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VA Partial Claim Program
Purpose
The VA Partial Claim Payment (VAPCP) is a temporary program that is intended to assist Veteran borrowers specifically impacted by the COVID-19 pandemic to resume making their regular (pre-COVID) mortgage payments after exiting forbearance. VAPCP will only be available from July 27, 2021 through October 28, 2022.
*Note: With a VA home loan, you have a number of options to avoid foreclosure. You should work with your loan servicer (the mortgage company collecting your monthly payments) to make the decision that is in your best financial interest.
Program Requirements
To participate in the COVID-VAPCP program, the following requirements must be met:
- You must have a VA-guaranteed loan.
- Your VA loan must have been current or less than 30 days past due on March 1, 2020 or originated on or after March 1, 2020.
- You received a COVID-19 forbearance and missed at least one payment under the terms of the original mortgage note.
- You currently occupy the property securing the guaranteed loan as your residence.
- You have recovered from the hardship and can resume making timely, full monthly payments under the terms of the original mortgage note.
- You agree to repay the partial claim amount to VA and allow VA to create a second mortgage lien on the property.
Frequently Asked Questions
1: How does the COVID-VAPCP program work?
Once your loan servicer determines that the VAPCP is the best option for you, they will report to VA that a VAPCP will be completed. Upon VA review, VA purchases the forbearance indebtedness (past due) amount, not to exceed 30 percent of the unpaid principal balance of the VA-guaranteed loan. This purchase amount is the partial claim payment. In exchange for VA’s partial claim payment on your behalf, you will execute a security instrument to be recorded as a second lien and an interest free promissory note to repay VA the partial claim amount. You must execute all required documents and provide them to your loan servicer no later than 120 days after your COVID-19 forbearance has ended.
2: Why is VA offering partial claim payments?
VA understands the financial difficulty that the COVID-19 National Emergency has caused many borrowers. As a result, VA wants to avoid situations where servicers require all accrued missed payments during COVID-19 forbearance periods to be repaid immediately. Regardless of any option or alternative chosen, servicers should not require you to make a lump sum payment to bring the loan current.
3: Does the VAPCP impact my entitlement?
No, the VAPCP does not impact your entitlement.
4: Does the VAPCP impact my credit rating?
The VAPCP does not impact the credit rating of your current loan. However, since you will be executing a new note, it may be reported on your credit report as new loan account.
5: Am I required to use the VAPCP program?
No, you are not required to use the program. VA offers other options to avoid foreclosure. You should contact your loan servicer and review the available options as they pertain to your specific situation.
6: How do I apply if I want to use the VAPCP program?
You should contact your loan servicer. They will review your loan to determine if the VAPCP is the best option for you and if you meet the requirements.
7: What can be included in the partial claim amount?
All missed monthly principal, interest and escrow payments for real estate taxes and insurance premiums to bring the loan current, not to exceed 30 percent of the current unpaid principal balance of the VA-guaranteed loan, can be included in the partial claim amount.
8: What if my delinquent amount exceeds 30 percent?
VA guidelines do not allow an exception to exceed the 30 percent rule. You should contact your loan servicer to explore other possible options to bring your loan current.
9: What if there are other people on my current loan?
All borrowers that signed the original loan must execute the security instrument and promissory note.
10: How/when do I repay the VAPCP loan?
The loan is interest free and must be paid in full when you refinance, pay the original guaranty loan in full or transfer the title of the property. You may make payments without penalty at any time before the loan becomes payable.
11: What is the deadline for me to use the VAPCP?
The VAPCP program will end on October 28, 2022. However, the deadline to contact your servicer and request the VAPCP may be earlier than this date depending on each borrower’s forbearance exit date, so you should contact your loan servicer.
12: How many times can I use the VAPCP program?
You may only use the VAPCP one time.
13: Can a Partial Claim loan be subordinated?
No. A partial claim loan, at the time of its origination, is a subordinated loan from the original guaranty. Subordination of a loan that is already a subordinate loan is not permissible under the program.
Partial Claim loans are written to assist borrowers in re-establishing good standing of their guaranty mortgage. If at any time the original guaranty or property connected to the guaranty either reaches maturity; is refinanced or sold; or the title changes, then the partial claim loan must be paid off under the guidelines of the program.
14: What happens if a borrower wants to obtain a home equity line of credit (HELOC) with Partial Claim?
VA allows the partial claim to be pushed to a lesser lien position in situations where a HELOC loan is obtained, provided the original guaranty maintains the first position.
15: Can a Short Sale be approved in instances where a Partial Claim exists?
A property that is subject to a short sale will attempt to recover as much of the unpaid principal balance (UPB) towards paying down/off the obligation of the borrower with a partial claim loan. In the event the proceeds from the sale do not allow for a full payoff of the partial claim, the remaining balance will be sent to the VA in an effort to obtain approval for a write-off transaction to bring the balance to zero and release the lien.
16:Who should I call if I have an issue or more questions about the VAPCP program?
For any additional questions, please contact a VA Regional Loan Center at 1-877-827-3702, Option 8, to speak to a VA Loan Technician.
