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Federal Register / Vol. 86, No. 102 / Friday, May 28, 2021 / Rules and Regulations
unable to afford the COVIDVAPCP
loan. Upon reviewing the comments, and in consideration of VAs decision to eliminate interest charges and the tenyear repayment term, VA is finalizing the rule with requirements more aligned with FHAs COVID19 Standalone Partial Claim program. As described below in the section-by-section analysis, VA is eliminating the financial certification requirement and will allow servicers to use the partial claim payment option, even in cases where other home retention options are feasible, provided the partial claim payment option is in the veterans financial interest.
As for the requirement that veterans certify their occupancy, VA notes that, much like FHAs COVID19 Standalone Partial Claim program for FHA
borrowers, one purpose of VAs COVID
VAPCP is to ensure that veterans remain safely housed during the pandemic. To help achieve this purpose, VA will still require that a veteran who participates in the COVIDVAPCP occupy, as the veterans residence, the property securing the guaranteed loan for which the partial claim is requested. However, VA has determined that it is sufficient for the servicer to assess this requirement without collecting a certification from the veteran.
Given VAs elimination of the certification requirements mentioned above, VA finds that the proposed application form is no longer necessary.
With the exception of the certifications, most of the information collected and presented on the form will be captured on the note prepared by the servicer and presented to the veteran. VA has further determined that those data elements from the form that may not be included in the note, such as the date of the veterans next monthly mortgage payment to the servicer, are not critical to the rule and will likely be communicated from the servicer to the veteran in other ways.
3. Maximum Amount of Assistance 38 CFR 36.4805b: Two commenters expressed concern over VAs decision to limit assistance under the COVID
VAPCP to 15 percent of the unpaid principal balance UPB of the guaranteed loan at the time the veteran entered forbearance. Both commenters noted that FHAs and USDAs partial claim programs allow for assistance up to 30 percent of the UPB. One commenter further noted that, in calculating whether a 15 percent UPB
cap would provide sufficient room for servicers to bring most guaranteed loans current, VA failed to consider the effect on older loans with smaller outstanding balances. Both commenters
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recommended that VA consider mirroring FHAs and USDAs 30 percent UPB caps; one commenter offered an alternative recommendation that VA
consider eliminating the cap for low balance loans.
VA Response: VA agrees with the commenters who recommended mirroring FHAs and USDAs 30 percent UPB caps. While an increase to a maximum UPB cap of 30 percent will not enable every loan currently under forbearance to meet the requirements for the COVIDVAPCP, this change in the final rule will allow approximately 9,000 additional loans to participate assuming other requirements such as occupancy and ability to resume regular monthly mortgage payments are met, with minimal additional financial risk to the Government.
The increase to the UPB cap does not affect the unique option that VA
included in its proposed rule, which would allow for a veteran to make an optional payment or for a servicer to waive amounts that would otherwise prevent a veteran from participating.
Even with VA adopting a higher UPB
cap in the final rule, VA is maintaining this feature of the program, as it could help more veterans be able to receive the assistance, at no additional cost to the program.
VA declines at this time to increase the maximum amount of assistance beyond the 30 percent UPB cap or to eliminate the cap for smaller balance loans. This rulemaking marks the first time that VA has administered a partial claim program. VA firmly believes a new partial claim program is necessary to help veterans, but it constitutes a fundamental shift for VA and all stakeholdersveterans, the lending and servicing industry, investors who provide liquidity to the industry, Congress, and other federal agencies.
Now VA is, in this final rule notice and before the program is underway, already doubling the proposed UPB cap to put it on par with the 30 percent UPB cap in both FHAs and USDAs partial claim programs. VA notes, too, that those caps are statutory, and Congress has not adjusted them in response to the national emergency.4 Since VA has never administered a partial claim program and Congress has limited FHAs and USDAs partial claims to 30
percent UPB, VA does not have enough information at this time to accurately forecast the range of potential outcomes of pushing beyond the 30 percent cap.
Furthermore, VA believes that if VA
were to decide to push such a boundary, 4 See
12 U.S.C. 1715ub2A; see also 42 U.S.C.
1472h14A.

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introduction of the concept would be better suited to an additional rulemaking where the public could provide additional input.
C. Expand Coverage to Loans That Became Delinquent Before March 1, 2020 38 CFR 36.4803a One commenter requested that VA
consider eliminating the requirement proposed in 38 CFR 36.4803a that the guaranteed loan was, on March 1, 2020, either current or less than 30 days past due. The commenter noted that delinquency status was not a factor in section 4022 of the CARES Act as to whether a borrower could request forbearance; therefore, the Moral and Ethical right thing to do is to allow ALL Veterans experiencing mortgage financial hardships to take advantage of the COVIDVAPCP.
Another commenter referred to the delinquency issue in response to one of VAs specific questions: Whether information collected as part of a complete loss-mitigation evaluation would be adequate to evaluate a borrowers residual income under 38
CFR 36.4340e.5 The commenter suggested that VA require minimal documentation from veterans with loans that were delinquent on March 1, 2020.
The commenter defined minimal documentation as proof of 30 days of income and an acceptable housing debtto-income ratio. Regarding borrowers with loans that were, on March 1, 2020, current or less than 30 days past due, the commenter recommended VA
require no documentation.
VA Response: While VA is committed to ensuring that assistance under this temporary program is widely available to veterans, VA declines to expand coverage to include loans that were not current or less than 30 days past due on March 1, 2020. As discussed in the proposed rule, the COVIDVAPCP is designed to be a temporary assistance program that provides a soft landing for veterans who, but for the COVID19
national emergency, would not be having difficulty paying their mortgage.6
To ensure that VA can target relief under the COVIDVAPCP to those veterans, VA believes it is necessary to maintain the requirement that the status of the loan on March 1, 2020, the date the COVID19 national emergency became effective, be current or less than 30 days past due.
VA acknowledges that many veterans who were experiencing financial hardship pre-pandemic continued to 5 See question 2, 85 FR 79142, 79153 Dec. 9, 2020.
6 85 FR 79142 Dec. 9, 2020.

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