`[Federal Register Volume 75, Number 180 (Friday, September 17, 2010)]
[Rules and Regulations]
[Pages 56875-56880]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-23277]


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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: Final rule.

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SUMMARY: This document amends the Department of Veterans Affairs' 
(VA's) Loan Guaranty regulations concerning assistance to eligible 
individuals in acquiring specially adapted housing. These changes 
improve the readability of the regulations; provide further detail 
about longstanding program policies; and address legislation, policy 
changes, and a VA Office of the General Counsel legal opinion.

DATES: Effective Date: October 18, 2010.

FOR FURTHER INFORMATION CONTACT: William White, Acting Assistant 
Director for Loan Policy and Valuation, Loan Guaranty Service (262), 
Veterans Benefits Administration, Department of Veterans Affairs, 810 
Vermont Avenue, NW., Washington, DC 20420, (202) 461-9543. (This is not 
a toll-free telephone number.)

SUPPLEMENTARY INFORMATION: 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. In a document published 
in the Federal Register on October 5, 2009 (74 FR 51103), VA proposed 
to amend regulations in 38 CFR part 36, subpart C, regarding assistance 
to certain disabled veterans in acquiring SAH, specifically Sec. Sec.  
36.4400 through 36.4410, which implement the SAH grant program.
    As explained in the proposed rule, VA is amending these regulations 
for three reasons. First, VA believes the regulations should be written 
in a reader-focused style. Second, detailed guidance about program 
policies and a regulation written with an easy-to-follow organizational 
structure will help applicants and eligible individuals (and those 
acting on their behalf) understand program requirements. Third, 
substantive changes are necessary to implement recent legislation, 
policy decisions, and a VA General Counsel legal opinion. 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, program participants, and other 
interested parties will be better informed about the legal requirements 
and Department policies that guide the administration of SAH grants.
    The comment period for the proposed rule ended on December 4, 2009, 
and VA received two comments. The commenters expressed concern 
regarding VA's proposed use of the terminology ``paraplegic housing 
grant or PH grant'' for the grant authorized under 38 U.S.C. 2101(a). 
The commenters pointed out that the term is reflective of only one of 
the types of disabilities that make an individual eligible for this 
grant. Additionally, the commenters suggested that the use of the term 
``paraplegic'' might result in an improper restriction on eligibility 
for SAH grants. The concern was that the term ``paraplegia'' or 
``paraplegic'' might not be interpreted to include the functional loss 
of use of the lower limbs due to psychological disorders or other non-
organic impairments. One commenter, citing General Counsel Precedent 
Opinion 60-90, asserted that such a restriction on eligibility for SAH 
grants is improper, and both commenters wanted to ensure that the 
definition for ``paraplegic grant'' would not exclude individuals who 
otherwise would have been eligible for assistance under 38 U.S.C. 
2101(a).
    The General Counsel opinion held that the determination of ``loss 
of use'' is made ``irrespective of whether such loss is functional or 
organic in origin.'' VA did not propose to diverge from this holding. 
VA agrees with the commenters' concerns and, therefore, has decided to 
use the applicable statutory citations when referring to the grants 
authorized under 38 U.S.C. 2101(a) as well as 2101(b), rather than the 
terms ``paraplegic housing grant'' or ``adaptive housing grant'' as 
proposed.
    No other substantive changes are made to the proposed rule. 
However, VA has made a few technical revisions. First, VA has revised 
the heading of subpart C to refer to ``Eligible Individuals'' rather 
than ``Certain Disabled Veterans.'' Second, VA is amending the language 
in Sec.  36.4404(a)(1), (2), and (3) to clarify that assistance is 
based on an individual's rating for entitlement to compensation under 
38 U.S.C. chapter 11. These changes are intended to clarify that 
assistance under 38 U.S.C. chapter 21 is available to veterans and 
active duty servicemembers. Third, on September 24, 2009, VA published 
a final rule establishing 38 CFR 36.4412, which implemented provisions 
of the Housing and Economic Recovery Act of 2008, Public Law 110-289. 
Those provisions authorize VA to provide automatic annual increases to 
certain SAH grant recipients. VA sought comments on proposed Sec.  
36.4412 in a document published in the Federal Register on May 12, 2009 
(74 FR 22145). VA inadvertently omitted Sec.  36.4412 in the proposed 
rule that preceded this final rule. See 74 FR 51103. VA is re-inserting 
this provision, without further change, as Sec.  36.4411. No 
substantive changes were made to the regulation. Finally, VA has 
revised Sec. Sec.  36.4405(a)(iii), 36.4405(b), and 36.4406(b) for 
grammatical reasons.

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 given year. This final rule will 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 final rule. The information 
collection provisions for subpart C of 38 CFR part 36 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

[[Page 56876]]

action,'' requiring review by 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 final rule have been examined, and it has been 
determined to be a significant regulatory action under Executive Order 
12866 because it is likely to result in a rule that may raise novel 
legal or policy issues arising out of legal mandates, the President's 
priorities, or the principles set forth in the Executive Order.

Regulatory Flexibility Act

    The Secretary hereby certifies that this final rule will 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 final rule will directly affect only individuals. Therefore, 
pursuant to 5 U.S.C. 605(b), this final rule is exempt from the initial 
and final 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.

