Legal Alert

VA Strongly Encourages Foreclosure and Eviction Moratorium

March 20, 2020

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.

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