In a letter Tuesday, the American Bankers Association and 18 industry and advocacy groups urged the Veteran’s Administration to expand the loss mitigation options available under the VA Home Loan Guaranty Program to help borrowers avoid foreclosure. The program gives servicemembers and veterans access to VA-guaranteed loans provided by private lenders, such as banks and mortgage companies.
There are currently between 100,000 and 130,000 seriously delinquent veteran borrowers with VA-backed mortgages, the groups said. However, the options available to borrowers in the program are fewer and less effective than those available to other government-insured borrowers. “Our organizations find this situation troubling and worthy of immediate attention. Policy changes and solutions—regulatory, statutory or budgetary—are needed now,” they said.
In response to a VA request for public input on how to improve the program, the groups said the agency could improve the loss mitigation tools available to borrowers. Examples include reactivating and updating the partial claim program, which allows borrowers to receive payment relief and assistance in resolving missed payments, and extending mortgage repayments to a full 40-year term to reduce a veteran’s monthly mortgage payment. The groups also pushed for additional financial resources for the home loan program.