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Given the potential for another rulemaking in upcoming weeks, the concerns about departing too far from the proposed rule, and the immediate need to publish this final rule notice, VA is not making any changes to the rule based on this comment. Generally, VA expects servicers to provide veterans with home retention options that are in the veteran's financial interest. To ensure that VA can assist as many veterans as possible in retaining their homes and recovering from the pandemic, VA is modifying the final rule such that the COVID-VAPCP will no longer be characterized as an option of last resort. As the COVID-19 national emergency and the CARES Act pass their one-year anniversaries, VA stakeholders continue to confront decisions that have far-reaching consequences.
Customers with questions regarding our loan officers and their licensing may visit the Nationwide Mortgage Licensing System & Directoryfor more information. In this short video listen to what Veterans say what "Home" means to them. And how the VA home loan helped them realize the dream of homeownership.
Other Assistance for Delinquent Veteran Borrowers
VA's partial claim assistance may well be the determining factor for certain veterans, affecting the extent to which they can recover financially from the crisis. Similarly, servicers are evaluating their liquidity positions and other factors to determine how to make the advances necessary for investor requirements. Some servicers may even be questioning whether they can stay afloat, which ultimately harms not just the servicer, but also the veterans whose guaranteed loans are being serviced. VALoans.com is a product of ICB Solutions, a division of Neighbors Bank.
The Veteran can prepay without penalty the entire loan or any part not less than one installment or $100. The builder of a new home is required to give the purchasing Veteran either a one-year warranty or a 10-year insurance-backed protection plan. Discharge under conditions other than dishonorable or early discharge for service-connected disability.
PART 36—LOAN GUARANTY
VA has instead advised of VA's preferred order of consideration for standard home retention options. As explained in the proposed rule, one reason supporting this policy is that, in VA's program, lenders, servicers, or other entities that own the loan often bear significantly more financial risk than the Government. Also, VA recognizes that individual circumstances may lead to “out of the ordinary” considerations.
All three commenters noted that VA should follow the more streamlined options presented by the other federal agencies. The commenter asserted that VA should find a way to allow servicers to offer a partial claim option without completing an evaluation of all loss mitigation options available to the borrower based on a complete loss mitigation application . The commenter stated that such flexibility is authorized by amendments made to CFPB's Regulation X. As discussed in the proposed rule, the COVID-VAPCP is a temporary program to help veterans return to making normal loan payments on their guaranteed loans after exiting a COVID-19 forbearance period.
E. § 36.4804 Partial Claim Payment as a Home Retention Option
The commenter suggested VA utilize its Circular process to offer this home retention option. The number one priority for anyone financially affected by COVID-19 is to ensure the health and safety of you and your family. While you might be worried about letting your mortgage company know about your financial hardships, your mortgage company is there to help you, and it is to your advantage not to wait, but to call them as soon as possible. If you paid the funding fee, you can write it off on your taxes as long as it’s within the same year you paid it. When the fee is refunded, however, you’ll be required to declare it as income on your tax return. Waiting for your refund can be frustrating, but processing VA funding fee refunds typically happens within 10 business days of your initial request.
VA is also concerned that mandating the partial claim option could increase upfront costs for some servicers, which could in turn impede them from helping the veterans they would otherwise be able to serve. The COVID-19 Refund Modification is intended for those borrowers that have not been able to recover from the pandemic to the same financial income level as prior to the pandemic. Those Veteran borrowers would be able to afford regularly scheduled monthly mortgage payments but not at the pre-pandemic amount.
That is, if the VA approves a disability claim application filed after loan closing but with a retroactive date before closing, you can still receive a funding fee refund. Generally, you and your lender could agree to "roll the payments in" to the end of the loan by extending the maturity date by the number of missed payments. There are multiple protections on your VA-guaranteed loan if you are experiencing financial hardship due to the COVID-19 emergency.
If approved, the purchaser will have to pay a funding fee that the lender sends to VA, and the Veteran will be released from liability to the federal government. No loan can be guaranteed by VA without first being appraised by a VA-assigned fee appraiser. The Veteran borrower typically pays for the appraisal upon completion, according to a fee schedule approved by VA. It is not an inspection and does not guarantee the house is free of defects. A thorough inspection of the property by a reputable inspection firm may help minimize any problems that could arise after loan closing.
Rather, VA has included revisions to clarify the different forms of restrictions on participation in FHA programs encompassed by this section. Changes in this section replace certain references to the CARES Act with COVID-19. These changes align the scope of the COVID-VAPCP with the coordinated federal response to veterans' prolonged financial hardship, as discussed in section III.A. VA also agrees with commenters that the September 9, 2021 sunset date should be extended, given the potential for COVID-19 forbearances extending beyond that date. VA is adjusting the sunset date in the final rule to align with the expectation that no veteran will be in a COVID-19 forbearance after June 30, 2022. Review the VA funding fee rate charts below to determine the amount you’ll have to pay.
This may not apply if you were alreadybehindon your mortgage when the COVID-19 forbearance was requested. It may be that your mortgage company has to maintain the delinquent status. If you bring your mortgage current, your mortgage company should report the credit obligation or account as current. If you can continue making payments despite the financial impact of COVID-19, you may not want to request forbearance.
VA expects your mortgage company to approve your request, for up to six months. VA also expects that, if you need additional forbearance after that, your mortgage company will approve, at your request, an additional COVID-19 forbearance for up to six months. Today, service members with a pending pre-discharge claim can be exempt from the fee, provided the lender obtains a proposed or memorandum rating from the VA prior to the loan closing.
The effective date of the disability compensation must be retroactive to a date prior to the date of loan closing. If the servicer miscalculates the partial claim amount, resulting in underpayment (i.e., an amount insufficient to bring the guaranteed loan current), the servicer must waive the difference. Nothing in this section shall preclude a veteran from making an optional payment or a servicer from waiving a veteran's indebtedness, such that the amount of partial claim payment would not exceed the 30 percent cap described in paragraph of this section. The veteran executes, in a timely manner, all loan documents necessary to establish an obligation to repay the Secretary for the partial claim payment.
Main pillars of the VA home loan benefit
The Public Inspection pageon FederalRegister.gov offers a preview of documents scheduled to appear in the next day's Federal Register issue. The Public Inspection page may also include documents scheduled for later issues, at the request of the issuing agency. Some wrongly charged fees were attributed to clerical errors, with the exception being for veterans whose exemption status changed when they were issued a disability rating after their loan had already closed.
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