BVA9503974 DOCKET NO. 93-08 459 ) DATE ) ) On appeal from the decision of the Department of Veterans Affairs Regional Office in Jackson, Mississippi THE ISSUE Waiver of recovery of loan guaranty indebtedness. ATTORNEY FOR THE BOARD Barry F. Bohan, Counsel INTRODUCTION The dates of the appellant's military service are not of record. This appeal arose from a June 1989 decision of the Committee on Waivers and Compromises of the Department of Veterans Affairs Regional Office in Jackson, Mississippi (VARO) which denied the appellant's request for a waiver of loan guaranty indebtedness in the amount of $6,944.10, plus accrued interest. Because the pertinent law was amended subsequent to that decision, the appellant's request for waiver was reconsidered in March 1993. 38 U.S.C.A. § 5302 (West 1991). CONTENTIONS OF APPELLANT ON APPEAL The appellant transferred the property in question to a transferee, who defaulted on his loan payments. In effect, the appellant has contended that he is without fault in the creation of the loan guaranty indebtedness. DECISION OF THE BOARD The Board, in accordance with the provisions of 38 U.S.C.A. § 7104 (West 1991), has reviewed and considered all of the evidence and material of record in the appellant's loan guaranty file. Based on its review of the relevant evidence in this matter, and for the following reasons and bases, it is the decision of the Board that waiver of recovery of the loan guaranty indebtedness should be granted, based on the principle of equity and good conscience. FINDINGS OF FACT 1. In September 1984, the appellant sold a house which was the subject of a VA guaranteed loan to a transferee. 2. The transferee defaulted, and the property was sold, at a loss, at a substitute trustee's sale. VA paid the lender's loan guaranty claim, and the related indebtedness to the government, $6,944.10, was charged to the appellant. 3. To require recovery of the charged indebtedness from the appellant would be unfair. CONCLUSIONS OF LAW 1. After default, there was a loss of the property which served as security for the VA guaranteed loan. 38 U.S.C.A. § 5302 (West 1991); 38 C.F.R. § 1.964(a) (1993). 2. Recovery of the charged loan guaranty indebtedness would be against equity and good conscience. 38 U.S.C.A. §5302 (West 1991); 38 C.F.R. §§ 1.964, 1.965(a) (1993). REASONS AND BASES FOR FINDINGS AND CONCLUSIONS The appellant is seeking a waiver of recovery of charged loan guaranty indebtedness in the amount of $6,944.10, plus accrued interest. Initially, the Board finds that the appellant has presented a claim which is supported by evidence which leads to the belief that it is well grounded. 38 U.S.C.A. § 5107(a) (West 1991) and Murphy v. Derwinski, 1 Vet.App. 78 (1990). Furthermore, we find that the appellant's claim has been adequately developed for appellate purposes by VARO and that we may therefore proceed to a disposition of the case. VARO's finding that the appellant has not demonstrated fraud, misrepresentation or bad faith in this case is also noted. Under pertinent law and VA regulations, no debt may be waived under the standard of equity and good conscience if bad faith is found to exist. 38 U.S.C.A. § 5302(c) (West 1991); 38 C.F.R. § 1.965 (b) (1993). The evidence has been carefully reviewed and the Board finds that the loan guaranty indebtedness in the original amount of $6,944.10 was properly established. Schaper v. Derwinski, 1 Vet.App. 430 (1991). In the interest of clarity, the Board will first briefly review the chronological history of this case. The issue presented on this appeal will then be discussed. History of the case The pertinent facts of this case are not in substantial dispute. In September 1984, the appellant sold a house in Florence, Mississippi which was the subject of a VA guaranteed loan to a transferee. The sale was by assumption. The appellant did not apply for a release from liability. 38 U.S.C.A. § 3713(b) (West 1991); 38 C.F.R. § 36.4323(g) (1993). The transferee defaulted on monthly loan payments starting in June 1985. Foreclosure proceedings were initiated. In June 1987, VARO contacted a relative of the appellant in an effort to locate him. In August 1987, the appellant called VARO and was informed of the transferee's default and his continued liability under the VA loan guaranty. The property was sold for a loss at the substitute trustee's sale in September 1987. In October 1987, the lender filed a claim under the loan guaranty, which was satisfied, in part, by VA. The appellant was found to be responsible for loan guaranty indebtedness in the amount of $6,944.10. This appeal followed. Analysis A waiver of recovery of loan guaranty indebtedness may be authorized in a case in which collection of the debt would be against equity and good conscience. 38 U.S.C.A. § 5302(b) (West 1991); 38 C.F.R. § 1.964 (1993). "Equity and good conscience" involves a variety of elements. Particular emphasis, however, is placed upon the element of the fault of the debtor. 38 C.F.R. § 1.965 (a)(1) (1993). In essence, however, "equity and good conscience" means fairness to both the appellant and to the government. After having carefully reviewed all of the evidence of record, the Board believes that the circumstances in this case were truly beyond the control of the appellant. He clearly did not demonstrate fault in connection with the loss to the government. We believe that his lack of fault, alone, supports waiver of recovery of his loan guaranty indebtedness. VBA Circular 20-90- 5, February 12, 1990 and TG 20-90-2, April 23, 1990. ORDER Waiver of recovery of loan guaranty indebtedness is granted. KENNETH R. ANDREWS,. JR. Member, Board of Veterans' Appeals The Board of Veterans' Appeals Administrative Procedures Improvement Act, Pub. L. No. 103-271, § 6, 108 Stat. 740, ___ (1994), permits a proceeding instituted before the Board to be assigned to an individual member of the Board for a determination. This proceeding has been assigned to an individual member of the Board. NOTICE OF APPELLATE RIGHTS: Under 38 U.S.C.A. § 7266 (West 1991), a decision of the Board of Veterans' Appeals granting less than the complete benefit, or benefits, sought on appeal is appealable to the United States Court of Veterans Appeals within 120 days from the date of mailing of notice of the decision, provided that a Notice of Disagreement concerning an issue which was before the Board was filed with the agency of original jurisdiction on or after November 18, 1988. Veterans' Judicial Review Act, Pub. L. No. 100-687, § 402 (1988). The date which appears on the face of this decision constitutes the date of mailing and the copy of this decision which you have received is your notice of the action taken on your appeal by the Board of Veterans' Appeals.