[00:00:02] Speaker 02:
The United States Court of Appeals for the Federal Circuit is now open and in session.

[00:00:07] Speaker 02:
God save the United States in this honorable court.

[00:00:12] Speaker 04:
Good morning.

[00:00:13] Speaker 04:
We have one argued case this morning, number 19-1667, Burkhard.

[00:00:24] Speaker 04:
We'll first hear from Mr. Toomey.

[00:00:28] Speaker 03:
Good morning, Your Honor.

[00:00:30] Speaker 03:
May it please the court, I'm Sean Toomey, appearing on behalf of Appellant Sally Burkhart.

[00:00:35] Speaker 03:
This appeal is about vindicating the right to VA home loan guarantee benefits that Mrs. Burkhart's late husband, Dave Burkhart, earned through his service in the Army during the Korean War.

[00:00:46] Speaker 03:
And Your Honors, there are three main reasons that independently merit this Court's reversal of the Veterans Court's decision.

[00:00:54] Speaker 03:
First, the Congress clearly intended in enacting 38-USB-3701, et cetera, the Chapter 37 benefits scheme, as well as 38-USB-1151, in enacting those, Congress clearly intended to provide for those in Mrs. Burkhart's position, that is, the surviving spouses of a veteran who was entitled to VA home loan guarantee benefits but was deprived of their use because the veteran died as a result of VA care.

[00:01:23] Speaker 03:
Regardless of whether Mrs. Burkhart is entitled to benefits in the first instance, the VA determined that she was in 2007 and issued her a certificate of eligibility, entitling her to a VA Home Loan Guarantee.

[00:01:37] Speaker 03:
And VA is prohibited by the plain language of 38USC 3721, which is the statute's so-called incontestability provision.

[00:01:46] Speaker 03:
The plain language of that statute prohibits the VA from disputing her eligibility for a VA Home Loan Guarantee.

[00:01:52] Speaker 03:
And the third round is, if nothing else, Mrs. Burkhart is entitled to, the facts of this case show that Mrs. Burkhart is entitled to equitable relief, either based on her own rights or the rights of Mr. Burkhart, her late husband, who was deprived of the use of VA home loan guarantee benefits as a result of his death of VA care.

[00:02:14] Speaker 03:
And so the Veterans Court erred in concluding that lack jurisdiction to grant equitable relief.

[00:02:21] Speaker 04:
Could you help me understand how this program works?

[00:02:27] Speaker 04:
Because I'm not sure that I do understand it entirely.

[00:02:33] Speaker 04:
If you are eligible for VA loan guarantee, my understanding is you go to the VA and ask for a certificate of eligibility.

[00:02:43] Speaker 04:
And we have an example of a certificate of eligibility that was issued to your client.

[00:02:50] Speaker 04:
And then as I understand it, you take the certificate of eligibility to a lender, say a bank, and you ask the bank to make a loan to you, right?

[00:03:02] Speaker 04:
That's my understanding, Your Honor.

[00:03:04] Speaker 04:
And then it is only at that point, once the loan is made, is it the bank or is it the widow in this case that goes back to the VA and says, please issue a guarantee certificate?

[00:03:18] Speaker 04:
Is that the way it works?

[00:03:22] Speaker 03:
I don't believe that to the latter part of your question, Your Honor, I don't think that there's an interaction between the COE holder and the VA in a later stage.

[00:03:39] Speaker 04:
So how does the certificate of guarantee get issued?

[00:03:42] Speaker 04:
Is that issued at the request of the lender?

[00:03:46] Speaker 03:
Right.

[00:03:49] Speaker 03:
It's not an interaction between the COE holder

[00:03:52] Speaker 04:
And then the lender, having secured the certificate of guarantee from the VA, can then sell the loan on the secondary market.

[00:04:06] Speaker 04:
Is that the way it works?

[00:04:08] Speaker 03:
That is my understanding, Your Honor, with the caveat that this is, as well as you, I have some trouble with this whole statutory scheme.

[00:04:20] Speaker 04:
But it seems to me that the government may be wrong in suggesting that the widow in this case is not entitled to the statutory protection.

[00:04:31] Speaker 04:
But on the other hand, I wonder what the basis for the argument is that the statutory protection comes into play before the making of a loan.

