VA Servicer Handbook M26-4 Chapter 14
VA Servicer Handbook M26-4 Chapter 14, verbatim from VA KnowVA (article 554400000314383, updated Dec 16, 2025).
Verbatim regulatory text
Verbatim provisions from VA Servicer Handbook M26-4 Chapter 14 — each quote is a verified substring of the regulator-published source snapshot, not retyped. Quoted for reference; this is not legal advice. The operational layer (P&P updates, prompts) lives in the regulation update kits.
VA Servicer Handbook M26-4 Chapter 14 — 14.01
14.01 CLAIMS(38 C.F.R. 36.4324) a. Servicers must submit claims to the Departmentof Veterans Affairs (VA) for reimbursement of any fees, costs, and lossesassociated with the termination of a guaranteed home loan within 365 days of termination. If a servicer fails to submit a claim within the required timeframe, they maysubmit an appeal late claim event to VA for consideration. Refer to Chapter16, Appeals, of this handbook for more information. b. Claimsmay be submitted on the following: 1. Foreclosure. 2. Deed-in-Lieu (DIL) of foreclosure. 3. Compromise sale. 4. Terminated mobile home. 5. Refund. On refunded loans, the servicers must submitthe refund claim within 60 days of VA’s approval date. Refer to the Chapter 9,Refunds, of this handbook for more information.
VA Servicer Handbook M26-4 Chapter 14 — 14.02
14.02 ELIGIBILITY FOR CLAIM PAYMENT a. The Basic Claim, or Supplemental Claim event must besubmitted electronically by the servicer through the Servicer Web Portal(SWP). VALERI presents the claim for review once the event is processed. b. Further review is required for the followingsituations: 1. The Servicemember Civil Relief Act(SCRA) is included on the Basic Claim Event. 2. Insurance loss proceeds areincluded in the Basic Claim Event. 3. An Invalid Sale Results Event wasreported for the current default. 4. There are pending regulatoryinfractions (RIs) on the loan. 5. The claim is a Refund Claim. 6. The claim is for a Texas Veterans LandBoard Loan. c. Servicers have two options when filing a claim through the SWP: 1. Basic Claim Event. This initial claim event shouldinclude all credits, advances, and expenses associated with the termination ofthe loan. VA defines loan termination as: (a) Foreclosure. The date of legal termination as definedunder state law. Refer to the State Foreclosure Process and Statutory BidInformation document located on the VALERI internet at http://www.benefits.va.gov/HOMELOANS/servicers_valeri.asp. (b) DIL of Foreclosure. The date the deed is recorded,or the date the deed is sent for recording. (c) Compromise Sale. The compromise sale settlement dateper the Closing Disclosure. 2. Supplemental Claim. The supplemental claim(s)should include all credits, advances, or expenses which were omitted from any previousclaim. d. VALERI rejects the Basic Claim, or Supplemental Claimsubmitted by the servicer if any of the following conditions exist: 1. Loan is not guaranteed. 2. Submitted more than 365 days after loan termination. 3. No termination event previously submitted by the servicer. 4. Bid was total debt and the property was not acquiredby VA.
VA Servicer Handbook M26-4 Chapter 14 — 14.03
8 sections · 14,396 characters of verbatim text. Open a section to read it, or . Every section below is in the page source whether open or closed.
§14.03 CLAIM PAYMENT CALCULATION1,895 ch
14.03 CLAIM PAYMENT CALCULATION a. VALERI calculates the final claim payment based upontotal eligible indebtedness (TEI), maximum guaranty, and credit to theindebtedness. b. To determine the gross claim payment for a loanterminated through compromise sale, DIL of foreclosure, or foreclosure. VALERIsubtracts the credit to the indebtedness (net value or actual proceeds of thesale) from its calculation of the TEI. To determine the claim payment for arefunded loan, VALERI uses its calculation of TEI as the claim payment. VA mayadjust the TEI calculation during a review of a non-routine claim if there areunsubstantiated items. c. TEI includes the following: 1. Unpaid Principal Balance (UPB). VALERIcalculates the unpaid principal balance as of the date of the foreclosure sale(or the date of confirmation of the sale in confirmation/ratification of salestates), closing date of the compromise sale (Closing Disclosure settlementdate), or date the DIL is recorded or submitted for recording (depending onwhich is reported in the DIL Complete event). VALERI calculates the unpaidprincipal balance by amortizing the loan based upon the original, or modifiedloan amount. VALERI compares this amount to the amount reported with the mostrecent delinquency status update (DSU), and uses the lower of the two amountsto calculate the TEI. 2. Accrued Unpaid Interest. VA pays interest onthe unpaid principal balance, and advances. Interest on these items is allowed up to the dateof loan termination, as long as the date of termination is less than or equalto 210 days from the due date of the last paid installment, plus the maximumallowable state foreclosure timeframe. For example, if the maximum allowablestate foreclosure timeframe is 180 days, VA allows interest up to 390 days (210+ 180) from the due date of the last paid installment.
