The COVID pandemic caused a global financial crisis and among the many groups affected were veteran and military homeowners. Many were laid off or unable to go to work, impacting their ability to pay their mortgage. As a result, to help borrowers prevent foreclosure on their VA home loan, the Department of Veterans Affairs created the COVID-19 Refund Modification Program. The VA is asking lenders to pause foreclosures until May 31, 2024.
What Is the COVID-19 Refund Modification Program?
The COVID-19 Refund Modification Program is designed to help Veterans and their families keep their homes by offering financial support. Here’s how it works:
- The VA (Department of Veterans Affairs) steps in to buy a part of the VA borrower’s mortgage. This action creates a second mortgage for the borrower, but with a big advantage: it has zero interest.
- At the same time, the lender that provided the original mortgage makes changes to the loan to bring it up to date. This might mean lowering monthly payments or making other adjustments to make sure the borrower can afford to keep paying.
- The goal is to make the payments manageable for the VA borrower, helping them avoid losing their home.
In short, this program is all about giving Veterans a helping hand to ensure they can stay in their homes by making their VA home loan more affordable, recognizing their service to our country.
VA Asks Servicers to Pause on Foreclosures
Even with the COVID-19 Refund Modification Program, many veterans are still struggling to make their mortgage payments. As a result, the VA has taken other steps to help military borrowers keep their homes and avoid foreclosure.
In November of 2023, the VA issued a statement saying they’re calling on mortgage servicers to pause foreclosures of VA-backed home loans through May 31, 2024. During this pause, they will continue to work with servicers to find ways to help Veterans stay in their homes. The VA has also extended the COVID-19 Refund Modification Program until May 31st of this year as well.
On top of this, the VA has stated that they will soon be launching a new home retention program called the VA Servicing Purchase (VASP) Program. Through this new program, “VA will purchase defaulted VA loans from mortgage servicers, modify the loans, and then place them in the VA-owned portfolio as direct loans.
Get Advice from a VA Home Loan Expert
If you’re concerned about the possibility of foreclosure or have questions about your VA home loan, please do not hesitate to contact us. One of our expert staff members will be more than happy to assist you.
