VA Strongly Encourages Foreclosure and Eviction Moratorium

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In Circular 26-20-8, the Department of Veterans Affairs (VA) “strongly encourages” mortgage servicers to observe a foreclosure and eviction moratorium of 60 days from March 18, 2020, with regard to mortgage loan borrowers affected or potentially affected by COVID-19.

With regard to foreclosures, VA states that “[a]lthough the loan holder is ultimately responsible for determining when to initiate foreclosure, and for completing termination action, VA strongly encourages loan holders to establish a sixty-day moratorium beginning March 18, 2020, on completing pending foreclosures or initiating new foreclosures on loans.” The VA notes that pursuant to a VA regulation (38 C.F.R. 36.4324(a)(3)(ii)), additional interest is allowed on a guaranty claim when eventual termination is delayed due to circumstances beyond the control of the holder, such as a VA-requested forbearance.

VA also states that, due to the widespread impact of COVID-19, loan holders should consider the impact of completing an eviction action when choosing to retain a property instead of conveying the property to VA. VA requests that, if at all feasible, holders not expose veterans and their families to additional risk through an eviction action.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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