aVA will pay interest beyond the maximum timeframe ifthe…315 ch
(a) VA will pay interest beyond the maximum timeframe ifthe bankruptcy filed event was reported (VA automatically adds 180 days to themaximum interest timeframe when the bankruptcy filed event is reported). Updatesto the maximum allowable state foreclosure timeframes are published in theFederal Register.
bVALERI calculates accrued unpaid interest based uponthe interest…3,780 ch
(b) VALERI calculates accrued unpaid interest based uponthe…965 ch
(b) VALERI calculates accrued unpaid interest based uponthe interest rate reported at loan origination or modification, and adjusts forany interest rate changes reported to VA with the Basic Claim event. 3. Interest on UPB. VA pays accrued dailyinterest on the unpaid principal balance of the loan. The interest applied toany month’s unpaid principal balance is the interest rate on the loan for thatmonth. 4. Interest on Advances. VA pays interest onamounts advanced prior to the loan termination date. VALERI calculates accrueddaily interest on advances using the interest rate on the loan. For example,for a loan with a six percent fixed interest rate, VA will pay six percent onan advance from the day it was advanced to the date of loan termination,subject to the maximum allowable timeframe. Similarly, VALERI calculates theinterest on an advance on an Adjustable Rate Mortgage (ARM) based upon eachmonth’s unique interest rate.
aVALERI calculates the interest amount only after itsubtracts the…2,040 ch
(a) VALERI calculates the interest amount only after itsubtracts the escrow credit balance from the earliest advances to the account. For example, if the current escrow credit balance is $500, and the firstadvances made to the account were $200 for taxes, $200 for insurance, and $100for mowing, VALERI eliminates any interest owed on these advances from thetotal interest calculation. 5. Liquidation Expenses. VA allows certain liquidation expenses, up to maximum allowable amounts, in thecalculation of TEI. The maximum allowable amount for each liquidation expensevaries by state and type of foreclosure process (judicial or non-judicial). Maximum allowable amounts for liquidation expenses are located on the VALERIFee Cost Schedule document located on the VALERI internet at http://www.benefits.va.gov/HOMELOANS/servicers_valeri.asp. Allowable liquidation expenses are determined based on the paid date reportedby the servicer on the claim event in conjunction with the maximum allowablefee cost schedule, frequency schedule and aggregate allowable, with exceptionto attorney fees. VALERI calculates liquidation expenses based uponinformation reported with the Basic Claim event. Liquidation expenses aregrouped into the following categories: (a) Attorney Fees. Allowable attorney fees aredetermined based on the termination date of the loan. Fees must be reportedseparately at the time of the claim and include: (1) Foreclosure attorney fees. Foreclosure re-startattorney fees after cancellation of a foreclosure sale. (Note: VALERIautomatically pays a restart fee of “0” on the claim. These fees may be paidto the servicer through the appeal claim process.) (2) DIL attorney fees. (3) Bankruptcy attorney fees. (4) Ad litem/curator fees/warning order attorney fees. (5) Attorney service taxes. (6) Mediation fee. (Note: VALERI automatically pays amediation fee of “0” on the claim. These fees may be paid to the servicer through theappeal claim process.)
bAppraisal Fees. Allowable appraisal feesinclude775 ch
(b) Appraisal Fees. Allowable appraisal feesinclude: (1) Cost of having a VA appraiser determine the marketvalue of the property. (2) Cost of having a VA appraiser update the marketvalue of the property. (Note: VALERI automatically pays an appraisal update of “0” on theclaim. These fees may be paid to the servicer through the appeal claimprocess.) (3) Cost of a court-ordered appraisal. (4) Appraisal service taxes. (5) Mileage expenses for a VA appraiser to travel to theproperty. (6) Note: The actual VA appraisal fee is payablein addition to the maximum guaranty on a claim. This allowable appraisalamount is determined based on the appraisal completion date reported by theservicer on the Basic Claim event.
cTitle Expenses. Allowable title expensesinclude expenses incurred for757 ch
(c) Title Expenses. Allowable title expensesinclude expenses incurred for: (1) Initial termination title review (search of recordsperformed by a title company or attorney prior to a foreclosure sale to ensure a validforeclosure). (2) Title updates that occur prior to termination (closeexamination of all public records that affect the title to the property, includingreviewing past deeds, wills, and trusts). (3) Initial termination title commitment/guaranty from thetitle company (written Commitment, received from the title company stating theconditions under which they will insure title to the property). (4) Final termination title documentation (requiredendorsement fees). (5) Title service taxes.
dFiling Fees. Allowable filing fee expensesinclude expenses…1,276 ch
(d) Filing Fees. Allowable filing fee expensesinclude expenses incurred for the recording or filing of: (1) Bankruptcy-related motions (specifically, the motionfor relief of stay). (2) Index number. (3) Lis pendens. (4) Summons. (5) Petition. (6) Complaint. (7) Judgment. (8) Request for judicial intervention. (9) Military affidavit. (10) Posting notice of sale. (11) Notice affidavit. (12) Notice of publication affidavit. (13) Order confirming sale. (d) Recording Fees. Allowable foreclosurerecording fees include amounts charged by public officials for recording orfiling of: (1) Substitution of trustee (appointment, agreement, ordocument). (2) Notice of default/foreclosure notice/notice of pendency/powerof attorney. (3) Summons. (4) Judgment. (5) Certificate of non-redemption. (6) Sheriff's/trustee's certificate of sale. (7) Assignment of sheriff's/trustee's certificate ofsale. (8) Foreclosure deed (sheriff's, trustee's, referee's,or commissioner's deed). (9) Assignment of sheriff's/trustee's deed.
