IN Department of Veterans Affairs offers two new programs for veterans facing financial difficulties related to the COVID-19 pandemic.
The programs are designed to help holders of VA-guaranteed home loans get their mortgages up to date and resume regular payments to avoid foreclosure.
While these new programs will only be offered as a last resort and under limited circumstances, VA has several other options to help veterans not lose their homes to foreclosure if you are not eligible for these new, time-limited programs.
Contact VA or your lender for more details.
Both new programs have their own requirements and limitations:
- You must currently reside in the property,
- As of March 1, 2020, you must be late or less than 30 days late on your mortgage payments.
- You must have missed at least one payment after this date.
- You must enter into an abstinence agreement with the lender. In essence, a deferral is a change in the original terms of a loan or a suspension of payments due to difficulties.
- You must have recovered from any financial hardships associated with COVID.
- You cannot be overdue more than 30% of the appraised value of the property.
There is a limited time to apply for the programs, so if you are close to having trouble paying off your mortgage, you should contact your lender or VA as soon as possible. Two new programs include:
VA Partial Benefit Program
The VA Partial Benefit Program is a temporary program that starts on July 27, 2021 and runs until October 28, 2022.
Under this program, VA will make any late mortgage payments to the lender and then create a second mortgage for the property. The second mortgage is interest-free and no payments are made until the veteran sells the house or pays off the original mortgage. During this time, the borrower must pay VA all the money received under this program before he becomes the owner of the home for free.
The borrower can repay the money ahead of schedule without penalties and is exempt from any late payments affecting their credit or continuing to accumulate interest or penalties.
COVID-19 Reimbursement Change Program
The COVID-19 return modification could give borrowers a 20% cut in their monthly mortgage payments.
Similar to the Paid Claims Program described above, VA makes any late payments to the creditor and creates a second mortgage on the property.
However, under this program, the lender is advised to change the existing mortgage to make it easier for the veteran to resume payments.
The lender can change the original mortgage by adding up to 10 years to the repayment schedule; this means that a 30-year mortgage can turn into a 40-year mortgage.
By adding this extra time to the mortgage and reducing the loan principal, taking into account any payments already made by the borrower, as well as any late payments made by VA under this program, the borrower can see a significant reduction in their monthly payments.
Contact your lender or VA loan officer at 877-827-3702 for more information.
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