The Veterans Affairs Department has requested leniency from lenders on behalf of veterans holding VA-backed loans on property in the path of volcanic activity in Hawaii and recent severe storms in North Carolina.
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.