[00:04:44] Speaker 03:
Well, to that point, Your Honor, the statute 3721 speaks

[00:04:50] Speaker 03:
a plain text of the statute speaks in terms of the eligibility of the loan for guarantee.

[00:04:54] Speaker 03:
So the protection comes into... Our position is that under the plain language of the statute, it comes into play even before the loan is issued because it's dealing with eligibility.

[00:05:09] Speaker 04:
Well, I'm not sure that that's the purpose of the statute.

[00:05:13] Speaker 04:
The purpose of the statute seems to protect people from

[00:05:18] Speaker 04:
the consequences of a loan being made when there was no eligibility, rather than protecting people who were trying to get a loan in the first place.

[00:05:31] Speaker 03:
Right, but the reason she's been denied the loan is their position that she's been eligible.

[00:05:39] Speaker 01:
This is Judge Toronto.

[00:05:41] Speaker 01:
Maybe I can just ask what I think is the question on the same subject.

[00:05:47] Speaker 01:
Why isn't it right to say evidence of eligibility for a guarantee is not the same as eligibility of evidence of a guarantee, which is to say the guarantee is something issued at a later stage than the issuance of eligibility.

[00:06:10] Speaker 01:
And as I understand from

[00:06:12] Speaker 01:
VA directives and publications and the statute, there is a real process inside the VA after eligibility is acknowledged.

[00:06:27] Speaker 01:
Sometimes the eligibility is acknowledged because it's automatic as a result of discharge from service.

[00:06:34] Speaker 01:
But the guarantee is something that happens later after the VA goes through, among other things, an appraisal process.

[00:06:42] Speaker 01:
So that to say that evidence of a guarantee shall be conclusive is not the same thing as saying evidence of eligibility for a guarantee shall be conclusive.

[00:06:56] Speaker 01:
Because there's a real process that takes place for a guarantee that post-dates the process for eligibility.

[00:07:08] Speaker 03:
I see your point, Your Honor.

[00:07:10] Speaker 03:
What I would say is that

[00:07:11] Speaker 03:
with respect to... The language of the statute says any evidence of guarantee.

[00:07:19] Speaker 03:
It doesn't say once a certificate of guarantee is issued.

[00:07:22] Speaker 03:
And so if you look at the COE, it is evidence of guarantee, quote unquote.

[00:07:27] Speaker 03:
On the face of the COE, certificate of eligibility, it sets forth a specific amount of money that she is entitled to as a loan guarantee.

[00:07:37] Speaker 03:
And so it's not just

[00:07:40] Speaker 03:
and eligibility, the reason being it's evidence of guarantee.

[00:07:45] Speaker 03:
And the statute, the language of the statute doesn't just say, you know, once a certificate of guarantee has been issued by the secretary, dot, dot, dot, it says any evidence of guarantee.

[00:07:55] Speaker 03:
And so, you know, properly construed, that would include certificate of eligibility, which evidences a specific amount of guarantee, for instance, Burkhardt and others.

[00:08:06] Speaker 04:
Well, let's take a hypothetical.

[00:08:09] Speaker 04:
The widow here goes to the bank, goes to the PNC bank, with its certificate of eligibility and gets the loan.

[00:08:18] Speaker 04:
And at that point, the VA says, well, you couldn't rely on the certificate of eligibility, though, in fact, she's ineligible and you're on the hook for a bad loan.

[00:08:34] Speaker 04:
I would have thought that the statute was designed to protect the bank under those circumstances.

[00:08:39] Speaker 04:
even before the loan guarantee had been issued.

[00:08:48] Speaker 03:
Right.

[00:08:49] Speaker 04:
And in fact, if you look at the certificate of eligibility, it does seem to contemplate a situation in which the bank will be protected.

[00:09:01] Speaker 04:
It talks about a change in marital status and says the bank is protected unless it was aware of the change in marital status.

[00:09:10] Speaker 03:
Right.

[00:09:11] Speaker 04:
So I'm dubious that the sole protection here arises when the guarantee certificate itself is issued.

[00:09:23] Speaker 03:
Right.

[00:09:23] Speaker 03:
I don't think it's the sole, but I certainly think that the broad language used in the statute is, you know, any evidence of guarantee would include a certificate of eligibility.

[00:09:33] Speaker 03:
you know, including because of what's on the face of a COE in terms of a specific amount of guarantee.

