VA Circular 26-14-22: VA Making Home Affordable Programs
On September 2, the U.S. Department of Veterans Affairs (VA) issued Circular 26-14-22, subtitled VA Making Home Affordable Program.
VA Making Home Affordable Program
1. Purpose. This Circular provides authority and instructions for modifying Department of Veterans Affairs (VA) guaranteed home loans in accordance with the President’s Making Home Affordable (MHA) program. The intent of these instructions is to ensure that Veteran borrowers receive the opportunity to be considered for affordable loan modifications when other home retention loss mitigation options are not feasible.
2. Background. VA has a longstanding policy of encouraging servicers to work with Veteran borrowers to explore all reasonable options to help them retain their homes, or when that is not feasible, to mitigate losses by pursuing alternatives to foreclosure. In an effort to help homeowners avoid foreclosure, the President announced the MHA program to make home loans more affordable. Two main features of this program are the Home Affordable Refinance Program (HARP) and the Home Affordable Modification Program (HAMP). HARP was introduced to help borrowers refinance at lower interest rates despite high loan-to-value (LTV) ratios, and provides relief similar to VA’s existing Interest Rate Reduction Refinancing Loan (IRRRL) program. HAMP was introduced to avoid foreclosures by modifying loans to increase affordability relative to borrower income. Under HAMP, an affordable modification is defined as a new monthly mortgage payment (including principal, interest, property taxes, insurance, and condominium or homeowners’ association fees (PITIA)) that is no greater than 31 percent of the borrower’s monthly gross income. This Circular explains how VA loan modifications conform to the MHA program.
By Direction of the Under Secretary for Benefits
Michael J. Frueh
Director, Loan Guaranty Service
Please click here to view the Circular in its entirety.
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