• This new series replicates existing regulations for most aspects of the VA Loan Guaranty program, but also includes changes related to several aspects of the servicing and liquidating of guaranteed housing loans in default, and the submitting of guaranty claims by loan holders. Specific topics revised in the new 4800 series include:
• increasing authority of servicers to implement  loss-mitigation options,
• making incentive payments to servicers for successful loss-mitigation options,
• establishing a system of measuring and ranking servicer performance,
• establishing updated reporting requirements,
• permitting loan holders to review liquidation appraisals,
• requiring holders to calculate the net value of the security property prior to foreclosure,
• establishing a timeframe for when foreclosure of a defaulted loan should be completed
• limiting the amount of interest and other fees and charges that may be included in a guaranty claim
• establishing allowable attorneys fees to be included in the guaranty claim,
• establishing a deadline for the submission of guaranty claims,
• modifying the requirements for title evidence for properties conveyed to VA following foreclosure,
• modifying the requirements for how long a holder must maintain records relating to loans for which VA has paid a claim on the guaranty, and eliminating the requirement for the submission of legal procedural papers to VA.

This document also includes specific revisions to three rules related to increased attorney fee allowances, establishment of a time limit for filing a claim under the guaranty, and granting authority for the Servicer Appraisal Processing Program that will be effective for all program participants upon publication of these rules. Also see VA Circular 26-08-01

In order to accommodate the phased implementation of the new rules, VA is establishing a new subpart F  of part 36 that contains substantive rules identical to those in the current rules (Sec. Sec.  36.4300 through 36.4393). In addition, the VA redesignates those current rules as subpart B of title 38, CFR. Subpart F will be effective upon publication of this notice only for the first segment of the mortgage servicing industry, as described  in the second supplemental notice published June 1, 2007 (72 FR 30505). The table in the full document (link below) is similar to the one in that notice, and provides the effective date for the first segment that will be affected by these rules, as well as an indication of the time periods during which the VA expects to make these rules applicable to all other segments of the industry (although these time periods may change due to unforeseen circumstances). The VA will publish as notices in the Federal Register the  actual applicability dates for industry segments two through nine.

Subpart B will continue to be the governing rules for industry segments until the dates they become subject to the new subpart F. VA is aware that certain portions of subpart B, are in need of revision to match recent legislative amendments, as well as to update VA positions on certain requirements. However, in order to avoid confusion with those issues not directly impacting the servicing and liquidating of guaranteed housing loans in default, and the submitting of guaranty claims by loan holders, those changes have not been included in this rulemaking. Instead, VA is preparing proposed changes, and will request comments from the public on those changes after the effective date of these new rules.

To view an abbreviated listing of the comments/VA responses, please click here.

To view the the final rule in its entirety, please click here.

For additional information please contact

Mike Frueh, Assistant Director for Loan Management (261),
Veterans Benefits Administration, Department of Veterans Affairs,
810 Vermont Avenue, NW.,
Washington, DC 20420,
Tel. No. 202-461-9521. 

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.