[Department of Veterans Affairs]{.smallcaps}

Veterans Benefits Administration

*275 Chestnut Street*

*Manchester, NH 03101*

September 20, 2001

In Reply Refer To: 373/26

[LOCAL RELEASE NO. 26-01-21]{.underline}

TO: ALL PROGRAM PARTICIPANTS

SUBJ: RELIEF FOLLOWING TERRORIST ATTACKS OF SEPTEMBER 11, 2001

1\. [PURPOSE:]{.underline} This circular expresses concern about VA home
loan borrowers affected by the terrorist attacks of September 11, 2001,
and describes measures mortgagees may employ to provide relief.

2\. [DIRECT AND INDIRECT IMPACT ON BORROWERS]{.underline}**:** Some
borrowers were directly affected by the attacks, and include the
families of those killed on the hijacked airplanes and their targets on
the ground, as well as those who have died in the rescue efforts. Also
directly affected were those whose work environments were destroyed or
severely damaged as a result of the attacks. To a certain extent, many
others have been less directly affected, including business partners of
those in the vicinity of the attacks. And our understanding is that the
impact continues to ripple throughout the country, as security concerns
have lead to limiting air service, including air transport of mail,
while electronic communications have also been affected.

> 3\. [FORBEARANCE REQUEST]{.underline}: VA encourages holders of
> guaranteed loans to extend every possible forbearance to borrowers in
> distress as a result of the attacks of September 11, 2001. Careful
> counseling with borrowers should help determine whether their
> difficulties are directly related to the attacks, or whether they stem
> from other sources which must be addressed. VA Regulations (located in
> title 38, code of Federal Regulations, or CFR) regarding
> "Reapplication of Prepayments" (38 CFR 36.4310), "Advances" (38 CFR
> 36.4313), "Extensions and Reamortizations" (38 CFR 36.4314), and
> "Supplemental Loans" (38 CFR 36.4355) may be of assistance in
> appropriate cases.
>
> 4\. [MORATORIUM ON FORECLOSURES]{.underline}: Although the loan holder
> is ultimately responsible for determining when to initiate foreclosure
> and for completing termination action, we are requesting that holders
> establish a 90 moratorium from September 11, 2001, on initiating new
> foreclosures on loans affected by the attacks. Since VA is requesting
> this, the provisions of 38 CFR 36.4319(f) will not be applied by VA
> during the moratorium to loans where VA is notified that the
> moratorium is appropriate. Also, the period of the moratorium will be
> considered "VA-requested forbearance" for purposes of the no-bid
> avoidance provisions of 38 CFR 36.4321. Because of the national impact
> of the attacks, holders should ensure that all foreclosures scheduled
> nationwide during the moratorium are reviewed prior to sale, to ensure
> that borrowers have not been affected significantly enough to justify
> postponement or cancellation. Any questions about impact should be
> discussed with the appropriate VA Regional Loan Center (RLC).

5\. [LATE CHARGE WAIVERS]{.underline}: VA has already heard from several
servicers about their plans to waive late charges due to the ripple
impact of the attacks. VA regulations (38 CFR 36.4311(c)) allow a late
charge not in excess of 4% on any installment paid more than 15 days
after the due date. Based on reports of mail delays, as well as
difficulties with electronic communications and transfer of funds, we
support those servicers who are automatically extending dates for
imposition of late charges, and encourage similar consideration by all
VA loan holders.

6\. [REPORTING TO VA]{.underline}: VA has also heard from at least one
servicer about difficulties with its computer access due to the attacks,
which will delay reporting of defaults to VA. This servicer will focus
its limited access on processing payments and servicing accounts. VA
supports those efforts and will not penalize the servicer for any late
reporting caused by the attacks. Contact the appropriate RLC with any
questions.

7\. [ACTIVATION OF RESERVISTS/GUARD]{.underline}: The President has
authorized the call to active military duty of as many as 50,000
National Guard and Reservists. Those individuals may be entitled to
relief provisions under the Soldiers' and Sailors' Civil Relief Act of
1940, as amended (50 USC App. Sections 501-590). VA is not charged with
enforcement of the Act, but in order to protect veterans we will attempt
to inform loan holders about certain provisions of the Act in the near
future.

8\. [OTHER VETERANS' BENEFITS]{.underline}: During the course of
servicing VA-guaranteed loans, counselors may contact veterans who
appear to be in need of additional benefits. In order to help those
veterans, mortgagees may want to ensure that their staffs are aware of,
and prepared to pass on a national toll-free number for obtaining
information on veterans' benefits. The number is 1-800-827-1000. Other
benefits which may be available to eligible veterans include
compensation for service-connected disabilities, pension payments for
needy veterans, vocational counseling and employment assistance,
education assistance, and life insurance programs. Medical benefits may
also be available for many conditions, including post traumatic stress
disorder.

Your continued support of the VA Home Loan Benefits Program is
appreciated.

Keith C. Boerner

Loan Guaranty Officer