[00:09:38] Speaker 03:
I think the purpose that Your Honor is articulating can still be served with other evidence of guarantee in addition to a COE.

[00:09:48] Speaker 03:
We're not saying this is the only evidence.

[00:09:50] Speaker 04:
Yeah, but my problem is that even if you accept the broader view of what the statute protects, I don't see that it's designed to protect

[00:10:02] Speaker 04:
an individual in these circumstances before any loan has been made?

[00:10:08] Speaker 03:
Well, Your Honor, on the face of the COE, it says that the COE hereby evidences both the eligibility of the holder and the validity of the guarantee.

[00:10:23] Speaker 03:
It seems that this, you know, in using this broad language, you know, any evidence of guarantee, it would include a COE, even if there are other categories that would also, you know, be evidence of guarantee.

[00:10:36] Speaker 03:
In other words, it isn't as if Congress, you know, drafted this to say once a loan has been issued or once a certificate of guarantee has been issued.

[00:10:45] Speaker 03:
You know, they purposely just chose any evidence of guarantee and, you know, we think COEs are among that category, including what's on the paper as a COE.

[00:10:53] Speaker 03:
I see I'm into my rebuttal time, Your Honor.

[00:10:55] Speaker 03:
If there are additional questions I can answer, I'd be happy to.

[00:10:59] Speaker 03:
Otherwise, I'd like to reserve the remainder.

[00:11:01] Speaker 04:
Okay.

[00:11:03] Speaker 04:
Unless there are further questions, we'll give you three for rebuttal.

[00:11:06] Speaker 04:
I don't know how much you have left.

[00:11:10] Speaker 04:
Let's hear from Ms.

[00:11:11] Speaker 04:
Finnan.

[00:11:15] Speaker 00:
Good morning, Your Honor.

[00:11:17] Speaker 00:
May I please look to the court?

[00:11:18] Speaker 00:
I'm here on behalf of the Secretary.

[00:11:20] Speaker 00:
ask that this court affirm the decision of the Vessions Court who agreed with the board that Ms.

[00:11:25] Speaker 00:
Burkhart is not eligible?

[00:11:27] Speaker 04:
Let me ask you the hypothetical that I asked Mr. Toomey.

[00:11:32] Speaker 04:
Suppose the widow goes to the bank with this certificate of eligibility, the bank makes the loan, and then the VA says, no, no, the loan is not protected because she wasn't eligible.

[00:11:50] Speaker 04:
Under those circumstances, doesn't the statute protect the bank from her default to the extent of the guarantee?

[00:12:01] Speaker 00:
Once there is a loan and a guarantee, yes, the bank is protected.

[00:12:07] Speaker 00:
That's the purpose of the incontestability provision.

[00:12:10] Speaker 00:
But I think it would help maybe if I clarified the process a bit.

[00:12:15] Speaker 04:
That probably would be helpful.

[00:12:17] Speaker 00:
The guarantee issue,

[00:12:20] Speaker 00:
in this Home Loan Guarantee Benefit Statute.

[00:12:23] Speaker 00:
It's a financial instrument.

[00:12:25] Speaker 04:
But wait, wait, back up.

[00:12:27] Speaker 04:
Go to the beginning.

[00:12:29] Speaker 04:
Okay.

[00:12:30] Speaker 04:
The widow wants a loan.

[00:12:31] Speaker 04:
She gets a certificate of eligibility.

[00:12:33] Speaker 04:
At that point, does she go to the bank and say, here's my certificate of eligibility, please give me a loan?

[00:12:39] Speaker 04:
This is all before the guarantee comes, the guarantee certificate is issued, right?

[00:12:44] Speaker 00:
Yes, that's correct.

[00:12:45] Speaker 00:
Does she take her certificate of eligibility to the bank?

[00:12:48] Speaker 00:
says, I want a loan.

[00:12:49] Speaker 00:
I'm also eligible for this guarantee.

[00:12:52] Speaker 00:
Here's my eligibility certificate.

[00:12:54] Speaker 00:
The bank then engages in its normal realty process, right?

[00:13:00] Speaker 00:
There's an appraisal, as the panel noted.

[00:13:04] Speaker 00:
The bank communicates with the VA, gets confirmation of the eligibility and the availability of the guarantee.

