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VA: Circular 26-21-07: COVID-19 Loan Repayment Relief

Updated 6/3/21: The U.S. Department of Veterans Affairs (VA) updated guidance providing a summary of the home retention options and alternatives to foreclosure that servicers should utilize to help borrowers affected by the pandemic.

Circular 26-21-07: Change 1

 

Investor Update
March 26, 2021

Source: VA

1. Purpose. The Department of Veterans Affairs (VA) remains firmly committed to assisting VA-guaranteed loan borrowers who experience financial hardship due to the COVID-19 pandemic. Through this Circular, VA is providing an updated summary of the home retention options and alternatives to foreclosure that servicers should utilize to help borrowers affected by the pandemic. This guidance is necessary given the extended duration of the pandemic, recent Presidential actions, and developments in VA’s program.

2. Home Retention Options and Alternatives to Foreclosure.

a. When evaluating a borrower’s case, servicers should consider all home retention options and work with the borrower to select the option that is in the borrower’s best financial interest. Where home retention options are not feasible, servicers should consider alternatives to foreclosure (i.e. a compromise sale or a deed in lieu of foreclosure). VA is reminding servicers that Chapter 5 of the VA Servicer Handbook M26-4 provides guidance relating to VA’s longstanding home retention options and alternatives to foreclosure. Servicers can utilize these options and alternatives to assist borrowers who are affected by the pandemic. Regardless of any option or alternative chosen, servicers should not require a borrower to make a lump sum payment to bring the loan current.

b. On September 14, 2020, VA provided guidance stating that servicers could also utilize a novel home retention option (that is, loan deferment), to assist borrowers who invoked loan forbearance under section 4022 of the CARES Act (Pub. L. 116-136). Through this Circular, servicers now have the flexibility to offer loan deferment in cases where a borrower missed one or more payments because of the pandemic, regardless of whether such a payment was subject to a CARES Act forbearance. To offer loan deferment, the servicer must defer payment of the total amount of missed payments (principal, interest, taxes, and insurance) to the loan maturity date or until a borrower refinances the loan, transfers the property, or otherwise pays off the loan, whichever occurs first. Servicers cannot charge any added costs, fees, or interest to the borrower. Servicers cannot impose any penalty for the borrower’s early payment of the deferred amount. Servicers can only utilize the loan deferment option in cases where the borrower is able to return to normal loan repayment under the loan contract. For VA’s purposes, the servicer does not need and should not enter into a modification agreement that alters the terms of the existing loan for the purposes of a loan deferment option. In consideration of the COVID-19 national emergency and to relieve undue prejudice to a debtor, holder, or other person, for the purpose of providing this loan deferment option, VA is temporarily waiving the requirement that a final loan installment payment shall not be in excess of two times the average of the preceding installments.

c. Recently, VA published a Proposed Rule setting forth VA’s intention to establish a temporary COVID-19 Veterans Assistance Partial Claim Payment program.4 Under this proposed program, servicers would have another option to assist borrowers affected by the pandemic. VA is reminding servicers to monitor for any updates relating to this rule.

3. Contact Information. Questions about this Circular can be sent to valerihelpdesk.vbaco@va.gov.

4. Rescission. This Circular is rescinded April 1, 2022.

By Direction of the Under Secretary for Benefits

Jeffrey F. London
Executive Director, Loan Guaranty Service

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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