eDeed to VA. Allowable DIL recording feesinclude amounts charged…307 ch
(e) Deed to VA. Allowable DIL recording feesinclude amounts charged by public officials for recording or filing of: (1) Warranty deed from owner to holder. (2) Estoppel affidavit. (3) Deed to VA. (4) Deed of re-conveyance/full release/satisfaction ofmortgage.
fForeclosure Facilitation Fees. Allowableforeclosure facilitation…456 ch
(f) Foreclosure Facilitation Fees. Allowableforeclosure facilitation fees include amounts charged by public officials tofacilitate the foreclosure process, including: (1) Sheriff's/administrator's/commissioner's fees andcosts (including court costs). (2) Trustee/referee/master in equity fees. (3) Auctioneer's fees. (4) Court recorder fees. (5) Prothonotary/clerk’s fees. (6) Attorney/notary fees.
gOther Fees and Costs. Allowable other feesand costs include expenses for5,610 ch
(g) Other Fees and Costs. Allowable other feesand costs include expenses for1,815 ch
(g) Other Fees and Costs. Allowable other feesand costs include expenses for: (1) Publication of sale (advertisement in appropriatenewspaper or on the internet). (2) Personal service of papers on any necessary party ofinterest. (3) Statutory required mail. (4) Service of papers by publication. (5) Service of papers by certified mail. (6) Investigation fees related to service. (Note:VALERI automatically pays an investigation fee of “0” on the claim. These fees may bepaid to the servicer through the appeal claim process.) (7) Non-extinguishable liens. (8) Committee fees and costs. (9) Transfer tax/documentary stamps. (10) Municipal lien certificate. (11) Title V septic (Massachusetts) fees and costs. (Note: VALERI automatically pays Title V septic in addition to maximum guaranty.) (12) Poundage. (13) Mennonite notices. (14) Relocation assistance/borrower incentive. (15) Property inspections. (16) State Pre-Foreclosure Fee. 6. Advances. VA allows advances in thecalculation of TEI, up to maximum allowable amounts. When properties areconveyed, VA will pay lienable items such as accrued taxes, water, sewer,special assessments, and ground or water rents up to 30 days past the date ofconveyance to VA. The maximum allowable amount for each advance varies bystate. Maximum allowable amounts for advances are located on the VALERI FeeCost Schedule at: http://www.benefits.va.gov/homeloans/servicers_valeri.asp. VALERI calculates advances based on the paid date reported by the servicer onthe claim event and allowable up to the interest cutoff date or termination,whichever is earlier, with exception of taxes. Advances are grouped into thefollowing categories:
aAdvances for Insurance. Allowable insuranceadvances include…224 ch
(a) Advances for Insurance. Allowable insuranceadvances include amounts advanced for payment of flood, homeowners/fire/hazard,wind, earthquake, and force placed insurance coverage prior to the loantermination date.
bAdvances for Taxes. Allowable advances fortaxes include amounts…371 ch
(b) Advances for Taxes. Allowable advances fortaxes include amounts advanced for payment of city, county/parish, school,levy, township, municipal utility district (MUD), public utility district (PUD)taxes, special assessments, and ground rent payments. Advances for taxes paidafter the loan termination date are not allowable if VA did not acquire theproperty.
cAdvances for Property Preservation. Allowableproperty…1,386 ch
(c) Advances for Property Preservation. Allowableproperty preservation expenses include amounts advanced for: (1) Yard maintenance: Mowing, shrub trimming, and snowremoval services. (2) Winterization: Winterization of property units withdry/wet/radiant heat, winterization of pools/spas/hot tubs, and amounts paid torepair/replace/install a reduced pressure zone (RPZ) valve. (3) Utilities such as electricity, gas, oil, propane,water, and sewer. (4) Equipment repair or replacement such as sump pumprepair and/or installation, services for pumping water from basement, waterwell repair or replacement, and septic system maintenance. (5) Securing and re-securing the property, temporaryroof repairs, securing in-ground or above ground pools, securing hot tubs or spas,and maintenance of pools, spas, and hot tubs. (6) Boarding the Property: Boarding the property with1/2", 5/8”, or 3/4" plywood or polycarbonate/clearboard. (7) Hazard Abatement: Hazard abatement such as advancesto take necessary actions in compliance with state and federal regulations withregards to environmental hazards (such as asbestos and radon). (8) Debris Removal: Debris removal such as removal ofcubic yards of debris from the property, and removal of vehicles from theproperty in compliance with state and local requirements.
dAdvances for Association Fees. As requiredby state law, amounts…193 ch
(d) Advances for Association Fees. As requiredby state law, amounts advanced by the servicer to pay homeowner’s association(HOA), Planned Unit Development, and/or condo association fees.