Signing Authority

    The Secretary of Veterans Affairs, or designee, approved this 
document and authorized the undersigned to sign and submit the document 
to the Office of the Federal Register for publication electronically as 
an official document of the Department of Veterans Affairs. John R. 
Gingrich, Chief of Staff, Department of Veterans Affairs, approved this 
document on September 13, 2010, for publication.

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.

    Dated: September 13, 2010.
Robert C. McFeteridge,
Director, Regulation Policy and Management, Office of General Counsel, 
Department of Veterans Affairs.

0
For the reasons stated in the preamble, the Department of Veterans 
Affairs is amending 38 CFR part 36 (subpart C) as set forth below.

PART 36--LOAN GUARANTY

0
1. The authority citation for part 36 continues to read as follows:

    Authority: 38 U.S.C. 501 and as otherwise noted.

0
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.
36.4411 Annual adjustments to the aggregate amount of assistance 
available.

Subpart C--Assistance to Eligible Individuals in Acquiring 
Specially Adapted Housing


Sec.  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))

Sec.  36.4401  Definitions.

    The following definitions of terms apply to this subpart:
    2101(a) grant: A grant authorized under 38 U.S.C. 2101(a).

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


    2101(b) grant: A grant authorized under 38 U.S.C. 2101(b).

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


    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)


    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 or special 
fixtures and necessary adaptations 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

[[Page 56877]]

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)


    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 Sec.  36.4409 
of this part to act on behalf of the Secretary.

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


    Specially adapted housing grant: A 2101(a) grant, 2101(b) 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)

Sec.  36.4402  Grant types.

    (a) 2101(a) grant. The 2101(a) 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 2101(a) 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 2101(a) 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 
2101(a) 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 2101(a) 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) 2101(b) grant. (1) The 2101(b) 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 2101(b) 
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 2101(a) grant, he or she may not subsequently receive a 
2101(b) grant.
    (2) If an individual is determined eligible for a 2101(b) grant, 
and becomes eligible for a 2101(a) grant, he or she may receive 2101(a) 
grants and TRA grants up to the aggregate amount of assistance 
available for 2101(a) grants. However, any 2101(b) or TRA grants 
received by the individual before he or she was determined eligible for 
the 2101(a) grant will count towards the three grant limit in Sec.  
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.

[[Page 56878]]

chapter 21 simultaneously, provided that no duplicate payments result.

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


Sec.  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 2101(a) grant and TRA grant usage will be limited to the 
aggregate amount of assistance available for 2101(a) grants;
    (b) The aggregate amount of assistance available to an eligible 
individual for 2101(b) grant and TRA grant usage will be limited to the 
aggregate amount of assistance available for 2101(b) 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 2101(a) grant or 2101(b) grant usages may 
only pay for reimbursing specially adapted housing-related 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.)


Sec.  36.4404  Eligibility for assistance.

    (a) Disability requirements. (1) The 2101(a) grant is available to 
individuals with permanent and total service-connected disability who 
have been rated as being 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
    (v) Any other injury identified as eligible for assistance under 38 
U.S.C. Sec.  2101(a).
    (2) The 2101(b) grant is available to individuals with permanent 
and total service-connected disability who have been rated as being 
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. Sec.  2101(b).
    (3) The TRA grant is available to individuals with permanent and 
total service-connected disability who have been rated as being 
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 
2101(a) grant or paragraph (a)(2) of this section for the 2101(b) 
grant.
    (b) Feasibility and suitability requirements. (1) In order for an 
individual to be eligible for 2101(a) 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 2101(b) 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)


Sec.  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 Sec.  
36.4404(a);
    (ii) Feasibility and suitability requirements have been satisfied 
pursuant to Sec.  36.4404(b); and
    (iii) The eligible individual has not exceeded the usage or dollar 
limitations prescribed by Sec. Sec.  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 Sec.  36.4406.
    (b) Final approval. In order for an individual 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 2101(a) 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 2101(b) 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

[[Page 56879]]

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,
    (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.)


Sec.  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 Sec.  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 Sec.  36.4403).
    (b) 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))


Sec.  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 Sec.  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 Sec. Sec.  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)



[[Page 56880]]




Sec.  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.)


Sec.  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 Sec.  
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)


Sec.  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))


Sec.  36.4411  Annual adjustments to the aggregate amount of assistance 
available.

    (a) On October 1 of each year, the Secretary will increase the 
aggregate amounts of assistance available for grants authorized under 
38 U.S.C. 2101(a) and 2101(b). Such increase will be equal to the 
percentage by which the Turner Building Cost Index for the most recent 
calendar year exceeds that of the next preceding calendar year.
    (b) Notwithstanding paragraph (a) of this section, if the Turner 
Building Cost Index for the most recent full calendar year is equal to 
or less than the next preceding calendar year, the percentage increase 
will be zero.
    (c) No later than September 30 of each year, the Secretary will 
publish in the Federal Register the aggregate amounts of assistance 
available for the upcoming fiscal year.

(Authority: 38 U.S.C. 2102(e))


[FR Doc. 2010-23277 Filed 9-16-10; 8:45 am]
BILLING CODE 8320-01-P`