These frequently asked questions (FAQs) and answers aim to provide approved, clear and concise information about the Veteran Affairs Servicing Purchase (VASP) program's process. The Program went into effect on May 8, 2024 and must be fully implemented by Oct. 1, 2024.
As of May 8, 2024, Chapter 5 is effective. Servicers should consider borrowers for all available options in Chapter 5 prior to offering VASP. If it appears the borrower would be eligible for VASP, servicers should hold these files until they are operationally ready to process VASP requests.
Unless there are CFPB requirements to collect new documents for the borrower (i.e. documents could be too old to make a proper decision), the servicer can use the documents they have in hand. Servicers can proceed with loss mitigation options that are in-process/in-trial.
Late fees are the only item that would not be capitalized. Servicers are to waive these fees.
We recognize there may be times when the servicer is unaware or unable to pay the tax and insurance payments early. If the loan hasn't transferred, servicers are to pay those bills as they come due.
This will be reconciled during the service transfer. If the borrower is current with their HOA payments, no action is needed by the servicer. If the HOAs are behind, servicers should be reinstating the HOAs and including that amount in the payoff. As a reminder, if the HOA has placed a lien on the property that jeopardizes VA’s first lien position, the loan is not eligible for VASP until that lien has been resolved.
See VA Servicer Handbook, Chapter 9 section 9-8
Servicers are to review and offer available home retention options in the prescribed waterfall, however, we cannot require the servicer to offer those options listed for disaster situations.
VASP isn't available to non-owner occupants.
We're not making an exemption to this requirement. If the event or circumstance that caused the default isn't resolved and is expected to re-occur in the future, then a more appropriate loss mitigation like forbearance should be utilized until the said circumstance is overcome.
Servicers should use commonly accepted practices (ex. removed power meter, unkept lawn, abandoned/untagged vehicles, posted notices of utility shutoff) or local/state law for determination of abandoned property.
We'll be updating guidance to include a waiver of the 1% interest rate cap for loan modifications. In the meantime, if a pre-approval to waive this requirement is submitted, our loan technician will approve the request.
Once VA makes a determination to accept a VASP loan, and the servicer has made a good faith effort to review the file within requirements, there are no repurchase requirements.
If the timeframe specified within the indemnification agreement has expired, VA would allow VASP. VA would also allow VASP on an indemnified loan, if the indemnification was the result of an action taken by the lender. If the indemnification resulted from fraudulent actions on behalf of the borrower, VA would not allow VASP.
The servicer would not be required to re-review the borrower under the new Chapter 5 if a decision was rendered before May 8, 2024, but could if they determined a re-review is needed. The servicer would continue with the current approved loss mitigation offer.
We'll accept and retain all loans where VA returns an accepted VASP event, and the servicer transfers the loan to VA and under no circumstance will we transfer a loan back to the servicer.
While failure to comply with VA regulations and policies, such as not providing proper documentation or establishing an erroneous interest rate or loan amount, would not result in the loan being transferred back to a servicer, we may take such action(s) as determined necessary including, issuing a bill of collection for any loss to the government caused by the servicer’s actions or temporarily or permanently barring a servicer from servicing or acquiring guaranteed loans. See 38 C.F.R. §§ 36.4328(c) and 36.4336.
Servicers should take appropriate steps to reconcile any information that may conflict with a Veteran’s statement that the home is owner occupied.
For example, if the Veteran’s mailing address is in another state, the servicer should inquire as to the discrepancy in confirming occupancy status.
Servicers must ensure every effort to obtain information as to any tax, insurance, and HOA payments in super lien states due within the next 90 days and as necessary.
Servicers should advise the Veteran that collection of this information is an important part of the VASP process. Payoff statements are to include all tax, insurance, and HOA bills in super lien states available through such efforts.
We'll review a pre-approval on its own individual merit to ensure the home retention option is in best interest of the Veteran.
The servicer is charged with protecting VA’s first lien position. Delinquent HOA dues where action has been initiated in a super lien state represent risk to VA’s lien position. A servicer must pay the HOA bill in a super lien state if a borrower indicates they are behind, or the title search indicates a lien has been filed. The servicer should perform a good faith effort to obtain the HOA bill, however, other forms of documentation are acceptable to validate the amount due.
Our expectation is that the payoff amount and the modified loan amount match. VA has always modified the loan under VA Purchase for the amount of the purchase claim. Late fees are the only item that would not be capitalized and included in the modification. Servicers are to waive these fees.
We'll reconcile any impound advances made during the transfer process. We will not make a reconciliation payment after the payoff has been completed for administrative costs and fees or late charges.
Servicers must provide a payoff statement with payoff date valid through 30 calendar days and servicers should project interest through the last day of the month preceding the first payment due date under the VASP loan modification.
For example, if the first payment due under the VASP modification is Oct. 1, interest should be included through Aug. 31.
A borrower must be three full months behind in payments to meet the qualifying criteria for VASP. This means the loan will be due for the fourth payment, at the time of the VASP review.
Yes, the loan will transfer to us.
The revised Chapter 5 replaces the prior version. It outlines all loss mitigation options that may be offered by servicers without VA preapproval. Loss mitigation options that were approved or offered by the servicer before May 8, 2024, may be completed.
In cases where the servicer did not approve or offer a loss mitigation option before May 8, 2024, the servicer should continue any loss mitigation review pursuant to VA Servicer Handbook, Chapter 5 and Appendix F.
The servicer would not be required to re-review the borrower under the new guidance if a decision was rendered before May 8, 2024, but could if they determined a re-review is needed. The servicer would continue with the current approved loss mitigation offer.
Yes. Since the TPP is not a VA requirement, if a borrower fails a TPP for a loss mitigation option in the waterfall prior to VASP, that does not mean the borrower moves to the VASP option.
If the borrower meets the criteria for options in the waterfall prior to VASP, the borrower will still be reviewed for those options. Servicers are reminded that any unnecessary overlays that push Veterans that are not qualified for VASP are not in the letter and spirit of the waterfall. We'll monitor servicer actions and take appropriate actions to maintain servicer compliance.
Chapter 5 and VASP do not require financial evaluations.
A SII could qualify for VASP if they are an obligor on the loan or other loss mitigation options. In certain cases, an assumption may be necessary, and servicers should continue to follow current policies and procedures regarding assumptions. For more information about VASP and assumptions, lease refer to Chapter 9 of the handbook.