Change Date

September 15, 2004, Change 4

This section has been changed to create subsection lettering.

a. Eligibility of Land Sale Contracts

VA may guarantee an obligation secured by a land sale contract for the purchase of improved residential property in the same manner as any obligation secured by a mortgage or deed of trust.

·   The land sale contract must contain the mandatory clauses provided in section 1 of this chapter.

·   The contract must be recorded.

VA may also guarantee a loan to refinance the unpaid balance under a land sale contract for the purchase of improved residential property, provided

·   the veteran will obtain title to the property described in the contract upon closing of the loan, and

·   the obligation to be guaranteed is in the form of a note or bond secured by a mortgage or other acceptable form of security instrument other than the existing land sale contract. 

b. Eligibility of Option Contracts

Option contracts are not eligible for guaranty, however, VA may guarantee a loan made for the unpaid purchase price of residential property when the option is exercised