
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 23, 2000]
[Document not affected by Public Laws enacted between
  January 23, 2000 and December 4, 2001]
[CITE: 38USC3713]

 
                      TITLE 38--VETERANS' BENEFITS
 
               PART III--READJUSTMENT AND RELATED BENEFITS
 
              CHAPTER 37--HOUSING AND SMALL BUSINESS LOANS
 
                          SUBCHAPTER II--LOANS
 
Sec. 3713. Release from liability under guaranty

    (a) Whenever any veteran disposes of residential property securing a 
guaranteed, insured, or direct housing loan obtained by the veteran, the 
Secretary, upon application made by such veteran and by the transferee 
incident to such disposal, shall issue to such veteran in connection 
with such disposal a release relieving the veteran of all further 
liability to the Secretary on account of such loan (including liability 
for any loss resulting from any default of the transferee or any 
subsequent purchaser of such property) if the Secretary has determined, 
after such investigation as the Secretary may deem appropriate, that (1) 
the loan is current, and (2) the purchaser of such property from such 
veteran (A) is obligated by contract to purchase such property and to 
assume full liability for the repayment of the balance of the loan 
remaining unpaid, and has assumed by contract all of the obligations of 
the veteran under the terms of the instruments creating and securing the 
loan, and (B) qualifies from a credit standpoint, to the same extent as 
if the transferee were a veteran eligible for purposes specified in 
section 3710 of this title, for a guaranteed or insured or direct loan 
in an amount equal to the unpaid balance of the obligation for which the 
transferee has assumed liability.
    (b) If any veteran disposes of residential property securing a 
guaranteed, insured, or direct housing loan obtained by the veteran 
under this chapter without receiving a release from liability with 
respect to such loan under subsection (a), and a default subsequently 
occurs which results in liability of the veteran to the Secretary on 
account of the loan, the Secretary may relieve the veteran of such 
liability if the Secretary determines, after such investigation as the 
Secretary deems appropriate, that the property was disposed of by the 
veteran in such a manner, and subject to such conditions, that the 
Secretary would have issued the veteran a release from liability under 
subsection (a) with respect to the loan if the veteran had made 
application therefor incident to such disposal. Failure of a transferee 
to assume by contract all of the liabilities of the original veteran-
borrower shall bar such release of liability only in cases in which no 
acceptable transferee, either immediate or remote, is legally liable to 
the Secretary for the indebtedness of the original veteran-borrower 
arising from termination of the loan. The failure of a veteran to 
qualify for release from liability under this subsection does not 
preclude relief from being granted under section 5302(b) of this title, 
if the veteran is eligible for relief under that section.
    (c) This section shall apply only to loans for which commitments are 
made before March 1, 1988.

(Pub. L. 85-857, Sept. 2, 1958, 72 Stat. 1212, Sec. 1817; Pub. L. 92-
328, title II, Sec. 204, June 30, 1972, 86 Stat. 397; Pub. L. 94-324, 
Sec. 7(18), (19), June 30, 1976, 90 Stat. 722; Pub. L. 97-72, title III, 
Sec. 303(f), Nov. 3, 1981, 95 Stat. 1060; Pub. L. 100-198, 
Sec. 10(a)(2), Dec. 21, 1987, 101 Stat. 1323; renumbered Sec. 1813 and 
amended Pub. L. 100-322, title IV, Sec. 415(b)(2), May 20, 1988, 102 
Stat. 550; Pub. L. 101-237, title III, Sec. 313(b)(1), Dec. 18, 1989, 
103 Stat. 2077; Pub. L. 102-40, title IV, Sec. 402(d)(1), May 7, 1991, 
105 Stat. 239; renumbered Sec. 3713 and amended Pub. L. 102-83, 
Sec. 5(a), (c)(1), Aug. 6, 1991, 105 Stat. 406; Pub. L. 103-446, title 
XII, Sec. 1201(e)(15), Nov. 2, 1994, 108 Stat. 4686.)


                               Amendments

    1994--Subsec. (b). Pub. L. 103-446 before period at end substituted 
``section 5302(b) of this title, if the veteran is eligible for relief 
under that section'' for ``subsection 5302(b) of this title, if eligible 
thereunder''.
    1991--Pub. L. 102-83, Sec. 5(a), renumbered section 1813 of this 
title as this section.
    Subsec. (a). Pub. L. 102-83, Sec. 5(c)(1), substituted ``3710'' for 
``1810''.
    Subsec. (b). Pub. L. 102-40 substituted ``5302(b)'' for ``3102(b)''.
    1989--Subsecs. (a), (b). Pub. L. 101-237 substituted ``Secretary'' 
for ``Administrator'' wherever appearing.
    1988--Pub. L. 100-322, Sec. 415(b)(2)(B), renumbered section 1817 of 
this title as this section.
    Subsec. (a). Pub. L. 100-322, Sec. 415(b)(2)(A), substituted ``for 
purposes specified in section 1810'' for ``under section 1810''.
    1987--Subsec. (c). Pub. L. 100-198 added subsec. (c).
    1981--Subsec. (a). Pub. L. 97-72, Sec. 303(f)(1), substituted 
``direct housing loan'' for ``direct loan''.
    Subsec. (b). Pub. L. 97-72, Sec. 303(f)(2), substituted ``or direct 
housing loan obtained'' for ``or direct loan obtained''.
    1976--Subsec. (a). Pub. L. 94-324, Sec. 7(18), substituted ``the 
veteran'' for ``him'' in two places, ``the Administrator may deem'' for 
``he may deem'', ``the transferee were a veteran'' for ``he were a 
veteran'', ``the transferee has assumed'' for ``he has assumed'', and 
``is obligated'' for ``has obligated himself''.
    Subsec. (b). Pub. L. 94-324, Sec. 7(19), substituted ``obtained by 
the veteran'' for ``obtained by him'', ``the Administrator determines'' 
for ``he determines'', and ``the Administrator deems'' for ``he deems''.
    1972--Pub. L. 92-328 designated existing provisions as subsec. (a) 
and added subsec. (b).


                    Effective Date of 1981 Amendment

    Amendment by Pub. L. 97-72 effective at end of 180-day period 
beginning on Nov. 3, 1981, see section 305 of Pub. L. 97-72, set out as 
an Effective Date note under section 3741 of this title.


                    Effective Date of 1976 Amendment

    Amendment by Pub. L. 94-324 effective June 30, 1976, see section 
9(a) of Pub. L. 94-324, set out as a note under section 3701 of this 
title.


                    Effective Date of 1972 Amendment

    Section 301(c) of Pub. L. 92-328 provided that: ``Sections 201 
through 206 of this Act [amending this section and sections 210, 1820 
[now 3720], 3102 [now 5302], and 3503 [now 6103] of this title, and 
enacting provisions set out as a note under section 5302 of this title] 
shall take effect upon the date of enactment of this Act [June 30, 
1972].''

                  Section Referred to in Other Sections

    This section is referred to in section 3726 of this title.
