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Loan Guaranty: COVID-19 Veterans Assistance Partial Claim Payment Program rule (2021)

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The Loan Guaranty: COVID-19 Veterans Assistance Partial Claim Payment Program rule is a significant rule issued by the Department of Veterans Affairs (VA) effective July 27, 2021, that created a temporary program that aimed to transition veterans from the forbearance process back to normal payments on VA-guaranteed loans after experiencing to financial hardship due directly or indirectly to the COVID-19 pandemic. The agency issued the rule per their authority under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.[1]

HIGHLIGHTS
  • Name: Loan Guaranty: COVID-19 Veterans Assistance Partial Claim Payment Program
  • Agency: Department of Veterans Affairs
  • Action: Final rule
  • Type of significant rule: Other significant rule

    • Timeline

    The following timeline details key rulemaking activity:

    Background

    This final rule took effect over a year after Congress passed the March 2020 CARES Act. VA stated that veterans and VA stakeholders— as of June 2021— were still getting sick and, in some cases, dying from SARS-CoV-2. They were also still financially affected by the COVID-19 pandemic, as they continued to struggle to meet payments on loans and mortgages. VA believed this rule would help both servicers and borrowers with the financial difficulties that were still plaguing them at the time VA made the rule, related to the COVID-19 pandemic; the rule aimed to help transition servicers and borrowers out of the pandemic without any parties involved reaching financial ruin. The sunset date, or expiration date, of this rule is listed as October 28, 2022.[1]

    Summary of the rule

    The following is a summary of the rule from the rule's entry in the Federal Register:

    “ The Department of Veterans Affairs (VA) is establishing through this final rule the COVID-19 Veterans Assistance Partial Claim Payment program (COVID-VAPCP), a temporary program to help veterans return to making normal loan payments on a VA-guaranteed loan (guaranteed loan) after exiting a forbearance for financial hardship due, directly or indirectly, to the COVID-19 national emergency.[1][2] ”

    Summary of provisions

    The following is a summary of the provisions from the rule's entry in the Federal Register:[1]

    “ (1) The partial claim maximum limit suggested by the proposed rule is doubled from 15 percent of the unpaid principal balance of the guaranteed loan as of the date the veteran entered into a COVID-19 forbearance, to 30 percent of such balance; (2) the proposed requirement that the veteran repay the partial claim within 120 months is eliminated; (3) the proposed requirement that VA charge interest on the new loan is eliminated, meaning the COVID-VAPCP loan is a no-interest loan for the veteran; (4) the proposed requirement that servicers complete a financial evaluation of the veteran is eliminated; (5) the timeframe for servicers to submit a partial claim payment request to VA is increased from 90 to 120 days; and (6) the proposed requirement that the COVID-VAPCP be the option of last resort is eliminated, meaning that servicers can use the partial claim payment option, even if other home retention options are feasible, provided that the partial claim payment option is in the veteran's financial interest.[2] ”

    Significant impact

    See also: Significant regulatory action

    Executive Order 12866, issued by President Bill Clinton (D) in 1993, directed the Office of Management and Budget (OMB) to determine which agency rules qualify as significant rules and thus are subject to OMB review.

    Significant rules have had or might have a large impact on the economy, environment, public health, or state or local governments. These actions may also conflict with other rules or presidential priorities. Executive Order 12866 further defined an economically significant rule as a significant rule with an associated economic impact of $100 million or more. Executive Order 14094, issued by President Joe Biden (D) on April 6, 2023, made changes to Executive Order 12866, including referring to economically significant rules as section 3(f)(1) significant rules and raising the monetary threshold for economic significance to $200 million or more.[1]


    The text of the Loan Guaranty: COVID-19 Veterans Assistance Partial Claim Payment Program rule states that OMB deemed this rule significant, but not economically significant:

    “ The Office of Information and Regulatory Affairs of the Office of Management and Budget (OMB) has determined that this rule is a significant regulatory action under Executive Order 12866... While the final rule is expected to affect a substantial number of small entities, the impact will not be economically significant.[2] ”

    Text of the rule

    The full text of the rule is available below:[1]

    See also

    External links

    Footnotes

    1. ↑ 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 Federal Register, "Loan Guaranty: COVID-19 Veterans Assistance Partial Claim Payment Program," December 11, 2023.
    2. ↑ 2.0 2.1 2.2 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
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