1.  Purpose.  This circular describes minimum requirements for the inspection of properties securing VA-guaranteed home loans and the maintenance, preservation, and repair of any properties found to be abandoned.  Additionally, this circular contains a table of the maximum fees that will be reimbursed by VA for those services in a claim under the loan guaranty.

2.  Background.  In the past, VA Regional Loan Centers provided annual releases detailing the requirements for property preservation and tables of maximum reimbursable amounts for services in their areas of jurisdiction.  With the transition to the VA Loan Electronic Reporting Interface (VALERI) environment and to a nationwide jurisdiction, this is no longer practical.  Therefore, this circular is issued to provide nationwide guidance and a single property preservation fee schedule.   

To view the Circular in its entirety, including Exhibits A & B providing the VA policy on property preservation and a table listing the maximum amounts to be reimbursed by VA on a claim under the guaranty, please click here.

Following is a summary (provided by Safeguard Properties) of the changes in the new Circular.

VA released circular 26-09-12 on August 13, 2009 implementing national guidance and pricing for inspections and property preservation maintenance for VA loans in default.  This circular replaces the prior regional instruction and variations - creating consistency and clarification to the servicers. 
 
As with prior guidance, monthly interior inspections are still required on vacant and abandoned properties in effort to detect and mitigate new damages at a property.  VA does not issue pre-approvals for property preservation items and the servicer is encouraged to take appropriate actions to preserve and protect the property and document the file to support the fees expensed.
 
With this release, some of the P&P fees have changed due to eliminating the 10 regional and state variations.  A securing allowable of $200 has been defined to include the cost to replace broken or missing locks, or to change the lock to permit access. 
 
Debris removal pricing has been defined by cubic yard instead of the prior "truck load" measurement in some of the regions.
 
An allowable to repair, as well as to replace sump pumps has been defined.  In addition, there is an emergency allowable up to $1500 to pump water from basements, which will greatly reduce the extent of water damages and mold growth at a property. 
 
Winterization procedures have been refined to reflect industry best practices and now have consistent pricing for all states. 
 
Another key change is the uniform pricing for yard maintenance and reoccurring grass cuts.  Prior to this release pricing varied by state, lot size, and measurements.  Pricing is defined across the board on a square footage basis now. 
 
The new VA guidelines adopted industry best practices for winterization and grass cut timeframes, retaining year round time frames and frequencies.