VA Announces Relief For VA Borrowers Affected by Colorado Fire
The Department of Veterans Affairs has issued VA Circular 26-13-11, which announces mortgage relief and other information for those with VA mortgages who are affected by the fire in Colorado Springs, Colorado.
According to the circular, “Directly affected by the Colorado Springs fire are those whose homes were severely damaged or destroyed, the families of those killed during the fire, and those who suffered considerable personal injury. Also directly affected are those whose work environments were destroyed or severely damaged as a result of the fire.”
“Many others have been indirectly affected, including business partners of those in the federally declared fire management assistance declaration announced by the Federal Emergency Management Agency (FEMA). The impact may continue to ripple throughout the country, as evacuees travel nationwide to seek the support and shelter of family members.”
As a result of this fire, the VA has issued a “Forbearance Request” to all lenders who are servicing VA mortgage loans in the affected area. “VA encourages holders of guaranteed loans to extend every possible forbearance to borrowers in distress as a result of the Colorado Springs fire. Careful counseling with borrowers should help determine whether their difficulties are directly or indirectly related to the fire, or whether they stem from other sources that must be addressed.”
“The proper use of authorities granted in VA regulations may be of assistance in appropriate cases. For example, Title 38, Code of Federal Regulations (CFR), section 36.4311 (Prepayments) allows the reapplication of prepayments to cure or prevent a default.”
According to the VA, this means, “if a borrower has been making additional principal payments over a period of years, the principal balance may be increased up to the scheduled balance and the increase applied toward regular installments. Also, 38 CFR 36.4315 (Loan modifications) allows the terms of any guaranteed loan to be modified without the prior approval of VA, provided certain conditions in the regulation are satisfied.”
The VA loan circular also requested a 90-day hold or moratorium on foreclosures, “from the date of a disaster on initiating new foreclosures on loans affected by major disasters.”
Home owners with fire damage are not the only ones affected by this circular. The VA circular also includes National Guard members who may be experiencing hardship due to being activated to serve in their state in the recovery efforts. ”
Some members of the National Guard have already been called to active duty to assist in recovery efforts. Those individuals may experience financial difficulties of their own due to what could be extended tours of duty during the disaster recovery efforts. VA encourages servicers to extend special forbearance to National Guard members in this situation.”
For more information on this circular, contact the VA directly at 1-800 827-1000.
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