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12.3.7.3 VA Forbearance Provisions

Significant Law Change

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.110 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.111

The VA clarified in Circular 26-21-4 that borrowers must request make their initial COVID-19 forbearance requests by June 30, 2021. According to the circular, “[a] COVID-19 forbearance period may extend through June 30, 2022.”112

Pursuant to the Biden Administration’s announcement to help borrowers avoid pandemic related foreclosures, VA has provided extended forbearance to borrowers who started their plans by June 30, 2020, and who still need forbearance to manage pandemic related hardships.113 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.”114 Servicers should document these evaluations and consider VA loan refunding if borrowers are ineligible.

Footnotes

  • 110 VA Circular 26-20-12 (Apr. 9, 2020).

  • 111 VA Circular 26-20-12 (Apr. 9, 2020).

  • 112 VA Circular 26-21-4 (Feb. 16, 2021).

  • 113 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).

  • 114 VA Circular 26-20-12 (Apr. 9, 2020).