eLess any Credits. Anycredits on the borrower’s account not already applied to the1,621 ch
(e) Less any Credits. Anycredits on the borrower’s account not already applied to the unpaid principal balance reduce the borrower’s TEI. VALERIcalculates credits based upon information you report with the Basic Claimevent. Credits include: (1) Refunds of insurance premiums. (2) Tenant rents. (3) Insurance loss proceeds. (4) Escrow credit balance. (5) Suspended credits (partial payments held insuspense). (6) Buy-down credits from origination (seller buy downs). (7) Interest on escrow. (8) Other credits for application to liquidationexpenses. (9) Other credits for application to advances. (10) Tax refunds. d. Sample Calculation of TEI. VALERI calculates TEIat the time of the claim using the UPB, accrued unpaid interest, paidliquidation expenses, and advances, less any credits. For example, a loan isterminated through foreclosure with: 1. UPB: $80,000 2. Accrued unpaid interest on UPB and advances: $8,000 3. Paid liquidation expenses: $4,000 4. Advances: $2,000 5. Credits: $900 6. TEI: ($80,000 + $8,000 + $4,000 + 2,000 - $900): $93,100 e. Under 38 U.S.C. 3712, VA is obligated to pay theservicer a claim up to maximum guaranty on any terminated loan and finalaccounting of the loan. The guaranty protects the servicer against loss if theVeteran or a subsequent borrower fails to repay the loan. VA will guarantee 25percent of the principal loan amount, up to the maximum guaranty. Guarantyamounts vary with the size of the loan and the location of the property.
VA Servicer Handbook M26-4 Chapter 14 — 14.04
25 sections · 18,019 characters of verbatim text. Open a section to read it, or . Every section below is in the page source whether open or closed.
§14.04 ALLOWABLE CLAIM ITEMS FOR VA REIMBURMSENT1,153 ch
14.04 ALLOWABLE CLAIM ITEMS FOR VA REIMBURMSENT a. The VALERI Fee Cost Schedule and the VALERI Fee CostSchedule Frequency located on the VALERI website at http://www.benefits.va.gov/HOMELOANS/servicers_valeri.asp,identifies each line item per state and provides maximum allowable limits thata servicer may seek reimbursement from VA once a loan has terminated. AppendixG, Property Preservation Requirements and Fees, provides guidance to servicersregarding VA’s minimum requirements to protect and preserve a delinquentproperty. b. VA does not reimburse for day-to-day expenses oradvances associated with the cost of doing business. This includes, but is notlimited, to broker’s price opinion (BPO), trip charges, regular mail, courierfees, photos, and photo copies. c. The information below provides descriptions of basicreimbursable claim items. 1. Advances. An amount the servicer pays onbehalf of the borrower for the maintenance or repair of the security, payment of accruedtaxes, special assessments, ground or water rents, and premiums on casualtyinsurance against loss or damage to the property.
aInsurance(s). Insurance which protects thehomeowner and/or servicer from608 ch
(a) Insurance(s). Insurance which protects thehomeowner and/or servicer from property losses during a fixed period of time. VA requiresservicers to ensure that insurance policies are maintained in an amountsufficient to protect the security against risks or hazards and to the extentcustomary in the locality. Force placed insurance must be put in place by theservicer when the homeowner’s insurance lapses or is cancelled. Insuranceadvances are allowable through the established interest cutoff date onterminated loans. The maximum allowable amount is based on a yearly and/or monthlypremium.
bTaxes. Taxes levied on the property by agoverning authority where the property450 ch
(b) Taxes. Taxes levied on the property by agoverning authority where the property is located. Billing frequency varies by state and the VAmaximum allowable amount applies to each line item claimed. If the property isacquired by VA, taxes are allowable up to 30 days after conveyance. If theproperty is not acquired by VA, taxes are allowable through the establishedinterest cutoff date, or the termination date, whichever is earlier.
cSpecial Assessment. Tax that can be imposedby a municipality for expenses such547 ch
(c) Special Assessment. Tax that can be imposedby a municipality for expenses such as installation of water or sewer lines, street paving, orstreet lighting. If the property was acquired by VA and unpaid fees resultedin a lien, special assessments will be allowable up to 30 days after loantermination or the confirmation/ratification of sale date when required underlocal law. If the property is not acquired, special assessments are allowablethrough the established interest cutoff date or the termination date, whicheveris earlier.
dGround Rent. Fee that is paid for the use ofland when title to a property is held as491 ch
(d) Ground Rent. Fee that is paid for the use ofland when title to a property is held as a leasehold estate, rather than as fee simple. If theproperty was acquired by VA and fees resulted in a lien, fees will be allowableup to 30 days after loan termination or the confirmation/ratification of saledate when required under local law. If the property is not acquired, the feeis allowable through the established interest cutoff date or the terminationdate, whichever is earlier.
eAssociation Fees. A fee collected from eachhomeowner of a multi-unit building,4,648 ch
(e) Association Fees. A fee collected from eachhomeowner of a multi-unit building,826 ch
(e) Association Fees. A fee collected from eachhomeowner of a multi-unit building, or community to fund common area repairs/improvements,ground maintenance, and security. If the property was acquired by VA and feesresulted in a lien, fees will be allowable without limitation of the interestcutoff date to clear title. If the property is not acquired, fees areallowable through the established interest cutoff date or the termination date,whichever is earlier. Unless required by local authority, VA does notreimburse for late charges, interest, or attorney's fees. 2. Property Preservation. Maintenance completed to preserve, protect and secure a vacant/abandoned property. These fees are allowable throughthe established interest cutoff date. The following are reimbursable on theclaim under guaranty:
aUtilities. Utility advances are allowablefrom the first uncured default through159 ch
(a) Utilities. Utility advances are allowablefrom the first uncured default through the interest cutoff date.VA will not reimburse latefees/charges.
bSecuring2,944 ch
(b) Securing22 ch
(b) Securing.