[00:13:14] Speaker 00:
And then the loan doc, the deed, the loan documents,

[00:13:18] Speaker 00:
and the guarantee are all executed at closing.

[00:13:24] Speaker 01:
So does that mean there is no situation in which a loan is issued before a guarantee is supplied by VA?

[00:13:36] Speaker 00:
No, I don't believe so.

[00:13:38] Speaker 00:
It's all part and parcel of the closing because, as the panel has noted, the purpose is

[00:13:46] Speaker 00:
to incentivize lenders to make these loans to veterans, right?

[00:13:52] Speaker 00:
So the guarantee is part and parcel of the clothing.

[00:13:56] Speaker 00:
And it's part of a much more complicated process as any realty clothing would be where a lot of documents are exchanged simultaneously and all signed and then the parties walk away.

[00:14:08] Speaker 00:
after the closing with a full and clear understanding of what their financial obligations are and what is or is not protected in particular matter.

[00:14:18] Speaker 04:
How do we know that that's the process and that we don't have a situation where the loan is issued based solely on the certificate of eligibility?

[00:14:32] Speaker 00:
If your audit would want some citations that's actually the regulations, I could provide those after argument, but I think we can infer it just by looking at the record, right?

[00:14:41] Speaker 00:
So we have the certificate of eligibility at the supplemental appendix 2627.

[00:14:48] Speaker 00:
My opposing counsel has asserted that the certificate of eligibility is, in fact, a guarantee.

[00:14:57] Speaker 00:
But especially in this instance, there's nothing listed, right?

[00:15:00] Speaker 00:
What is it a guarantee of?

[00:15:01] Speaker 00:
There's no loan.

[00:15:03] Speaker 00:
There's no used amount.

[00:15:04] Speaker 00:
The amount is unclear.

[00:15:06] Speaker 00:
I mean, it says that theoretically $36,000 is available, but then there's an asterisk to talk about a guarantee will not exceed 25%.

[00:15:14] Speaker 04:
So typically you say there would be a loan amount in the certificate of eligibility.

[00:15:23] Speaker 00:
Yeah, because it's a lifetime benefit.

[00:15:26] Speaker 00:
So the veteran or other qualifying individual could use, you know, if you had the benefit and you used it for 40 years, you might have more than one house, right?

[00:15:37] Speaker 00:
So maybe you use 10,000 of it for the first house and you never default and so the VA never pays out on the guarantee.

[00:15:46] Speaker 00:
Well, then that would, then your 36,000 or your 25% might still be available, but maybe,

[00:15:52] Speaker 00:
Maybe you do default and $10,000 is used and then there's only 25,000 or up to 25% for a successive loan.

[00:16:00] Speaker 00:
That's why there's multiple boxes here for prior loans and outstanding loans.

[00:16:06] Speaker 04:
Why does the certificate of eligibility talk about protecting the lender who's unaware of a change in marital status?

[00:16:19] Speaker 00:
The certificate of eligibility

[00:16:21] Speaker 00:
All it says is that it would be null and void if there was a change in marital status.

[00:16:27] Speaker 00:
I don't know.

[00:16:29] Speaker 00:
I mean, that's not correct.

[00:16:31] Speaker 04:
That's correct.

[00:16:32] Speaker 04:
It says unless the lender making the loan was not aware of any change in marital status.

[00:16:44] Speaker 00:
Are you reading from the certificate of eligibility?

[00:16:47] Speaker 04:
On page 56 of the appendix, yes.

[00:16:53] Speaker 04:
This seems to contemplate action by the bank based on the certificate without actually getting the guarantee itself.

[00:17:03] Speaker 00:
Well, I mean, there is action by the bank on the basis of the certificate in the sense that it triggers a process.

[00:17:10] Speaker 00:
But it's not a guarantee instrument in and of itself.

[00:17:13] Speaker 00:
That's a much more complicated scheme, right?

[00:17:16] Speaker 00:
And the lenders have to be approved by the VA.

[00:17:20] Speaker 00:
There are no dis-requirements.

[00:17:22] Speaker 04:
I don't think you're addressing my question.

[00:17:23] Speaker 04:
Why would this language exist in the certificate of eligibility if the bank weren't taking some action like making a loan relying on what the marital status is?

