WBK Industry News - Federal Regulatory Developments

VA Updates Guidance on Loss Mitigation Letters

The Department of Veterans Affairs (VA) recently released Circular 26-19-24, Change 1 to Circular 26-19-24, and Change 2 to Circular 26-19-24 (collectively, Circular), which updates the guidance on loss mitigation letters that mortgage servicers are required to provide borrowers.  The Circular’s requirements went into effect on October 1, 2019.

Some of the key provisions of the Circular include the following:

  • Clarifies that VA does not require a mortgage servicer to send a loss mitigation letter if the servicer is legally prohibited from contacting the borrower;
  • Provides when mortgage servicers are required to report specific loan events to VA;
  • Updates the contact information that must be included in loss mitigation letters;
  • States that all post audits performed on terminated VA-guaranteed loans must include a copy of the loss mitigation letter as a required document; and
  • Requires loss mitigation letters to be uploaded into the VALERI application as part of the post audit package.

Note that the Circular is set to be rescinded on October 1, 2020.