In two circulars released last week, VA requested that lenders delay foreclosure proceedings for at least 90 days on VA-backed borrowers holding properties in the affected areas. The department also requested that the lenders:
- Delay any reports to credit bureaus regarding loans in the regions. VA said it would not hold lenders accountable for any such reports owed to the department.
- Take advantage of regulations that allow some loan modifications without prior VA approval, and use the policy to help veterans remain current on their payments.
- Waive any late fees ― a move already made by several lenders with clients in the disaster areas.
VA also requested that lenders provide “special forbearance” for National Guard members called up to assist in disaster-recovery efforts. These members may experience financial hardship as a result of the mobilization.
The suggestions contained in the circulars are just that: While VA may back the loans, the loan-holders make the final decisions on whether and when to begin foreclosure procedures or offer leniency.
For more advice to VA-backed borrowers on what to do when disaster strikes, go here.