18.104.22.168 VA Forbearance Provisions
VA borrowers are entitled to forbearance under the CARES Act. The agency’s guidance, consistent with interagency guidance from FHA/VA/USDA, clarifies that borrowers are entitled to determine the length of forbearance up to 360 days.388 The VA is silent on whether borrowers may receive multiple shorter increments of forbearance. However, given the VA’s acknowledgement of the borrower’s role in deciding length of forbearance and its recognition that forbearance may extend “up to 360 days,” advocates should push for a full year if needed.389
The VA clarified in Circular 26-21-20 that “servicers should approve requests from such borrowers provided that the borrower makes the request during the National Emergency Concerning the Novel Coronavirus Disease 2019 (COVID-19) Pandemic.”390 Prior to VA Circular 26-21-20, the VA had established a September 30, 2021, deadline for forbearance requests. The VA expects all forbearance periods to end by September 30, 2022.391
Pursuant to the Biden Administration’s announcement to help borrowers avoid pandemic related foreclosures, VA provided extended forbearance beyond a maximum of twelve months to borrowers who started their plans by June 30, 2020, and who still need forbearance to manage pandemic related hardships.392 Borrowers meeting these requirements may receive an addition six months of forbearance beyond the twelve months already accessible. Servicers should provide the additional forbearance in two three-month increments.
Servicers must evaluate borrowers for loss mitigation options “no later than 30 days before the forbearance period is scheduled to end.”393 Servicers should document these evaluations and consider VA loan refunding if borrowers are ineligible.
388 VA Circular 26-20-12 (Apr. 9, 2020).
389 VA Circular 26-20-12 (Apr. 9, 2020).
390 VA Circular 26-21-20 (Sept. 29, 2021).
391 VA Circular 26-21-20 (Sept. 29, 2021).
392 VA Circular 26-21-4 (Feb. 16, 2021); The White House, Fact Sheet: Biden Administration Announces Extension of COVID-19 Forbearance and Foreclosure Protections for Homeowners (Feb. 16, 2021); Federal Housing Finance Agency, News Release, FHFA Extends COVID-19 Forbearance Period and Foreclosure and REO Eviction Moratoriums (Feb. 25, 2021).
393 VA Circular 26-20-12 (Apr. 9, 2020).