8.04 NOTICE OF VALUE, AND EXTENSIONS (02/01/18)

Owned by Kacey Olson
Nov 24, 2018
3 min read

© VA Servicers Handbook - M26-4

a. At least 30 days prior to the scheduled, or anticipated date of the foreclosure sale, the servicer must request that VA assign an appraiser to conduct a liquidation appraisal. If the property is vacant, the servicer must provide the appraiser access to the property. The Construction, and Valuation (C&V) section at the Regional Loan Center (RLC) of jurisdiction where the property is located may reach out to the VA-assigned technician for assistance in contacting the servicer for access to vacant properties. If state laws prevent the servicer’s ability to provide access to a vacant property, the appraiser must contact the C&V section of the RLC in the jurisdiction where the property is located for approval to conduct an exterior-only report. An interior appraisal will no longer be required in cases where the property was originally scheduled for foreclosure, and a subsequent compromise sale offer is made. The exterior-only liquidation appraisal will be sufficient to complete the Compromise Sale without any further delays. The only exception to this rule is if the purchaser is a Veteran, or surviving spouse. The liquidation appraisal is valid for 180 calendar days from the date of issuance, however, the C&V section may specify a shorter validity period if rapidly-changing market conditions exist in the area. Failure to order the appraisal timely, or a delay in providing the appraiser access to a vacant property, may delay the completion of the foreclosure sale.
b. If the servicer has a Servicer Appraisal Processing Program (SAPP) authority to process liquidation appraisals under 38 C.F.R. 36.4348, the appraiser will forward the liquidation appraisal report directly to the servicer for determination of fair market value. If the servicer does not participate in SAPP, the appraiser will forward the liquidation appraisal report to the RLC of jurisdiction, for determination of fair market value. If the servicer learns of any material damage to the property after the appraisal has been completed, but prior to the foreclosure sale, the servicer must contact the C&V section of the RLC of jurisdiction for specific guidance.
c. If the Notice of Value (NOV) will expire prior to the foreclosure sale date, the servicer may request an extension of the NOV by contacting the VA-assigned technician. A Servicing Officer, or Loan Administration Officer will generally grant a 14-day extension in VALERI, as long as the following conditions apply:
1. The request is received prior to the NOV expiration date.
2. The NOV extension request is received before the foreclosure sale.
3. The current occupancy status of the property, and explanation as to why the extension is necessary has been provided.
4. No known extenuating circumstances exist that may diminish the value of the property.
d. Any requests that fall outside of these general requirements will be reviewed by VA on a case-by-case basis. If VA denies the servicer's request to extend the validity period of the NOV, the servicer must order a new VA appraisal.
e. The servicer will compute, and determine the bid type, and amount by taking the fair market value of the property, minus estimated costs incurred by VA in acquiring, and disposing of the property. The number to be subtracted from the fair market value will be calculated by multiplying the fair market value by the current Net Value cost factor. The Net Value cost factor is published by VA in the Federal Register per 36 C.F.R. 36.4301. Current, and past rates for the Net Value cost factor can be viewed at: http://www.benefits.va.gov/HOMELOANS/servicers_valeri.asp.
f. The servicer is required to follow VA requirements, and comply with all federal, state, county, and local foreclosure laws when scheduling, and carrying out a foreclosure sale. Once the foreclosure sale is complete, the servicer must report the Results of Sale event in VALERI. This event will terminate all loans that are in a “guaranty issued” status except those that are located in a confirmation/ratification state. Refer to Appendix G, State Foreclosure Process, and Statutory Bid Information, in this handbook.
g. VA also requires servicers to report the type of foreclosure, either judicial, or non-judicial, in VALERI. The type of foreclosure is defined by state, county law, and is required to determine what fees are allowable at time of the claim.