Oregon Statutes - Chapter 407 - Veterans Loans - Section 407.385 - Prohibition against using loan for purpose other than farm or home acquisition; prompt use of farm or home as principal residence; extension; exception; penalty.

(1) Money received as a loan under this chapter shall be used only for the acquisition of a home or farm.

(2) Except as provided in this section, use of all or any part of a loan received under this chapter for investment or any purpose other than the acquisition of a home or farm constitutes an act of default and results in immediate acceleration of the unpaid balance of the loan.

(3) When the Department of Veterans’ Affairs determines that a borrower is using loan moneys in violation of this section, the department shall immediately commence any action or proceeding necessary to recover for the state those moneys or any property obtained therewith.

(4) A failure by a borrower to move into the home or farm securing the borrower’s loan and to use it as the borrower’s principal residence within 60 days after the loan or assumption is made, or within such extension as may be granted in writing by the department, shall be conclusively presumed to constitute a violation of this section. A request for an extension for good cause shall be made in writing within the 60-day period. The applicant may file a written request for a hearing within 30 days after a denial of the request for extension.

(5) The department may not approve any rental or lease of a home or farm that affects the federally tax exempt status of bonds issued under Article XI-A of the Oregon Constitution. When the rental or lease does not affect the federally tax exempt status of such federally tax exempt bonds, the department may approve in writing the rental or lease of a home or farm after the home or farm is used as the principal residence of the borrower. The department may establish factors to consider when determining whether to approve the rental of a home or farm. [Formerly 407.042; 1987 c.767 §3; 1991 c.262 §2; 1995 c.238 §7; 1999 c.46 §1; 2001 c.98 §1; 2005 c.625 §42]

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Last modified: August 7, 2008