Concerns over readiness and lack of guidance prompt call for extended deadline
The Mortgage Bankers Association (MBA) and Housing Policy Council (HPC) are urging the Department of Veterans Affairs to postpone the implementation of its new Veterans Affairs Servicing Purchase (VASP) program.
In a joint letter to the VA on Friday, the trade groups argued that critical details remain unclear, making the original October 1 deadline unrealistic for lenders to implement the necessary operational changes.
The VASP program aims to assist struggling veteran borrowers by allowing their mortgage servicers to transfer delinquent VA loans to a new servicer for loss mitigation assistance.
While calling VASP “a welcome addition” to the VA’s loss mitigation toolkit, the MBA and HPC said successfully implementing the complex program will require more time for lenders to adjust operations.
“We encourage the VA to set clear expectations with veterans by publicly communicating that servicers and the VA are working diligently to quickly adjust their existing operations to support the new program before the mandatory compliance deadline, which we think should be re-set,” the groups wrote.
Specifically, they are seeking an extension of at least six months beyond the publication of the full VASP guidance to meet the compliance date.
“It is not fair to veterans or servicers to create a public expectation that VASP will be available before May 31, 2024,” the letter cautioned.
Read more: VA announces voluntary foreclosure moratorium and loan aid
The MBA and HPC also urged ongoing meetings with the VA to address outstanding technical and operational details around loss mitigation processes and servicing transfers under VASP.
“Frequent and ongoing communication with all relevant parties is essential to ensuring veterans receive timely assistance,” the groups stated.
They further recommended the VA extend its voluntary foreclosure moratorium for VASP-eligible borrowers until the new program’s effective launch date.
“A properly structured and implemented VASP is a welcome addition to the VA’s loss mitigation toolkit to help Veterans in today’s interest rate environment,” the MBA and HPC concluded. “To successfully provide the relief needed and communicate effectively with veterans, we urge you to consider this request as time is of the essence.”
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