Section 175.20 - Delinquencies and Forfeiture Procedures(a) Definitions. The following words and terms when used in this section shall have the following meanings, unless the context clearly indicates otherwise: (1) Account--The loan account a borrower holds with the Veterans Land Board. The account includes the obligations between the borrower and the board as evidenced by contracts and documents in the borrower's loan file as well as the accounting records of the board. This includes the amount of the unpaid principal balance of the loan, any administrative costs made a part of the loan, unpaid interest, and any delinquent amount.(2) Borrower--The person presently obligated to make the loan installment payments set forth in the contract, including the purchaser at a forfeited land sale or the last board-approved assignee of the original veteran purchaser.(3) Contract--The contract of sale and purchase between the board and a borrower.(4) Current--The account is in good standing with no installments past due.(5) Delinquent amount--The total amount needed to bring an account current. This includes all past due installments, administrative costs made part of such past due installments, and all accrued delinquent interest or penalty on all such past due installments. Delinquent interest or penalty shall accrue on any delinquent amount as set by the board from time to time by resolution.(6) Forfeiture--The action by which the board declares a borrower to be in breach of his or her contract by virtue of failing to perform a material term of the contract, including, but not limited to, timely payment of the loan installments.(7) Installment--The amount of the periodic loan payment specified by the contract.(8) Partial Payment Agreement--A borrower's written agreement to clear the delinquent amount on or before a designated date by making payments in addition to the installment amount on scheduled dates as described in the agreement.(9) Delinquent interest--The interest or penalty which accrues on a loan installment which has become delinquent. The delinquent interest rate or penalty shall be set by the board from time to time by resolution(10) Reinstatement penalty--The amount charged to a borrower (whose contract has been forfeited by the board) in order to reinstate the contract. The reinstatement penalty is in addition to the amount necessary to bring the account current. (A) Beginning on the date of the first and any second forfeiture of the contract, each unpaid delinquent installment (of principal and interest combined) will accrue a reinstatement penalty in an amount equal to 1.5 percent per month (or 18 percent per year), until the contract is reinstated.(B) Beginning on the date of the third instance and any subsequent forfeiture of the contract, the outstanding principal balance of the contract will accrue a reinstatement penalty in an amount equal to 1.5 percent per month (or 18 percent per year), less the accrued delinquent interest, until the contract is reinstated.(11) Sale order date--The date on which the board meets to order a tract advertised for sale, or for lease for mineral development.(b) Delinquencies. (1) If a scheduled loan installment is not received by the board within the time allotted by the board, the account becomes delinquent. Any payments received on an account shall be first applied to the delinquent amount. The account continues in a delinquent status until the full amount of the delinquent amount has been received by the board.(2) A partial payment agreement may be granted at the discretion of the chairman at any time prior to the date an account is forfeited. From time to time, the board may, by resolution, set guidelines for other conditions under which partial payment agreements may be approved.(c) Forfeiture. (1) The board is the sole judge whether any contract has been forfeited. An account shall become eligible for forfeiture if: (A) it remains in a delinquent status for 30 or more consecutive days; or,(B) the contract has been Transferred without obtaining the board's permission; or,(C) property taxes for all prior years shall not have been paid by May 1 of any year; or,(D) the provisions of the Natural Resources Code, Chapter 161, the terms of the contract, or the rules of the board are not satisfied.(2) The board must give 30 days written notice to the borrower, the original veteran purchaser (if different from the borrower) and all board approved assignees of the original veteran purchaser, if any, and must specify the reason why the contract is subject to forfeiture. This notice will be sent by certified mail to the last known address of these parties. If the reason for forfeiture is cured or corrected within 30 days the board shall not declare a forfeiture.(3) The liability of the original veteran purchaser and any subsequent assignee or assignees is joint and several, but the original veteran purchaser is primarily liable for payment of the money under the contract. The board may release any assignor from liability if the assignor requests the release in writing and at least 3 years have passed since the assignment was approved and the assignee has paid the account in a manner acceptable to the board.(4) A forfeiture shall be effective at the same time the board meets and adopts a resolution forfeiting the contract. At that time, the land and all payments previously made are forfeited.(5) When the forfeiture is effective, the full title to the land shall revest in the board. Any interest in the mineral estate which the board acquired at purchase shall likewise revest in the board. The board shall recognize, and continue in force and effect, any outstanding valid oil, gas, or mineral lease and collect all rentals, royalties, or other amounts payable under the lease. The board may also lease the land on terms it considers proper. The proceeds received from a lease on a forfeited tract shall be credited to the Veterans Land Fund; however, the chairman is authorized to credit any portion of the lease proceeds to the delinquent amount and unpaid principal of a loan as part of a borrower's attempt to reinstate his or her contract.(d) Reinstatement. (1) From time to time, the board by resolution may set additional guidelines and reasonable requirements which must be satisfied before reinstatement may be granted (e.g., evidence that there are no delinquent taxes due as of the date and time of reinstatement, etc.).(2) The borrower, the original veteran purchaser (if different from the borrower) and all board approved assignees may reinstate the contract at any time before the sale order date if the reason for forfeiture was failure to keep the account current. If the contract was forfeited for any other reason, the board in its discretion may determine there is no right to reinstate the contract. (A) Any person wishing to exercise a right of reinstatement shall submit to the board payment of the delinquent amount, the reinstatement penalty and other costs incident to the reinstatement as prescribed by the board. (i) If there is only one person who has a right to reinstate a contract (there having been no board approved assignments of the contract), or if the last approved assignee requests reinstatement, the chairman of the board may in his or her discretion reinstate the contract immediately upon receipt of payment of the delinquent amount, the reinstatement penalty and other costs prescribed by the board.