Loans

VA calls on servicers to suspend foreclosures through May



Department of Veterans Affairs asks housing finance companies to stop seizing certain homes to resolve The gap between pandemic relief packages and subsequent plans.

“We are calling on mortgage servicers to suspend foreclosures on VA-insured loans through May 31, 2024,” the VA said in a press statement reviewed over the weekend. “During this moratorium, we will work with servicers to provide Veteran.”

Recently suspended News report on the impact on borrowers of ending the partial claims scheme and a letter from a group of senate democrats Call for such a change until it is replaced, VA Service Purchase Program [VASP]can be established.

In addition to requiring servicers to suspend foreclosures, the VA said it is extending to May 31 the COVID-19 Refund Modification Program, which was recently set to expire at the end of the year.

The purpose of the latter program is to allow borrowers to obtain adjustments to their mortgage terms to make their down payments more manageable. It also allows them to obtain a separate loan to cover their outstanding monthly debt without incurring interest.

“During this pause, we will work with service members to develop viable home retention solutions for veterans,” the VA said in an emailed statement.

While consumer advocates generally applaud the borrower assistance measures, at the time of this writing, industry stakeholders and experts have questions about the potential impact of these changes on repayment obligations.

“What’s scary is having another moratorium on foreclosures that means lenders can’t continue,” said Ted Tozer, former president and CEO of the government agency Ginnie Mae and a nonresident fellow at the Center for Urban Studies. Dealing with Delinquent Borrowers.” Institute.

Housing Finance Corporation, a Gini servicer, must fund investor payments through the securitization of government loans, which the agency guarantees when borrowers default on their obligations.

“Issuers are going to have to continue to make early principal and interest payments to bondholders, which really puts — especially small and mid-sized — independent mortgage bankers at a significant risk of failure,” Tozer said.

Tozer suggested that Genie could help these companies obtain financing by guaranteeing a one-year commercial paper financing facility from the private market, with the same mandate as backing securitizations but requiring prison funding to do so.

Ginnie Mae had not responded to inquiries by deadline.

Polunsky Beitel Green attorney Peter Idziak said the VA’s announcement also raised questions about the extent of voluntary compliance with the directive.

“They’re ‘calling on servicers’ to stop foreclosures until May 31, 2024, which to me, as a lawyer, is a little more lenient than ‘we’re updating our policy,'” he said .

He said that while the move may help some Veterans Administration borrowers who are going into foreclosure, the impact for those who go further could be mixed.

“I think it’s laudable to allow homeowners to stay in their homes as much as possible, but for people who see foreclosure as a way to get out of their obligations, they’re stuck,” Idziak said. Dilemma.” He noted that they may not qualify for the refund model or VASP.

While there are questions in the industry about how the VA’s announcement will affect all borrowers, the numbers that consumer groups expect it will help are generally positive.

“The foreclosure moratorium is urgently needed because for more than a year, veteran survivors have had no options other than foreclosure,” Steve Sharp, senior staff attorney at the National Consumer Law Center, said in a news release. A choice of meaning.”

The Center for Responsible Lending estimates the number of refugees who could avoid foreclosure by taking steps to close the gap caused by the termination of some claims programs could reach five figures.

“The VASP program will provide tens of thousands of service members and veterans with the assistance they received through their service,” said Kanav Bhagat, a consultant who has worked with the Center for Responsible Lending on the issue. stated in a press release.

Democratic Party and republican party They face criticism for increasingly influencing mortgage policy in a partisan manner ahead of the next presidential election.

Industry groups have also been calling on the VA to do something about the gap between some claims programs and their successor programs.

John Bell III, executive director of the loan guarantee program, told attendees at the Mortgage Bankers Association Services Conference earlier this year that the VA had some unique considerations from a “budgetary perspective” that led to the program termination.





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