1Securing of the Property. Fees to secure aproperty are allowable from the first299 ch
(1) Securing of the Property. Fees to secure aproperty are allowable from the first uncured default to the interest cutoff date. If multiplesecuring advances are claimed, VA will pay up to the aggregate amount. Lockboxes are part of securing and will be included in the aggregate amount.
2Re-securing of the Property. Fees to resecurea property after…260 ch
(2) Re-securing of the Property. Fees to resecurea property after initial securing. The system will automatically deny thisexpense on the initial claim. Servicers may file an appeal or supplementalclaim, with justification and supporting documentation.
3Boarding. Fees toboard a property are allowable from the first uncured default to421 ch
(3) Boarding. Fees toboard a property are allowable from the first uncured default to the interest cutoff date. If multiple boarding advances areclaimed, VA will pay up to the aggregate amount for each plywood orpolycarbonate/clearboard size if the completion dates are the same. Ifmultiple boarding advances are claimed and completion dates are different, VAshould only be paying the first boarding advance.
4Hazard Abatement. An expense that can beimposed by a municipality for the302 ch
(4) Hazard Abatement. An expense that can beimposed by a municipality for the removal of hazards related to unsafe conditions inconnection with a vacant property. These fees are allowable from the firstuncured default to the interest cutoff date or the termination date, whicheveris earlier.
5Debris Removal. Removal of unhealthy orhazardous materials from the exterior1,640 ch
(5) Debris Removal. Removal of unhealthy orhazardous materials from the exterior and interior of properties prior to transferring custody ofvacant properties. Reimbursement of this expense is based on cubic yards andmust be itemized. These fees are allowable from the first uncured default tothe interest cutoff date or the termination date, whichever is earlier. 3. Expenses. Fees incurred by the servicer tocomplete the termination of a mortgage loan. (a) Foreclosure or DIL Attorney Fees. Feesincurred due to the termination of a mortgage loan through foreclosure or DIL of foreclosure. These are paid as an aggregate not to exceed the maximum allowable in VA regulation. Only foreclosure attorney fees are reimbursed on the initial claim when a loanhas been reviewed for a DIL, but the end result is foreclosure; DIL attorneyfees are not reimbursable. However, when a foreclosure has commenced on a loanthat terminates through a DIL, the foreclosure and DIL attorney fees can becombined, to be reimbursed up to maximum allowable for each. (b) Foreclosure Restart Attorney Fee. Feesincurred if local law requires the foreclosure process to be restarted when the foreclosureaction is canceled or postponed. A restart may be the result of a bankruptcyfiling, VA requested delay, property damage/hazardous conditions, or attorneyerrors. The system will automatically deny this expense on the initial claim. Servicers may file an appeal or supplemental claim, with justification andsupporting documentation, to validate circumstances that were beyond thecontrol of the servicer or their attorney.
cBankruptcy Attorney Fees (Chapter 7, 11, and 13filings)…308 ch
(c) Bankruptcy Attorney Fees (Chapter 7, 11, and 13filings). Bankruptcy attorney fees are only allowable if a motion for reliefwas filed. Multiple bankruptcy attorney line items are allowable, up to themaximum aggregate amount. VA limits the amount reimbursable for multiplebankruptcy filings.
dVA Appraisals. An appraisal completed by aVA fee appraiser for liquidating326 ch
(d) VA Appraisals. An appraisal completed by aVA fee appraiser for liquidating purposes. The system will allow one appraisal. Servicersmay file an appeal or a supplemental with justification and supportingdocumentation for additional appraisal expenses. This fee is allowed to bereimbursed over maximum guaranty.
eAppraisal Service Tax. An expense that canbe imposed by a municipality85 ch
(e) Appraisal Service Tax. An expense that canbe imposed by a municipality.
fCourt Appraisal. An expense required by ajudicial foreclosure state and is not122 ch
(f) Court Appraisal. An expense required by ajudicial foreclosure state and is not paid above maximum guaranty.
gMileage. Fee paid to a VA fee appraiser totravel to the property;80 ch
(g) Mileage. Fee paid to a VA fee appraiser totravel to the property;
hAppraisal Update. An updated appraisalreport completed by a VA fee appraiser304 ch
(h) Appraisal Update. An updated appraisalreport completed by a VA fee appraiser for liquidating purposes. The system will automaticallydeny this expense and servicers may file an appeal or supplemental claim, withjustification and supporting documentation, for additional appraisal expenses.
