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Federal Register / Vol. 86, No. 102 / Friday, May 28, 2021 / Rules and Regulations
whether the COVIDVAPCP can assist borrowers in bringing their loans current when the forbearance periods end.
To illustrate: A veteran is about to exit a 360-day COVID19 forbearance period. In working with the veteran, the servicer learns that, but for having to repay the COVID indebtedness, the veterans income would allow the veteran to return to the normal monthly payment. Assuming there were no other prohibitive aspects of the case, the COVIDVAPCP would seem to be in the veterans financial interest. VA would not expect the servicer to expend resources on evaluating all other home retention options, solely to determine that the COVIDVAPCP was the option of last resort. Similarly, because the COVIDVAPCP would be in the veterans financial interest, offering a loan modification to see how things go would likely not be the optimal outcome for the veteran because even if the modification succeeds, the COVID
19 indebtedness would be capitalized into the loan modification, resulting in thousands of dollars of additional interest being charged to the veteran.
If, however, the servicer learns at the outset that a veterans income could no longer support a return to the monthly payment, even with the COVIDVAPCP
assistance covering the COVID19
indebtedness, it could be difficult to show how offering the COVIDVAPCP
would be in the veterans financial interest. This would be especially apparent if the veteran could retain the home through a modification to the interest rate and, for example, a principal reduction from the infusion of HAF 14 funds.
In other words, while VA has not prescribed a waterfall of home retention options, in cases where the servicer determines that the partial claim option is an optimal method, the servicer should pursue it, rather than another option. This will help shield the veteran from delaying the veterans financial recovery and help prevent the expensive and labor-intensive burdens that could be posed by an unnecessary series of home retention strategies.
In sum, VAs final rule clarifies that the COVIDVAPCP is available in cases where other home retention options are feasible, ensures a more streamlined application process, and provides 14 HAF is the Homeowner Assistance Fund, which provides States with funding to provide relief to our countrys most vulnerable homeowners. For more information, visit https
home.treasury.gov/policy-issues/coronavirus/
assistance-for-state-local-and-tribal-governments/
homeowner-assistance-fund last accessed May 1, 2021.

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flexibility such that servicers can implement home retention options that fit within their business capabilities. VA
believes that such changes are consistent with VAs longstanding servicing regulations and policies and will enable more borrowers to utilize this temporary assistance program while mitigating burdens to veterans and servicers.
Note: VA continues to explore ways to help veterans as they exit their COVID19 forbearances and as foreclosure/eviction moratoriums end.
VA expects the upcoming weeks to provide critical information in evaluating the COVIDVAPCP and additional measures to help veterans. In fact, VA anticipates additional rulemaking will be urgently necessary to keep pace with the evolving financial needs of veterans.
E. Expiration of the COVIDVAPCP 38
CFR 36.4809
Three commenters, including the joint trade and consumer group, did not agree with VAs proposed COVIDVAPCP
expiration date of September 9, 2021.
All three commenters noted that current information suggests that many veterans will remain in forbearance beyond September 9, 2021. The commenters suggested that if VA does not extend the sunset date, such borrowers would not be able to receive assistance.
Commenters recommended that VA
consider changes to the final rule that would ensure all veterans who enter a COVID19 forbearance can take advantage of the program. One commenter specifically requested that VA commit to accepting partial claim requests for at least 15 months beyond the date the COVID19 national emergency ends. The commenter noted that this timeline would allow veterans to utilize up to 12 months of forbearance and provide an additional 90 days to complete the paperwork required for a partial claim. This commenter also requested that VA consider changing the permissive language in proposed 36.4809b from the Secretary may still accept a request for a partial claim payment to the Secretary shall accept a request for a partial claim payment, thereby requiring the Secretary to accept a request within 90 days of a veteran exiting a COVID19 forbearance.
VA Response: VA agrees in part. VA
believes that the permissive element of proposed 36.4809b should instead be mandatory upon the Secretary. If the COVID19 national emergency ends while a veteran is under a COVID19
forbearance, the permissive language in the proposed rule could lead the veteran to question whether it is necessary to
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cut short the forbearance period in order to take advantage of the COVIDVAPCP.
This is not an outcome VA intended.
Accordingly, VA has revised this final rule to require the Secretary to accept a request for a partial claim payment if it is submitted timely.
VA notes that acceptance of a request for a partial claim payment is not synonymous with approval of that request. Thus, this change only requires the Secretary to accept, but not necessarily approve, a request that is received before the requisite deadline.
In other words, even though this final rule prohibits the Secretary from refusing to consider a request that is submitted before the deadline, timely submission is not tantamount to approval.
VA also agrees with commenters that the September 9, 2021 sunset date should be extended, given the potential for COVID19 forbearances extending beyond that date. VA is adjusting the sunset date in the final rule to align with the expectation that no veteran will be in a COVID19 forbearance after June 30, 2022.
On February 16, 2021, VA published guidance stating that VA expects servicers to approve initial COVID19
forbearances if the request is made on or before June 30, 2021. VAs guidance also stated that certain COVID19
forbearance periods may extend through June 30, 2022. Additionally, the guidance stated that VA expects that, if needed, a veteran may request, and the servicer will approve, up to two additional three-month forbearance periods, after twelve months of COVID
19 forbearance.15 VA also stated that neither of the two additional threemonth forbearance periods may extend beyond December 31, 2021. These timeframes align with both FHAs and USDAs COVID19 forbearance guidance.16
Considering the factors mentioned above, and that VA is extending the timeframe during which a servicer can request a partial claim payment from 90
15 VA Circular 262104. Approving Forbearance Requests for Veterans Affected by COVID19, Feb.
16, 2021, https www.benefits.va.gov/
HOMELOANS/documents/circulars/26_21_04.pdf.
16 See HUD Mortgagee Letter 202105. Extensions of Single Family Foreclosure and Eviction Moratorium, Start Date of COVID19 Initial Forbearance, and HECM Extension Period;
Expansion of COVID19 Loss Mitigation Options, Feb. 16, 2021, https www.hud.gov/sites/dfiles/
OCHCO/documents/2021-05hsgml.pdf. See also USDA Extends Evictions and Foreclosure Moratorium to June 30, 2021 and Provides Additional Guidance for Servicing Loans Impacted by COVID19, Feb. 16, 2021, https
www.usda.gov/media/press-releases/2021/02/16/
biden-administration-announces-anotherforeclosure-moratorium-and.

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