[00:17:45] Speaker 00:
If the lender, let's assume hypothetically that the lender made a loan based on the certificate, you know, relying on the fact that he's going to get a guarantee, gets a guarantee, nobody realizes that the widow has remarried and the entitlement is no longer in existence, well then, the incontestability provision would kick in at Section 3721 to stop the VA from denying the guarantee.

[00:18:15] Speaker 00:
Right?

[00:18:15] Speaker 00:
That's what that's there for, right?

[00:18:17] Speaker 00:
If after there's a loan and a guarantee in place pursuant to Section 3721, the VA would be a stop from disavowing the guarantee obligation on the basis of eligibility grounds.

[00:18:32] Speaker 00:
But that's not what we have here.

[00:18:34] Speaker 04:
She has... It's not what we have here, but it does suggest that banks rely on certificates of eligibility.

[00:18:43] Speaker 04:
which suggests that the statute is designed to treat the certificate of eligibility as a document that's relevant for the incontestability provision.

[00:18:55] Speaker 00:
It can be relevant, yes.

[00:18:57] Speaker 00:
So if we look to the incontestability provision at Section 3721, by its clean terms in the first sentence of that section, it only kicks in based on any evidence of guarantee shall be conclusive evidence of eligibility.

[00:19:13] Speaker 00:
Could a certificate of eligibility ever be evidence of guarantee?

[00:19:17] Speaker 00:
Perhaps, if there was a listing of a loan and an amount on that certificate.

[00:19:24] Speaker 00:
It wouldn't be a guarantee itself.

[00:19:26] Speaker 00:
It might be, quote, evidence that a guarantee somewhere existed, right, if the certificate listed Bank of America 20,000.

[00:19:36] Speaker 00:
That's not the case on this record.

[00:19:40] Speaker 04:
Let me give you another hypothetical.

[00:19:44] Speaker 04:
Suppose the widow goes to the bank with a certificate of eligibility.

[00:19:50] Speaker 04:
The bank makes the loan and then all of a sudden the bank says, oops, we shouldn't have made the loan because you're not eligible.

[00:19:57] Speaker 04:
We want you to pay it back immediately.

[00:20:00] Speaker 04:
Can the widow rely on the statute to protect her from that eventuality?

[00:20:06] Speaker 00:
That's what the incontestability provision is there.

[00:20:08] Speaker 00:
So it's not if the bank.

[00:20:11] Speaker 04:
The widow is protected.

[00:20:14] Speaker 04:
In litigation with the bank, the widow would be protected.

[00:20:17] Speaker 04:
And she could say, bank, you can't go behind the certificate of eligibility.

[00:20:22] Speaker 04:
You have to accept it.

[00:20:24] Speaker 04:
You can't contest it.

[00:20:26] Speaker 00:
There would be no basis for the bank to engage in litigation with the bank.

[00:20:33] Speaker 00:
purportedly eligible individuals.

[00:20:36] Speaker 04:
That's my question.

[00:20:37] Speaker 04:
Can the widow get the benefit of the incontestability provision under that hypothetical?

[00:20:45] Speaker 00:
She would be a third-party beneficiary, but the provision is meant to protect the lender as the language of Section 37.

[00:20:54] Speaker 04:
But the answer is no, she's not protected by the statute in those circumstances?

[00:21:00] Speaker 00:
She receives the benefit of the statute, but the statute exists to protect and incentivize the lender.

[00:21:07] Speaker 00:
Through protecting and incentivizing the lender, she receives the collateral benefit of protection herself, but she is not the intended beneficiary of the, I mean not directly, of Section 3721, the legislative history.

[00:21:25] Speaker 00:
of that section makes clear that it was passed in order to incentivize lenders, original lenders, and subsequent bonafide purchasers for value of the loan to make and hold VA loans.

[00:21:42] Speaker 00:
Obviously, by doing that, eligible veterans benefit, right?

[00:21:46] Speaker 00:
There are more lenders that are willing to take on VA loans, but the provision itself is not

[00:21:53] Speaker 00:
It's not a provision for her to invoke.

[00:21:56] Speaker 00:
It's a provision for the lender to invoke if, after the fact of a loan and a guarantee, there is a default, possession of defaults on the loan, the bank would like to invoke the guarantee, signed it closing, and says, hey, VA, there's been a default, $10,000 debt.

[00:22:18] Speaker 00:
We want to invoke the guarantee for the government to pay us.

