(1) When the Department of Veterans’ Affairs receives an application pursuant to ORS 407.205, the department shall immediately process the application.
(2) The security for the loan must consist of the property to be acquired by the applicant and must be secured by a mortgage or trust deed in the full amount of the loan.
(3) The mortgage or trust deed must:
(a) Be either a first lien on the property, subject to subsection (4) of this section, or a lien insured by mortgagee’s title insurance against loss from any prior encumbrance; and
(b) Provide that the borrower, or any subsequent owner of the secured property, may pay all or any part of the loan at any time without penalty.
(4) The department may make subordinate loans secured by the same security if there are no intervening liens between the first lien of the department created under this section and the recorded liens securing repayment of such subordinate loans. Such consecutive liens, for the purposes of this chapter, shall be deemed collectively as a first lien upon the security.