iInitial Termination Title Review. An expenseincurred for a search of records598 ch
(i) Initial Termination Title Review. An expenseincurred for a search of records performed by a title company or attorney prior totermination of a loan. VA will only reimburse one initial title fee on aterminated loan. The search may consist of: (1) Identifying all liable parties with an interest inthe property; (2) Reviewing past deeds, wills, and trust to make surethe title has passed correctly to each owner; and (3) Confirming there are no outstanding prior mortgages,judgments, liens, overdue special assessments, or outstanding restrictive covenants.
jTitle Updates that Occur Prior to Termination. An expense completed to update323 ch
(j) Title Updates that Occur Prior to Termination. An expense completed to update the initial title search information to ensure that nochanges have occurred. VA will only reimburse one title update on a terminatedloan, requiring all additional updates to be appealed with supportingdocumentation and justification.
kInitial TerminationTitle Commitment/Guaranty. A written commitment from a268 ch
(k) Initial TerminationTitle Commitment/Guaranty. A written commitment from a title company stating the conditions which they will insuretitle to the property. VA will only reimburse one initial termination titlecommitment/guaranty fee on a terminated loan.
lFinal Termination Title Documentation. Anexpense incurred by the servicer to236 ch
(l) Final Termination Title Documentation. Anexpense incurred by the servicer to pay required endorsement fees to ensure marketability of theproperty. If the property is acquired by VA, one final termination fee isallowable.
mFiling Fees. Expenses charged by publicofficials for the filing of documents117 ch
(m) Filing Fees. Expenses charged by publicofficials for the filing of documents associated with the loan.
nRecording Fees for Foreclosure or DIL. Expensescharged by public officials for315 ch
(n) Recording Fees for Foreclosure or DIL. Expensescharged by public officials for the recording of documents associated with the loan. TheDeed to VA, Assignment of Sheriff’s/Trustee’s Deed, and Assignment ofSheriff’s/Trustee’s Certificate of Sale are not allowable unless the propertyis acquired by VA.
oForeclosure Facilitation Fees. Expensescharged by public officials to facilitate144 ch
(o) Foreclosure Facilitation Fees. Expensescharged by public officials to facilitate the foreclosure action as required by state law.
pRelocation Assistance/Borrower Incentive. Anincentive paid by the servicer to a257 ch
(p) Relocation Assistance/Borrower Incentive. Anincentive paid by the servicer to a Veteran occupant, not to exceed $1,500, subsequent to thecompletion of a compromise sale, or execution of a DIL of foreclosure and isreimbursable to the servicer.
qInvestigation Fee Related to Service. Expenseincurred for investigation services362 ch
(q) Investigation Fee Related to Service. Expenseincurred for investigation services. The system will automatically deny this expense on theinitial claim. Servicers may file an appeal or a supplemental withjustification and supporting documentation to validate this expense. Skiptrace is not considered an investigation fee and will not be payable.
rNon-Extinguishable Liens. Expense incurredby the servicer to pay for any liens173 ch
(r) Non-Extinguishable Liens. Expense incurredby the servicer to pay for any liens that are not released by the foreclosure action in order toobtain clear title.
sCommittee Fees and Costs. Fees and costsincurred by the servicer to convene the207 ch
(s) Committee Fees and Costs. Fees and costsincurred by the servicer to convene the committee to confirm the sale where there is an equityand/or Internal Revenue Service lien against the property.
tTransfer Tax/Documentary Stamps. Expenseimposed by a public official for the149 ch
(t) Transfer Tax/Documentary Stamps. Expenseimposed by a public official for the transfer of title from one person (or entity) to another.
uMunicipal Lien Certificate. Legal documentthat lists all taxes, assessments, and220 ch
(u) Municipal Lien Certificate. Legal documentthat lists all taxes, assessments, and water charges owed on a property. This document isrequested to make sure all charges are paid current prior to foreclosure.
vTitle V Septic (Massachusetts). MassachusettsState Law requiring…414 ch
(v) Title V Septic (Massachusetts). MassachusettsState Law requiring all individual sewage systems to be inspected prior to thetransfer of the property to another entity. A licensed inspector approved bythe Board of Health must conduct the inspection. Fees associated with thisprocess are payable only if the servicer transfers custody to VA. This fee isallowed to be reimbursed over maximum guaranty.
wPoundage. An expense imposed by a publicofficial to handle funds received for a142 ch
(w) Poundage. An expense imposed by a publicofficial to handle funds received for a third party sale in the state of Oklahoma only.
