(a) The Secretary will pay a servicer in tiers one, two, or three an incentive payment for each of the following successful loss-mitigation options or alternatives to foreclosure completed: repayment plans, special forbearances, loan modifications, short sales, and deeds-in-lieu of foreclosure. Only one incentive payment will be made with respect to any default required to be reported to the Secretary pursuant to § 36.4317(c). No incentive payment will be made to a servicer in tier four. The options and alternatives are listed in paragraph (b) of this section from top to bottom in their preferred order of consideration (i.e., a hierarchy for review), but VA recognizes that individual circumstances may lead to “out of the ordinary” considerations.
(b) The amount of the incentive payment is as follows:
| Tier ranking | One | Two | Three | Four |
|---|
| Repayment Plan | $200 | $160 | $120 | $0 |
| Special Forbearance | 200 | 160 | 120 | 0 |
| Loan Modification | 700 | 500 | 300 | 0 |
| Short Sale | 1,000 | 800 | 600 | 0 |
| Deed in Lieu of Foreclosure | 350 | 250 | 150 | 0 |
(c) For purposes of this section, a loss-mitigation option or alternative to foreclosure will be deemed successfully completed as follows:
(1) With respect to a repayment plan (as defined in § 36.4301), when the loan reinstates;
(2) With respect to special forbearance (as defined in § 36.4301), when the loan reinstates. If a repayment plan is developed at the end of the forbearance period, then the special forbearance is not eligible for an incentive payment, although the subsequent repayment plan may be eligible upon loan reinstatement;
(3) With respect to a loan modification, when the modification is executed and the loan reinstates;
(4) With respect to a short sale, when the claim under guaranty is filed; or
(5) With respect to a deed-in-lieu of foreclosure, when the claim under guaranty is filed.
(d) Incentive payments with respect to repayment plans, special forbearances and loan modifications shall be made no less frequently than monthly. For all other successful loss-mitigation options, incentives shall be paid in the final claim payment.
(e) The Secretary shall reserve the right to stop an incentive payment to a servicer if the servicer fails to perform adequate servicing.
(The Office of Management and Budget has approved the information collection requirements in this section under control number 2900-0021)
(Authority: 38 U.S.C. 3703(c), 3720, 3722)
[73 FR 6310, Feb. 1, 2008. Redesignated at 75 FR 33705, June 15, 2010, as amended at 75 FR 65238, Oct. 22, 2010; 89 FR 25144, Apr. 10, 2024]
Notes of Decisions
Cited in
12
cases, 1981–1996 · leading case:
Buzinski v. Brown, 6 Vet. App. 360 (Vet. App. 1994).
Buzinski v. Brown, 6 Vet. App. 360 (Vet. App. 1994).
· cites it 2× “The VA responded to the mortgagee on July 25, 1986, that it had received a copy of the complaint, and directed the mortgagee to timely file a foreclosure appraisal in accordance with 38 C.F.R. §§ 36.4319 , 36.4325 (1993). Final judgement of foreclosure was entered by the Florida…”
Jones v. Turnage, 699 F. Supp. 795 (N.D. Cal. 1988).
· cites it 2× “§ 1820 (a)(6); 38 C.F.R. §§ 36.4319 , 36.4320 (1988). Under California law, the holder of a loan may foreclose either judicially or non-judicially, so long as there is a power of sale provision in the mortgage or deed of trust.”
Boley v. Brown, 10 F.3d 218 (4th Cir. 1993).
· cites it 2× “§ 3720 (a)(6); 38 C.F.R. §§ 36.4319 , 36.4320. If a deficiency remains after the foreclosure sale, the VA reimburses the lender up to the amount of the guaranty.”
United States v. Vallejo, 660 F. Supp. 535 (W.D. Wash. 1987).
“See 38 C.F.R. §§ 36.4319 , 36.4320. The deed of trust itself specifies that foreclosure in the event of default is to be according to the Washington Deeds of Trust Act.”
Whitehead v. Derwinski, 904 F.2d 1362 (9th Cir. 1990).
· cites it 2× “§§ 1820 (a)(6), 1832; 38 C.F.R. §§ 36.4319 , 36.4320. The VA must reimburse the lender for certain losses remaining after the foreclosure sale.”
Vail v. Derwinski, 742 F. Supp. 1039 (D. Minnesota 1990).
“does not participate in the actual foreclosure proceedings, 38 C.F.R. § 36.4319 (f), the regulations governing the V.”
Carter v. Derwinski, 987 F.2d 611 (9th Cir. 1993).
“§ 3720 (a)(6); 38 C.F.R. §§ 36.4319 , 4320. Each plaintiff Idaho veteran purchased residential real property with a VA guaranteed loan.”
Whitehead v. Turnage, 701 F. Supp. 795 (W.D. Wash. 1988).
“See 38 C.F.R. §§ 36.4319 , 36.-4320. Courts have applied state foreclosure laws to loans made by the SBA, the FmHA, and the VA.”
Grant v. United States Dep't of Vets.' Affairs, 827 F. Supp. 418 (S.D. Tex. 1993).
“It also appears that MICO timely gave the VA the notices required by VA regulations to permit the foreclosure sale to occur. Home mortgage foreclosures of VA-guaranteed loans are conducted by the note and lien holder in accordance with the laws of the state in which the property…”
Carter v. Derwinski, 758 F. Supp. 603 (D. Idaho 1991).
“38 C.F.R. § 36.4319 (f). Once a foreclosure sale has taken place, the VA must reimburse the lender for certain remaining losses.”
Denson v. Merchants & Farmers Bank, 946 F. Supp. 470 (S.D. Miss. 1996).
“§ 3720 (a)(6); 38 C.F.R. §§ 36.4319 , 36.4320. If a deficiency remains after the foreclosure sale, the VA reimburses the lender up to the amount of the guaranty.”
Annotations are extracted automatically from the opinions in the
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treatment. Dots show Syfertize treatment of the citing case itself.