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VA Circular 26-15-9: Servicer Statutory Redemption Procedure

Investor Update
May 18, 2015

1. Purpose. This Circular provides guidance on the procedure to redeem a Department of Veterans Affairs (VA) property, post-foreclosure, in a state which allows “statutory redemption.” The standardization of the procedure will ensure the accuracy and uniformity of the redemption process for foreclosed properties, guaranteed by VA loans, which were transferred to VA prior to the expiration date of the redemption period.

2. Background. Statutory redemption, as opposed to equitable redemption, is permitted in only those states whose foreclosure statutes provide that a (former) borrower may redeem their mortgage after foreclosure of their home has occurred, within a specified period of time. The redemption period varies by the state statute and ranges from 30 days to 2 years. At the time of redemption, the entire underlying mortgage debt, plus interest and other costs (such as foreclosure fees and expenses) are due. In most cases, redeemed property has been transferred to VA from the servicer prior to the end of the redemption period. At redemption, however, the (former) borrower or local authority, such as the sheriff’s office, obtains the payoff figure from the loan servicer or foreclosure attorney and pays this amount to the loan servicer. The loan servicer transmits the redemption funds to VA through its property management contractor, Vendor Resource Management (VRM).

a. Redemption payments to VRM are payable to “The Secretary of Veterans Affairs” and can be made by check or a direct bank transfer pursuant to the instructions located on the VALERI website at: http://www.benefits.va.gov/HOMELOANS/documents/docs/Redemption_instructions.pdf.

3. Concerns. In some instances, loan servicers are providing the redeeming party an inaccurate redemption quote because it does not take into account fees and costs VA has incurred during the period in which VA owned the property, post-foreclosure sale. These fees and costs include, but are not limited to, homeowner association fees, real estate taxes, other assessments and certain VRM fees. VRM, not the loan servicer, is the only party who can calculate an accurate redemption amount because VRM facilitates the disbursement and tracking of VA funds expended during the period of VA ownership of foreclosed properties. When loan servicers provide a redemption quote without first consulting VRM for the exact figure, the amount redeemed may be insufficient to reimburse VA for property-related expenses.

4. Notice. Effective immediately, all loan servicers are required to request a redemption quote from VRM, through an email to VRM?redemption@vrmco.com, at least 5-business days before they intend to provide the information to the redeeming party. If the former borrower indicates that time is of the essence due to the imminent expiration of the redemption period, the loan servicer should indicate the urgency and request expedited processing. The e-mail request to VRM should include the property address, the VA loan identification number, the former borrower’s name, and the VRM Asset ID Number, if available.

VRM will provide an e-mail response containing the total redemption amount due within 2-business days of receipt. The figure provided by VRM will be the only redemption quote acceptable to VA. If a non-VRM quote is used by the loan servicer and VA or VRM later determines that the redemption amount collected was insufficient to reimburse VA’s costs, VA may request the amount of the deficiency from the loan servicer.

5. Rescission: This Circular is rescinded January 1, 2018.

By Direction of the Under Secretary for Benefits

Michael J. Frueh
Director, Loan Guaranty Service

Source: VA

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CEO

Alan Jaffa

Alan Jaffa is the Chief Executive Officer for Safeguard Properties, steering the company as the mortgage field services industry leader. He also serves on the board of advisors for SCG Partners, a middle-market private equity fund focused on diversifying and expanding Safeguard Properties’ business model into complimentary markets.

Alan joined Safeguard in 1995, learning the business from the ground up. He was promoted to Chief Operating Officer in 2002, and was named CEO in May 2010. His hands-on experience has given him unique insights as a leader to innovate, improve and strengthen Safeguard’s processes to assure that the company adheres to the highest standards of quality and customer service.

Under Alan’s leadership, Safeguard has grown significantly with strategies that have included new and expanded services, technology investments that deliver higher quality and greater efficiency to clients, and strategic acquisitions. He takes a team approach to process improvement, involving staff at all levels of the organization to address issues, brainstorm solutions, and identify new and better ways to serve clients.

In 2008, Alan was recognized by Crain’s Cleveland Business in its annual “40-Under-40” profile of young leaders. He also was named a NEO Ernst & Young Entrepreneur Of The Year® Award finalist in 2013.

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Esq., General Counsel and EVP

Linda Erkkila

Linda Erkkila is the General Counsel and Executive Vice President for Safeguard Properties, with oversight of legal, human resources, training, and compliance. Linda’s broad scope of oversight covers regulatory issues that impact Safeguard’s operations, risk mitigation, strategic planning, human resources and training initiatives, compliance, insurance, litigation and claims management, and counsel related to mergers, acquisition and joint ventures.

Linda assures that Safeguard’s strategic initiatives align with its resources, leverage opportunities across the company, and contemplate compliance mandates. She has practiced law for 25 years and her experience, both as outside and in-house counsel, covers a wide range of corporate matters, including regulatory disclosure, corporate governance compliance, risk assessment, compensation and benefits, litigation management, and mergers and acquisitions.

Linda earned her JD at Cleveland-Marshall College of Law. She holds a degree in economics from Miami University and an MBA. Linda was previously named as both a “Woman of Influence” by HousingWire and as a “Leading Lady” by MReport.

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COO

Michael Greenbaum

Michael Greenbaum is the Chief Operating Officer of Safeguard Properties, where he has played a pivotal role since joining the company in July 2010. Initially brought on as Vice President of REO, Mike’s exceptional leadership and strategic vision quickly propelled him to Vice President of Operations in 2013, and ultimately to COO in 2015. Over his 14-year tenure at Safeguard, Mike has been instrumental in driving change and fostering innovation within the Property Preservation sector, consistently delivering excellence and becoming a trusted partner to clients and investors.

A distinguished graduate of the United States Military Academy at West Point, Mike earned a degree in Quantitative Economics. Following his graduation, he served in the U.S. Army’s Ordnance Branch, where he specialized in supply chain management. Before his tenure at Safeguard, Mike honed his expertise by managing global supply chains for 13 years, leveraging his military and civilian experience to lead with precision and efficacy.

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CFO

Joe Iafigliola

Joe Iafigliola is the Chief Financial Officer for Safeguard Properties. Joe is responsible for the Control, Quality Assurance, Business Development, Marketing, Accounting, and Information Security departments. At the core of his responsibilities is the drive to ensure that Safeguard’s focus remains rooted in Customer Service = Resolution. Through his executive leadership role, he actively supports SGPNOW.com, an on-demand service geared towards real estate and property management professionals as well as individual home owners in need of inspection and property preservation services. Joe is also an integral force behind Compliance Connections, a branch of Safeguard Properties that allows code enforcement professionals to report violations at properties that can then be addressed by the Safeguard vendor network. Compliance Connections also researches and shares vacant property ordinance information with Safeguard clients.

Joe has an MBA from The Weatherhead School of Management at Case Western Reserve University, is a Certified Management Accountant (CMA), and holds a bachelor’s degree from The Ohio State University’s Honors Accounting program.

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Business Development

Carrie Tackett

Business Development Safeguard Properties