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VA | RIN: 2900-AR05 | Publication ID: Fall 2020 |
Title: ●Loan Guaranty: COVID-19 Veterans Assistance Partial Claim Payment Program | |
Abstract:
The Department of Veterans Affairs (VA) proposes to establish the COVID-19 Veterans Assistance Partial Claim Payment program (COVID-VAPCP), a temporary program to help veterans return to making normal loan payments on a VA-guaranteed loan (guaranteed loan) after exiting a Coronavirus Aid, Relief, and Economic Security Act (CARES Act) forbearance period. Under this proposed program, a servicer could consider a partial claim option after the servicer has evaluated all loss-mitigation options for feasibility. If the veteran qualifies and opts to move forward, VA would act as a mortgage investor of last resort by purchasing the amount of indebtedness necessary to bring the veteran’s guaranteed loan current. The veteran would then be able to return to making regular mortgage payments to his or her servicer while repaying VA for the amount of indebtedness under a second mortgage with extremely favorable terms. |
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Agency: Department of Veterans Affairs(VA) | Priority: Economically Significant |
RIN Status: First time published in the Unified Agenda | Agenda Stage of Rulemaking: Proposed Rule Stage |
Major: Yes | Unfunded Mandates: No |
EO 13771 Designation: Regulatory | |
CFR Citation: 38 CFR 36.4301 38 CFR 36.4320 | |
Legal Authority: 38 U.S.C. 3720 38 U.S.C. 3732 |
Legal Deadline:
None |
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Statement of Need: To implement the partial claim program, VA would rely on its loss mitigation authority for helping Veterans retain their homes. The authority stands distinct from provisions establishing VA’s direct lending programs. While VA already boasts strong loss mitigation policies to assist borrowers struggling financially, the current COVID-19 National Emergency is unprecedented, and this additional loss mitigation option is necessary to ensure Veterans and servicemembers can retain their homes backed by a VA-guaranteed mortgage. VA’s federal housing counterparts already offer partial claim as part of the suite of loss mitigation options available to borrowers and servicers. This regulation will ensure Veterans have access to similar loss mitigation options. |
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Summary of the Legal Basis: Applying as a consistent, coherent framework VA’s loan refund authority in 38 U.S.C. 3732 and the broad powers authorized under 38 U.S.C. 3720 to assist veterans who have suffered loss due to disasters and to help veterans return to making normal loan payments on a VA-guaranteed loan (guaranteed loan) after exiting a Coronavirus Aid, Relief, and Economic Security Act (CARES Act) forbearance period. |
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Alternatives: A regulatory alternative considered is the baseline scenario, which is detailed the Regulatory Impact Analysis (RIA) statement. In the status quo or baseline scenario, absent regulation, VA anticipates higher levels of default as borrowers exit forbearance. Absent any intermediary solution, borrowers could face unrealistic repayment terms as servicers seek solvency and meet their own repayment obligations. |
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Anticipated Costs and Benefits: VA estimates that the proposed rule would result in transfers and costs, as well as benefits that are described qualitatively in the Benefits section above. As shown in Table 2, this rulemaking results in transfers between $10.6 million and $19.0 million in FY21 and $112.1 million to $201.6 million over the five-year period. There are also GOE costs of $41,259 in FY21. Together, these transfers and costs result in a net cash flow of between $10.6 million and $19.0 million in FY 21 and a net cash flow between $112.1 million and $201.7 million over the first five-year period (FY 2021 through FY 2025). Relative to baseline costs (which are detailed in the Alternative Policy Approaches section), the proposed regulation generates a net transfer savings between $46.3 million and $83.2 million over a 5-year period and costs of $41,259 resulting in a net budget savings between $46.2 million and $83.2 million over 5 years. Table 10 presents transfers for each individual year, and as there are no costs beyond FY21, this captures the net budget impact relative to baseline for each year from FY22 to FY25. |
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Timetable:
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Regulatory Flexibility Analysis Required: No | Government Levels Affected: None |
Small Entities Affected: No | Federalism: No |
Included in the Regulatory Plan: Yes | |
RIN Information URL: www.regulations.gov | |
RIN Data Printed in the FR: No | |
Agency Contact: Andrew Trevayne Assistant Director for Loan and Property Management (261) Department of Veterans Affairs 810 Vermont Avenue NW, Washington, DC 20420 Phone:202 632-8795 Email: andrew.trevayne@va.gov |