The Department of Veterans Affairs is calling on mortgage servicers to pause foreclosures of VA-guaranteed loans through May 31, 2024. The agency is also extending the COVID-19 Refund Modification program through May 31, which will allow veterans to obtain a zero-interest, deferred-payment loan from VA to cover missed payments and modify their existing VA-guaranteed loan to achieve affordable monthly payments for the duration of the extension.
The Veterans Assistance Partial Claim Payment program—which began in July 2021—allowed military borrowers to skip six or 12 mortgage payments during the COVID-19 pandemic if they had a financial hardship. The program ended in October 2022 despite calls from the mortgage industry to delay its expiration, forcing borrowers to pay back payments quickly or refinance at higher interest rates.
In a statement, VA said that by extending the COVID-19 Refund Modification program, it can continue assisting veterans with their loans while it launches a new home retention option, the VA Servicing Purchase program. Through the new program, the agency will purchase defaulted VA loans from mortgage servicers, modify the loans, and then place them in the VA-owned portfolio as direct loans.