New VA home loan program saving millions of veterans’ homes

Published: Aug. 31, 2021 at 8:46 AM CDT
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WAUSAU, Wis. (WSAW) - Thousands of homes owned by veterans and their families are in danger of foreclosure due to the COVID pandemic. Just announced is an expanded government-wide effort to help homeowners retain their homes as they weather the economic challenges.

A major new VA Home Loan program will help save the homes of an estimated 2.3 million veterans impacted by COVID-19. This just-announced new COVID-19 Refund Modification option is only available until Sept. 30, 2021.

“The COVID-19 Refund Modification provides veterans a lasting and affordable solution to keeping their homes and avoiding foreclosure,” said VA Secretary Denis McDonough. “As our country recovers and rebuilds from the economic devastation brought on by the pandemic, VA and the Biden-Harris administration continue to make every effort to help Veterans keep a roof over their head as they get back on their feet.”

In some cases, veterans can receive a 20% payment reduction — in others, the reduction can be even larger.

Like with the VA’s COVID-19 partial claim option, the Veteran’s deferred indebtedness from a Covid-19 Refund Modification will be established as a junior lien. The junior lien will not accrue interest, will not require monthly payments and will only become due when the property is sold, the guaranteed loan is paid off, or the guaranteed loan is refinanced.

Under the COVID-19 Refund Modification, the VA purchases a veteran’s past due payments and amounts of unpaid principal, depending on how much assistance is necessary, subject to certain limits. Loan servicers also modify the loan. These efforts help ensure the veteran can afford future mortgage payments.

The VA Home Loan Program:

  • Backs at least 25% of most loans, eliminating the need for a down payment and PMI.
  • Can be used while away on active duty or after six years of National Guard or Reserve service.
  • May be used more than once.
  • Offers direct loan financing for use on over 100 tribal lands and U.S. Territories.

To learn more about this new option visit VA’s Home Loan Program or call 877-827-3702.

The new VA Partial Claim Program is a temporary program, which will bring certain borrowers current on their mortgage as they resume regular mortgage payments, will remain in effect until Oct. 28, 2022. Here are the requirements:

  • The loan must be a VA-guaranteed loan
  • The VA loan must have been current or less than 30 days past due on March 1, 2020, or originated on/after March 1, 2020
  • The borrower must have received a COVID-19 forbearance and missed at least one payment under the terms of the original mortgage note
  • The borrower must currently occupy the property securing the guaranteed loan as their residence
  • The borrower has recovered from the hardship and can resume making timely, full monthly payments under the terms of the original mortgage note
  • The borrower agrees to repay the partial claim amount to VA and allow VA to create a second mortgage lien on the property

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