VA Circular 26-10-8
June 23rd, 2010
The Department of Veterans Affairs released Circular 26-10-8 titled, Relief for Veteran Homeowners Affected by the Gulf Oil Crisis.
RELIEF FOR VETERAN HOMEOWNERS AFFECTED BY THE GULF OIL CRISIS
1. Purpose. This circular expresses concern for VA-guaranteed home loan borrowers
who are experiencing difficulties due to the oil spill in the Gulf of Mexico and describes
measures VA urges mortgage servicers to employ in providing relief to distressed
borrowers.
2. Background. VA has a longstanding policy requesting the extension of all
reasonable forbearance to borrowers affected by a natural disaster. The situation in the
Gulf of Mexico is a widespread disaster caused by human actions and is continuing to
directly impact significant areas of the Southeastern United States. Some predictions
indicate many more areas could be directly affected as the oil continues to spill, while the
impact of the crisis may indirectly affect borrowers throughout the country, especially
those with commercial ties to the Gulf States.
3. Forbearance. VA strongly encourages servicers of VA-guaranteed home loans to
extend every possible forbearance to veterans experiencing difficulties because of the oil
spill crisis. Careful counseling with borrowers should help determine whether their
difficulties are directly or indirectly related to the crisis, or whether they stem from other
reasons. Servicers should consider payment histories and age of loans, and extend
forbearance for those borrowers with excellent records who are suddenly in distress due
to the crisis. Even borrowers with less than excellent payment records should be afforded
additional opportunities to resolve their issues.
4. Special Actions. The proper use of authorities granted in VA regulations may be of
assistance in appropriate cases. For example, title 38, Code of Federal Regulations
(CFR), section 36.4311 (Prepayments) allows the reapplication of prepayments to cure or
prevent a default. This means that if a borrower has been making additional principal
payments over a period of years, the principal balance may be increased up to the
scheduled balance and the increase applied toward regular installments. Also, 38 CFR
36.4315 (Loan modifications) allows the terms of any guaranteed loan to be modified
without the prior approval of VA, provided certain conditions in the regulation are
satisfied.
5. Other Relief. Many servicers have announced plans to waive late payment charges
on loans as well as the fact that many servicers have suspended derogatory reporting to
credit bureaus on borrowers affected by the crisis. VA strongly encourages all servicers
to employ these practices.
6. Other Veterans’ Benefits. During the course of servicing VA-guaranteed home
loans, servicers’ counselors may contact veterans who appear to be in need of additional
VA benefits. In order to help those veterans, we encourage servicers to ensure their staffs
are aware of, and are prepared to pass on the national toll-free number for obtaining
information on veterans’ benefits, 1-800-827-1000.
7. Rescission: This circular is automatically rescinded July 1, 2012.
By Direction of the Under Secretary for Benefits
Mark Bologna, Director
Loan Guaranty Service
To view the online Circular, please click here
About Safeguard
Safeguard Properties is the largest privately held field services company in the country. Located in Cleveland, Ohio and founded in 1990 by Robert Klein, Safeguard has grown from a regional preservation company with a few employees and a handful of contractors performing services in the Midwest, to a national company with over 700 employees. Safeguard is supported by a nationwide network of subcontractors able to perform any requested superintendence, preservation, and maintenance functions, as well as numerous ancillary services in the U.S., the Virgin Islands, and Puerto Rico.