[00:22:23] Speaker 00:
The government at that point, the VA, would be a stop from disavowing the guarantee that it had previously issued at the closing on the basis of recently found evidence that the veteran never qualified in the first instance.

[00:22:41] Speaker 00:
It's providing protection to the original lender and subsequent holders of the mortgage through assignment or bona fide purchase of value.

[00:22:51] Speaker 02:
Can I just interrupt?

[00:22:53] Speaker 02:
This is Judge Hughes.

[00:22:55] Speaker 02:
It sounds like what you're saying to me is that the lender is not going to make a loan and close on a loan until it gets evidence of a guarantee from the VA.

[00:23:09] Speaker 02:
It's not going to do it just based upon the certificate of eligibility.

[00:23:13] Speaker 02:
Is that correct?

[00:23:15] Speaker 02:
Yes.

[00:23:16] Speaker 02:
So I guess, Mike, can I just follow up then?

[00:23:19] Speaker 02:
Because all I wanted was a simple yes.

[00:23:21] Speaker 02:
Can I just follow up on Judge Dyke's hypothetical?

[00:23:25] Speaker 02:
What if the lender makes a mistake and does approve, you know, presumably they just don't do this, but suppose it's some really small bank and they're not familiar with this process and they just do move a loan to a veteran or the spouse based solely on this certificate

[00:23:49] Speaker 02:
and doesn't follow up with the VA and get any kind of real guarantee and it goes through closing and the like and then the widow defaults on the loan.

[00:24:00] Speaker 02:
Is VA still on the hook for the default even though they didn't follow the proper process and the certificate of eligibility might not be valid?

[00:24:16] Speaker 00:
It's a fairly fact-specific hypothetical.

[00:24:19] Speaker 00:
I would assume that it would depend on how material was the lender's failure to follow its process.

[00:24:27] Speaker 00:
So this might be somewhat informative.

[00:24:30] Speaker 00:
38 USC 3703, which is part of the Home Loan Guarantee Benefit Statutes after the definitions of who's entitled in 3701 and 3702, 3703 talks about,

[00:24:44] Speaker 00:
in somewhat more detail that there are stages to this transaction, right?

[00:24:51] Speaker 00:
So, 3703C1, loans guaranteed or insured under this chapter shall be payable among such terms and conditions as may be agreed upon by the parties there too, subject to provision of the chapter in regulations of the secretary.

[00:25:07] Speaker 02:
Can I just ask you another follow-up?

[00:25:09] Speaker 02:
Let's assume that

[00:25:10] Speaker 02:
everything is true from my previous hypothetical, is a dispute then between the lender and the VA about whether they follow the proper procedures and whatever the result of that, the widow is because the lender purported to issue a loan guaranteed by this VA program is not subject to default or they can't go after her for any

[00:25:38] Speaker 02:
money covered by this?

[00:25:41] Speaker 02:
Is that the way it would work?

[00:25:42] Speaker 02:
Or in Judge Dyke's hypothetical, could the bank go back to the widow and say, you weren't eligible, give me our money back?

[00:25:54] Speaker 00:
I would assume that it would come down to, you know, whether there's fraud or material misrepresentation, so the inspectability provisions.

[00:26:05] Speaker 00:
provides that the VA is a stop from disavowing a guarantee on eligibility grounds unless these are the original lender.

[00:26:13] Speaker 00:
There's evidence of fraud or misrepresentation.

[00:26:15] Speaker 00:
So that's one carve out there.

[00:26:18] Speaker 00:
Also, I think what we're contemplating here is the guarantee is not for the entire, right?

[00:26:26] Speaker 00:
There's a maximum amount on that guarantee.

[00:26:28] Speaker 00:
So theoretically, if the veteran

[00:26:33] Speaker 00:
obtained a loan for more than the amount of the guarantee.

[00:26:39] Speaker 00:
I think I'm out of time.

[00:26:41] Speaker 04:
So the question is that she could rely on it against the bank as long as there was no fraud or forgery or misrepresentation.

[00:26:57] Speaker 00:
Yes.

[00:26:58] Speaker 00:
Theoretically, if everything else has come to fore, right, there's a valid loan with a valid guarantee.

[00:27:05] Speaker 04:
Okay.

[00:27:09] Speaker 04:
Any further questions from my colleagues?

[00:27:12] Speaker 02:
No.