(ii) If two or more persons, other than the last approved assignee, appear to have a right to reinstate the same contract, reinstatement shall not be granted prior to the time the board meets on the sale order date. In this event, all persons wishing to reinstate the same contract are required to submit to the board payment of the delinquent amount, reinstatement penalty and other costs prescribed by the board. Any person failing to satisfy this requirement by the sale order date may, in the chairman of the board's discretion, be deemed to have failed to exercise his or her right to reinstate the contract. Any monies and documents submitted by such persons shall be returned. If on the order for sale date, there are still two or more persons who have satisfied the requirements to reinstate the same contract, the chairman of the board may, in his or her discretion, reinstate the contract in the name of the person that has complied with the board's requirements for reinstatement and was most recently approved by the board as a purchaser or an assignee.(B) A person who desires to reinstate a contract but is unable to submit full payment of the delinquent amount before the anticipated sale order date, may petition the chairman to postpone the sale order date for the tract. The chairman in his or her sole discretion may grant or deny such a petition. (i) In granting such a petition, the chairman may set reasonable conditions which must be satisfied by a stated deadline. Such conditions may include, but are not limited to, the requirement that the requesting party enter into a partial payment agreement.(ii) If the requesting party satisfies all conditions set by the chairman by the stated deadline, the account shall be reinstated.(iii) If the requesting party fails to satisfy all conditions set by the chairman by the stated deadline, the sale order date for the tract may be reset. If the requesting party thereafter fails to pay the delinquent amount in full prior to the sale order date, all monies paid under the partial payment agreement shall be forfeited to the board.(3) Any person failing to make a timely submission shall lose his or her right of reinstatement.(4) The right to reinstate a contract is extinguished when the tract has been ordered advertised for sale (or for lease for mineral development). However, the borrower, the original veteran purchaser (if different from the borrower), or any board approved assignee may petition the board to permit reinstatement. (A) The board, in its discretion, may reinstate the contract under conditions it deems appropriate, including, but not limited to, requiring that the account be paid in full simultaneously with the reinstatement.(B) Stay of Sale. (i) The board, in its discretion, may stay (postpone) sale of the tract. The board may set conditions which must be satisfied before reinstatement will be permitted. The chairman is authorized by the board to make a written agreement with the party seeking reinstatement setting forth all conditions for reinstatement, including a date by which each condition must be satisfied. The conditions may include, but are not limited to, the following: payment of the delinquent amount, payment of the reinstatement penalty (including costs incident to the reinstatement), and submission of tax certificates evidencing that there are no delinquent taxes on the land. When the board determines that all conditions set forth in the agreement have been satisfied, it shall reinstate the contract. Until the board's conditions have been satisfied, the contract will remain in a forfeited status, but the sale of the tract shall be stayed.(ii) The stay may be revoked at any time by the board if the borrower fails to satisfy any of the conditions set forth in the agreement.(iii) The board shall be the sole judge of whether the conditions of the agreement have been satisfied.(5) The board expressly authorizes the chairman to reinstate any account at any time prior to receipt of full payment of the delinquent amount if he or she deems it to be in the best interest of the Veterans Land Program.(6) If a contract is forfeited more than two times, the chairman may require, as an additional condition of reinstatement, that the account be paid in full.(e) Re-amortization. (1) The chairman, in his or her discretion, may permit a borrower to re-amortize his or her loan to incorporate all or part of the delinquent amount into the unpaid balance.(2) A re-amortization shall be granted only on the condition that the borrower's loan has not been previously re-amortized.(3) The chairman's consent to re-amortize shall state the new balance and the term over which it is to be re-amortized.(f) Restoring Eligibility to Participate after Order for Sale. (1) A person who is ineligible to participate in loan programs because of a past forfeiture and order for sale, may make a written request to the board for a restoration of the person's eligibility. The request must detail the circumstances which led to the prior forfeiture and order for sale and justify such request. If granted, the requestor must fulfill any conditions that the board, in its sole discretion and notwithstanding any other provisions of this chapter, establishes or determines are necessary to restore such eligibility.(2) Notwithstanding any other provisions of this chapter, the board authorizes the chairman to restore a person's eligibility to participate in board loan programs, as a veteran or non-veteran as the case may be, without further board action if the person requesting the restoration of eligibility: (A) was not the account holder at the time the account was forfeited and ordered for sale, because the board had earlier approved a transfer of the account to a new account holder and the account was current at the time of transfer; or(B) was the account holder at the time of forfeiture and order for sale and: (i) the board has sold the property that was the subject of the forfeited account; and(ii) the person requesting the restoration of eligibility pays to the board the unpaid interest, including delinquent interest, and reinstatement penalty that had accrued on the forfeited account as of the date the account was ordered for sale.(g) Savings clause. Interest charged and collected on any contract will not exceed the maximum rate or amount of nonusurious interest that may be contracted for, taken, reserved, charged, or received under any law. Any interest in excess of that maximum amount will be credited on the principal amount of the contract or, if the principal amount has been paid, refunded to the borrower. On any acceleration or required or permitted prepayment any excess interest will be canceled automatically as of the acceleration or prepayment or, if the excess interest has already been paid, credited on the principal amount or, if the principal amount has been paid, refunded to the borrower. This subsection shall prevail over other provisions in this chapter and any instruments concerning the debt.(h) All contracts are subject to the provisions of the constitution, statutes, and rules governing the board, as such constitution, statutes, and rules may from time to time be amended.40 Tex. Admin. Code § 175.20
The provisions of this §175.20 adopted to be effective May 17, 1988, 13 TexReg 2168; amended to be effective August 24, 1999, 24 TexReg 6516; amended to be effective August 12, 2001, 26 TexReg 5840; amended to be effective May 15, 2003, 28 TexReg 3846; amended to be effective October 21, 2003, 28 TexReg 9089