21.06 ELIGIBILITY FOR VA DISASTER LOAN MODIFICATION (02/01/18)

© VA Servicers Handbook - M26-4

Following forbearance relief, servicers may offer a VA Disaster Loan Modification to delinquent borrowers impacted by a disaster, subject to the following conditions:

a. The mortgage loan is a VA-guaranteed first lien mortgage loan.
b. The borrower has been impacted by a federally-declared disaster.
c. The mortgage loan was no more than 30 days past due at the time of the disaster.
d. The mortgage loan is at least 60 days delinquent after the disaster forbearance period has ended. Servicers may offer a disaster modification to a borrower prior to the expiration of the forbearance period if clear evidence exists that the borrower is ready to resume monthly installments.
e. The servicer must follow 38 C.F.R. 36.4315 with respect to amounts included in the modified indebtedness, interest rate adjustment, and term extensions.
f. The borrower has not submitted a complete loss mitigation package, or is not performing under a loss mitigation option at the time of consideration for a VA Disaster Loan Modification.
g. The borrower must complete a TPP.
h. The servicer may not offer a TPP in connection with the VA Disaster Loan Modification more than 12 months after the federally-declared disaster event.
i. Servicers have discretion to consider other eligibility exclusion criteria including, but not limited to: loans in active bankruptcy, mediation, or litigation, upon advice of servicer’s counsel.