[00:27:14] Speaker 04:
No.

[00:27:15] Speaker 04:
Okay.

[00:27:17] Speaker 04:
Thank you, Ms.

[00:27:17] Speaker 04:
Spinnon.

[00:27:18] Speaker 04:
We'll hear from Mr. Toomey.

[00:27:20] Speaker 04:
You have three minutes.

[00:27:23] Speaker 03:
Thank you, Your Honor.

[00:27:27] Speaker 03:
Briefly, I believe I heard counsel say that banks are not going to issue loans if not COEs, but I don't think that's accurate.

[00:27:35] Speaker 03:
It may be that the process generally follows what we discussed earlier, but lenders specifically have the ability to request COEs on behalf of veterans.

[00:27:46] Speaker 03:
That's in the VA's own materials cited in our brief.

[00:27:50] Speaker 03:
There's no reason for lenders to be able to do that, to request COEs,

[00:27:55] Speaker 03:
unless they're planning to rely on that as evidence and guarantee and to issue a loan based on that.

[00:28:00] Speaker 02:
So I think that... Why isn't... Sorry, can I just interrupt?

[00:28:04] Speaker 02:
This is Judge Hughes.

[00:28:05] Speaker 02:
Why isn't that just the start of the process if the government counsel suggests that the lender knows that the specific veteran or spouse is going to be entitled to the loan at the end of the process, but there still has to be the back and forth with the guarantee actually issued at closing?

[00:28:24] Speaker 03:
It may be, Your Honor, that it's the start of the process, but I'm not aware of anything that would preclude the bank from issuing a loan based on that.

[00:28:37] Speaker 03:
So what I'm saying is that may be the start of the process.

[00:28:40] Speaker 02:
I don't understand.

[00:28:41] Speaker 02:
Do you mean offering a loan subject to approval by the VA during the process and a guarantee of closing, or do you mean actually closing just based upon the certificate of eligibility?

[00:28:54] Speaker 03:
I think either, Your Honor.

[00:28:56] Speaker 03:
You know, for example, the hypothetical discussed that maybe it's a small bank that doesn't do a lot of these and, you know, they, they, that's my hypothetical was they made a mistake, not that they just did it and it was proper under the regulations.

[00:29:08] Speaker 02:
Can you cite to me anywhere in the regulations that would contradict the government's account that this is all done at closing?

[00:29:18] Speaker 03:
This being

[00:29:20] Speaker 02:
But the guarantee is actually issued at closing with all the other loan documents.

[00:29:25] Speaker 02:
The eligibility is just a start to the process.

[00:29:31] Speaker 03:
I think the answer is on the COE itself.

[00:29:35] Speaker 03:
The government has repeatedly referred to this COE specifically as being blank.

[00:29:41] Speaker 03:
That's not true.

[00:29:42] Speaker 03:
The blank space on the document, it says prior loans.

[00:29:46] Speaker 03:
I'm looking at Appendix 56, the copy of the COE.

[00:29:49] Speaker 03:
uh... blank spaces for prior loan right i think it's a couple of that um... she doesn't have any prior since this is her personal mission applied for so it's not that it's not that it's blanket but there's no guarantee there if the reason that box of blankets because she hasn't been issued a previous loan the first one she's speaking however if you look you know uh... under to the right and underneath it talks about the specific amount thirty six thousand dollars that's the amount of guarantee that she that she's been issued that's reflected on this document

[00:30:19] Speaker 03:
And this, the fact that the COE itself is treated as evidence of guarantee is also in the VA's own documents, and we cite this in our brief 31 and 32.

[00:30:30] Speaker 03:
There's a handout from the VA that's called VA Guarantee, and it shows that the COE is treated as showing the amount of the guarantee.

[00:30:37] Speaker 03:
Can I see that amount of time, Your Honor?

[00:30:39] Speaker 04:
Okay, any further questions?

[00:30:41] Speaker 03:
No.

[00:30:42] Speaker 03:
No.

[00:30:43] Speaker 04:
Thank you, Mr. Chairman.

[00:30:44] Speaker 04:
We thank both Councils.

[00:30:46] Speaker 04:
The case is submitted.

[00:30:47] Speaker 04:
That concludes our session for this morning.

[00:30:51] Speaker 02:
The honorable court is adjourned until tomorrow morning at 10 AM.