinances, and any relevant tribal 

resolutions. 

(Authority: 38 U.S.C. 2101(d), 3711(i), 3762) 

§ 36.4408 Submission of proof to the 

Secretary. 

The Secretary may, at any time, 

require submission of such proof of 

costs and other matters as the Secretary 

deems necessary. 

(Authority: 38 U.S.C. 501, 2101(d)) 

(The Office of Management and Budget has 

approved the information collection 

provisions in this section under control 

numbers 2900–0031 and 2900–0300.) 

§ 36.4409 Delegations of authority. 

(a) Each employee of the Department 

of Veterans Affairs appointed to or 

lawfully filling any of the following 

positions is hereby delegated authority, 

within the limitations and conditions 

prescribed by law, to exercise the 

powers and functions of the Secretary 

with respect to assisting eligible 

individuals in acquiring specially 

adapted housing: 

(1) Under Secretary for Benefits. 

(2) Director, Loan Guaranty Service. 

(3) Deputy Director, Loan Guaranty 

Service. 

(4) Assistant Director, Loan Policy 

and Valuation. 

(5) Chief, Specially Adapted Housing, 

Loan Guaranty Service. 

(6) Director, VA Medical Center. 

(7) Director, VA Regional Office. 

(8) Loan Guaranty Officer. 

(9) Assistant Loan Guaranty Officer. 

(b) Nothing in this section will be 

construed to authorize the 

determination of basic eligibility or 

medical feasibility under § 36.4404(a), 

(b)(1)(i), or (b)(1)(ii) by any employee 

designated in this section, except as 

otherwise authorized. 

(Authority: 38 U.S.C. 501, 512, ch. 21) 

§ 36.4410 Supplementary administrative 

action. 

Subject to statutory limitations and 

conditions prescribed in title 38, U.S.C., 

the Secretary may take such action as 

may be necessary or appropriate to 

relieve undue prejudice to an eligible 

individual or a third party contracting 

or dealing with such eligible individual 

which might otherwise result. 

(Authority: 38 U.S.C. 501, 2101(d)) 

[FR Doc. E9–23842 Filed 10–2–09; 8:45 am] 

BILLING CODE 8320–01–P 


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