VA issues foreclosure moratorium for Covid-19-affected borrowers

Federal Issues Covid-19 Department of Veterans Affairs Foreclosure Mortgages

On March 18, the Department of Veterans Affairs (VA) released Circular-26-20-8, “Foreclosure Moratorium for Borrowers Affected by Covid-19,” to strongly encourage mortgage servicers to observe the following actions regarding home loan borrowers affected or potentially affected by Covid-19: (i) establish a 60-day moratorium starting March 18 on completing pending foreclosures or initiating new foreclosures; and (ii) consider the impact of eviction when choosing to retain property instead of conveying to the VA. The VA requests that loan holders not expose veterans and their families to additional risks through evictions, and states that VA regulation 38 C.F.R. 36.4324(a)(3)(ii) “allows additional interest on a guaranty claim when eventual termination has been delayed due to circumstances beyond the control of the holder, such as VA-requested forbearance.”