xMennonite Notices. An expense imposed by thecourt to notify every party5,691 ch
(x) Mennonite Notices. An expense imposed by thecourt to notify every party913 ch
(x) Mennonite Notices. An expense imposed by thecourt to notify every party holding a legally-protected property interest whose name andaddress can reasonably be determined by diligent efforts (ex. Mennonite boardof Missions v. Adams). (y) Property Inspections. An inspection of aproperty to determine its condition. VA will reimburse up to two inspectionsper month. Property inspections are paid based on the completed date reportedby the servicer on the claim event and is allowable up to the interest cutoffdate or termination date, whichever is earlier. (z) Service (to Serve Homeowners). The procedureof delivering court documents to the borrower giving legal notice and enabling that person torespond to the proceeding before the court. Each jurisdiction has specificrules regarding the means of delivery for notification to the homeowner. Thetype of fee that is claimable:
1Personal service such as a sheriff or private entitypersonally delivers the documents;99 ch
(1) Personal service such as a sheriff or private entitypersonally delivers the documents;
2Service by publication such as the attorneypublishes the notice…110 ch
(2) Service by publication such as the attorneypublishes the notice in a local newspaper or such; and
3Service by certified mail such as the attorney wouldrequire proof…4,569 ch
(3) Service by certified mail such as the attorney wouldrequire…1,535 ch
(3) Service by certified mail such as the attorney wouldrequire proof of delivery by the mailing service. (aa) Posting Notice of Sale. A filing feeimposed by the court in order for an attorney to proceed with serving the homeowners for foreclosure. (bb) Estoppel Affidavit. A document that isexecuted by the borrower, for a DIL, attesting to deed the property of theirown free will. (cc) Mediation Fee. An attorney fee costassociated with the foreclosure which is required by the local jurisdiction. The system willautomatically deny this expense on the initial claim. Servicers may file anappeal or a supplemental with justification and supporting documentation tovalidate this expense. (dd) Vacant Property Registration. A feeincurred for a vacant property prior to foreclosure in certain municipalities due to state laws. The system will automatically deny this expense on the initial claim. Servicers may file an appeal or supplemental claim, with justification andsupporting documentation. (ee) State Pre-Foreclosure Fee. A staterequired fee allowed once during the life of the loan. The system willautomatically allow this expense on the initial claim if the loan has beenreferred to foreclosure. 4. Servicers are also eligible for an incentive paymentupon the successful completion of an alternative to foreclosure option whichmeets VA regulatory requirements. This fee is paid over maximum guaranty. Thefollowing items are payable above the maximum guaranty:
1VAliquidation appraisal fees41 ch
(1) VAliquidation appraisal fees.
2Title V septic fees in the State of Massachusetts required only if VAacquired the104 ch
(2) Title V septic fees in the State of Massachusetts required only if VAacquired the property.
3Incentive payment for a DIL of foreclosure or compromise sale2,889 ch
(3) Incentive payment for a DIL of foreclosure or compromise sale. 5. Maximum guaranty is calculateddifferently on original versus modified loans: (1) Original Loans. For original loans that havenot been modified, VALERI calculates maximum guaranty as the lesser of theoriginal guaranty amount or the original guaranty percentage applied to totalindebtedness at the time of liquidation. (a) Example. If VA originallyissued a $36,000, 40 percent guaranty on a $90,000 loan and the totalindebtedness is $95,000, the guaranty is capped at the original guaranty amountof $36,000. This is because the original guaranty amount of $36,000 is lessthan the original guaranty percentage applied to the total indebtedness (40% x$95,000 = $38,000). If total indebtedness on the same $90,000 loan is $80,000,the amount of guaranty would be 40 percent of the total indebtedness or $32,000(40% x $80,000) because this is less than the original guaranty amount. (2) Modified loans. For loans that have beenmodified, VALERI calculates the maximum claim payable as the lesser of themodified loan’s guaranty amount or the modified loan’s guaranty percentageapplied to the total indebtedness at the time of liquidation. (a). VALERI calculatesthe adjusted guaranty amount and guaranty percentage for the modified loanbased upon the following scenarios: 1. If the loanwas modified before February 1, 2008, and the modified loan amount is greater than the originalloan amount, the dollar amount of guaranty will be equal to the dollar amountof guaranty on the original loan. In this case, the original dollar amount ofguaranty remains the same and the guaranty percentage is reduced. 2. If the loan was modified before February 1, 2008, and the modifiedloan amount is lessthan or equal to the original loan amount, VALERI determines the guarantypercent tobe equal to the original percent of guaranty. In this case, the guarantypercentage remainsthe same and the original dollar amount of guaranty is reduced. 3. If the loan was modified on or after February 1, 2008, the dollaramount of the guarantymay not exceed the greater of the original guaranty amount of the loan being modified,or 25 percent of the loan being modified subject to the statutory maximum specifiedin 38 U.S.C. 3703(a)(1)B. 6. When the modified loan amount is greater than the original loan amount, the originaldollar amount of guaranty remains the same if greater than 25 percent of the modifiedloan amount and the guaranty percentage is reduced. 7. When the modified loan amount is less than, or equal to the original loanamount, theguaranty percentage remains the same if greater than 25 percent, and theoriginal dollaramount of guaranty is reduced. The guaranty will never drop below 25 percenton loansmodified on, or after February 1, 2008.
