VA Circular 26-13-3 Continued Forbearance

Investor Update: On February 5, the Department of Veterans Affairs (VA) issued Circular 26-13-3, subtitled Continued Forbearance Due to Hurricane Sandy.

Circular 26-13-3

1. Purpose. This circular requests continued forbearance for Department of Veterans
Affairs (VA) home loan borrowers affected by Hurricane Sandy and associated storms
affecting the Eastern United States.

2. Continued Forbearance. VA issued Circular 26-12-10 on November 1, 2012, to
request forbearance and consideration of special assistance to all borrowers in
distress as a result of Hurricane Sandy. This included borrowers within the federally
declared disaster areas, as well as borrowers in other areas of the country who
provided information indicating the hurricane had impacted their income
(due to business partner relationships in the disaster areas) or their family expenses
(due to provision of assistance to relatives evacuated from the disaster areas).
This circular encourages holders of guaranteed loans to continue to extend additional
forbearance and assistance to distressed borrowers in the hope that an additional
period of forbearance will assist to clarify prospects for resumption of regular payments
and restoration of damaged properties.

3. Extended Moratorium on Foreclosure Initiation. VA policy, as published on its website
( is to request that holders establish a 90-day
moratorium from the date of a disaster on initiating new foreclosures on loans affected
by major disasters. For loans that servicers document as affected by Hurricane Sandy,
that request is hereby extended for another 90 days. VA recognizes that the scope of
the disaster has been such that, in some cases, in the disaster areas mortgagees have
been unable to obtain necessary information about borrower prospects for repairs to
homes or resumption of employment income. VA expects that the additional
forbearance and moratorium periods will enable loan servicers to obtain necessary
information on accounts that remain unpaid in the disaster areas, even though initiation
of termination action might be the usual response to lack of contact from borrowers on
delinquent loans.  VA requests this delay in normal processing based on an
understanding that conditions are still so unsettled in some parts of the disaster areas
that clear information cannot be obtained.  Should later events lead to loan termination,
VA will accept documented reports of reasonable servicing efforts on loans in disaster
areas that result in lack of definitive information, when considering requests for interest
in excess of the 210 days from the due date of the last paid installment specified in
title 38, Code of Federal Regulations, section 36.4324(a)(3)(ii).

4. Waiver of Late Charges and Credit Reporting. As announced in Circular 26-12-10,
VA encourages servicers to waive late charges and suspend credit reporting as
appropriate.  VA will not penalize servicers for late reporting to VA resulting from storm issues.

5. Rescission: This circular is automatically rescinded January 1, 2015.

By Direction of the Under Secretary for Benefits

Michael J. Frueh
Director, Loan Guaranty Service

To view the online Circular, please click here.

About Safeguard
Safeguard Properties is the largest privately held field services company in the country. Located in Cleveland, Ohio and founded in 1990 by Robert Klein, Safeguard has grown from a regional preservation company with a few employees  and a handful of contractors performing services in the Midwest, to a national company with more than 1,600 employees. Safeguard is supported by a nationwide network of subcontractors able to perform any requested superintendence, preservation, and maintenance functions, as well as numerous ancillary services in the U.S., the Virgin Islands, and Puerto Rico.


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