Background
On February 1, 2008, VA published extensive changes to part 36 of the Code of Federal Regulations (CFR). Included are three changes to the existing regulations that are effective immediately and impact all VA-guaranteed loans. Existing sections 36.4313 and 36.4321 were revised, and a new section 36.4344a was added. This circular provides details on these three changes.

Allowable Attorney Fees 
Title 38, CFR, section 4313, describes advances and other charges that may be included in the computation of a claim under loan guaranty. The recent change establishes the allowable amount for reasonable attorney fees for loan termination from a national limit of $850 to individual State amounts published with the new regulations in a table in the Federal Register.
The table also includes allowable expenses for deeds in lieu of foreclosure, restarts, and bankruptcy releases. A copy of the table is included as Exhibit A (link below).
The change also clarifies that amounts payable for trustee fees may be in addition to attorney fees only when performed by a Government official, or if an individual other than the foreclosing attorney (or any employee of that attorney) is appointed as part of judicial proceedings and local law establishes trustee fees.
The new regulation and maximum allowable attorney fees will be applicable to all loan terminations completed on or after February 1, 2008.

Claim Time Limits
Section 36.4321 of title 38, CFR, was amended to establish a time limit for filing guaranty claims of one year after the completion of the liquidation sale. As defined in the new regulation, the liquidation sale is completed when the last act under State law is taken to make the sale final (excluding any redemption period); when a deed-in-lieu of foreclosure is recorded; or, when settlement occurs on a sale that will require a compromise claim payment by VA (a.k.a. a short sale).
All loans terminated prior to February 1, 2008, will have a one-year time limit after that date, or no later than February 2, 2009, for filing a claim under loan guaranty. The new regulation also provides for a 30-day period for appeal of any item on a claim disallowed by VA.

New Liquidation Appraisal Review Authority
A new section 36.4344a, “Servicer Appraisal Processing Program (SAPP),” has been added to title 38, CFR. This section establishes authority for VA to delegate to a servicer the review of a liquidation appraisal and the determination of reasonable value. While this authority was established primarily in conjunction with the new environment created by subpart F, VA is also establishing this authority in section 36.4344a for servicers working with the existing environment. However, given that any servicer who wants to participate in SAPP must be approved and undergo training, VA must give priority for this processing to servicers according to the implementation schedule for the new VALERI environment. Details for the processing will be provided in the near future as part of the VA Loan Guaranty website

Additional Information
For a complete copy of the new regulations, please refer to the VA Loan Guaranty website .
Any questions about this circular may be directed to Carl Wasson at carl.wasson@va.gov.

To view the Circular in its entirtey, including Exhibit A, please click here.

About Safeguard
Safeguard Properties is the largest privately held field services company in the country. Located in Cleveland, OH  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 450 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.