The mortgage industry responds to a hanging closure of Vasp
The circular also explains that the VA waterfall for home retention is withdrawn and advises administrators to stop using April 30 at 11:59 PM et.
The VA (TPP) test payment plan, with which borrowers can demonstrate their ability to make a changed monthly payment, is permitted to continue until 31 August. But failed TPPs cannot be re -submitted after 30 April.
Servicers must report the completion status of TPPs in the VA Loan Electronic Reporting Interface (Valeri) before August 31, explained the circular.
Servicers are also required to assess veteran-leners on all other applicable loss movement options such as Vasp, while “VA’s preferred order in mind,” said the document.
Comments in the industry
Responses in the industry to the provisions of the document were mixed. Matt Tully, Chief Compliance Officer Linksaid that the VA decision to end Vasp is a reflection of the current market reality.
“The VASP program was launched in an environment of higher interest rates and closing the program is a recognition of falling interest rates,” Tully said. “The challenge for serviceers will implement the changes to the VA loss suspicion waterfall quickly and seamlessly.”
Since Vasp is a program that was implemented less than a year ago, Tully called it “the last in a long line of loss mitigation options offered by the VA.” He added that serviceers with real -time data access can be “more agile to be aware of all recent updates for the loss reduction options that are available for homeowners, at the VA and then.”
When the news about the discontinuation of Vasp was reported earlier this month, the Mortgage banking association (MBA) came to the defense of the program. When asked to comment on the new guidelines of the department, an MBA representative referred Housing Back to the original explanation of the association about this.
“The work must immediately start strengthening the VA’s loss restraint kit, and that includes the implementation of a permanent partial claim option, a tool for avoiding protection used on a large scale in any other government loan program,” read that explanation partially.
“MBA would like to continue working with the VA and Congress To protect veterans and ensure that they can use the housing advantage that they have earned through their service. “
Rob Zimmer, external business consultant with the Community Home Lenders of America (Chla), told Housing That the timeline of the closure can influence the understanding of veterans of their status with the program.
“It used to be that it worked in a certain way to suspect that the ‘Vasp application’ would be successful,” Zimmer said. “Now it is not clear. What Chla has been here is to reduce or eliminate uncertainty for veterans.
“All veterans and the serviceers have followed the rules. The rules change – it happens – but we still need more clarity about how exactly this will work, so that veterans understand the process and do not feel that they are being taken around.”
David Dworkin, President and CEO of the National Housing Conference (NHC), said “there is no good reason to close a borrower when a training is possible.” He added that a borrower with a temporary crisis must be permitted to move missed payments until the end of the loan period without punishing a lender.
It is a “established strategy with a track record of success,” said Dworkin, adding that he does not understand “why we would ever like to see a veteran lose his house if it can be avoided.”
Although there are cases where a loan cannot be cured – and he acknowledged that Vasp has problems – Dworkin said there is a difference between tackling improvement points and simply ending a program.
“Vasp is an imperfect program that needs to be improved,” he said. “Elimination is not an improvement.”