VA Servicer Handbook M26-4 Chapter 14 — 14.05
14.05 VA DETERMINES CREDIT TO INDEBTEDNESS a. VA subtracts the credit to indebtedness from the TEIto determine the gross claim payment. Unless the property is located in astate or locality with statutory bid requirements, the credit to indebtednessis always the greater of net value, amount bid at sale, or actual proceeds ofthe sale. For total debt bids, where the servicer transfers custody of theproperty to VA, the credit to the indebtedness is the unpaid principalbalance. VALERI calculates the credit to the indebtedness based on the bidtype, outcome of the sale, and if the property is located in a state orlocality with statutory bid requirements. b. Credit to Indebtedness for Foreclosure Sales inStates Without Statutory Bid Requirements. 1. Net value bid type where theholder retains or transfers custody of the property. Credit toindebtedness is the net value. 2. Net value bid type where athird party is the successful bidder. Credit to indebtedness is the greater of netvalue or actual third party bid amount. 3. Net value overbid where theholder retains or transfers custody of the property. Credit toindebtedness is the actual overbid amount. 4. Net value underbid where theholder retains or transfers custody of the property. Credit to indebtedness is the netvalue. 5. Total debt bid where the holdertransfers custody of the property. Credit to indebtedness is the UPB. 6. Total debt overbid whereholder transfers custody of the property. Credit to indebtedness is the UPB. 7. Total debt underbid whereholder transfers custody of the property. Credit to indebtedness is the UPB. c. Credit to Indebtednessfor Foreclosure Sales in States With Statutory Bid Requirements. 1. Statutory net valueoverbid where the holder retains the property. Credit to indebtedness is the actual bidamount. 2. Statutory net valueoverbid where the holder transfers custody of the property. Credit toindebtedness is the net value. 3. Statutory net valueoverbid where a third party is the successful bidder. Credit to indebtedness is the actual third-partyamount. d. A list of states and localities with statutory bidrequirements is located in the State Foreclosure Process and Statutory BidInformation document on the VALERI internet at http://www.benefits.va.gov/HOMELOANS/servicers_valeri.asp. e. For a DIL of foreclosure, if the net value is lessthan the borrower’s TEI, VA credits net value. If the net value is more thanthe borrower’s TEI and the servicer transfers custody of the property, VAcredits the UPB. f. For a compromise sale, VA credits net value or theactual proceeds of the sale, whichever is greater. VA credits actual proceedsof sale on loans where the servicer submitted a pre-approval request andreceived approval to accept less than net value.
VA Servicer Handbook M26-4 Chapter 14 — 14.06
14.06 VA CALCULATES CLAIM PAYMENT a. Once VALERI determines TEI, maximum guaranty, and thecredit to the indebtedness, the claim payment for loans terminated throughforeclosure, DIL of foreclosure, and compromise sale is calculated as follows: 1. Determine Gross Claim Amount. The gross claimamount equals the TEI, minus the credit to the indebtedness. The followingdescribes how VALERI calculates TEI and credit to the indebtedness. (a) Example. A servicer holds a foreclosure saleon a property with a net value of $88,130 and total eligible indebtedness of$95,000. According to VA guidelines, the servicer must bid the lower of netvalue or TEI. In this example, the servicer bids the correct net value of$88,130 and is the successful bidder. They retain the property and file aclaim for the remainder of the indebtedness. The gross claim amount would bethe TEI, minus the credit to indebtedness ($95,000 - $88,130 = $6,870). 2. Compare Gross Claim Amount to Guaranty Amount. Ifthe guaranty amount is greater than or equal to the gross claim amount, the amountpayable is the gross claim amount. If the guaranty amount is less than thegross claim amount, the amount payable is the maximum guaranty amount, plus anyVA liquidation appraisal fees, Title V septic fees in the State ofMassachusetts on VA-acquired properties, and any incentive payment for a DIL offoreclosure or compromise sale. 3. Determine Total Amount Payable at Claim. Thetotal amount payable at claim may differ from the amount calculated in Step 2if the loan termination type was a compromise sale or DIL. In these cases, thetotal amount paid at claim is the claim amount payable, plus any incentiveamount payable. Incentives are paid only when the case is eligible for anincentive payment.
VA Servicer Handbook M26-4 Chapter 14 — 14.07
14.07 OTHERREVIEW CONSIDERATIONS ON CLAIM PAYMENT a. RIs. Prior to claim payment, all RIs will be reviewedto determine if VA’s liability has been increased and if a monetary adjustmentis warranted to reduce the claim payment. If the gross claim is in excess ofthe calculated maximum guaranty after adjustments have been made, the claimpayable will remain at maximum guaranty. If the gross claim is less than the calculatedmaximum guaranty after adjustments have been made, the gross claim will bepayable at the reduced amount. VA only penalizes the servicer for the amountthat should not have been included in the claim if they had complied with the regulation. b. Bankruptcy. When a portion of the debt owedon a loan has been legally discharged by a bankruptcy court (cram-down), the amountdischarged by the court shall be treated as a prepayment to principal as of thedate of the discharge. VA will allow and pay the bankruptcy attorney fees andfiling fees only when the servicer reports a Bankruptcy Update Event in VALERIwith Relief of Stay Filed or Stay Lifted information. c. Joint Loans. A loan made between a Veteranand non-Veteran is considered a joint loan. VA will credit the net value to the TEI(only including the Veteran’s share of the eligible liquidation expenses). VA’sliability will be equal to the Veteran’s share of the balance remaining, not toexceed the original maximum amount of guaranty, plus the cost of theliquidation appraisal, Title V septic fees in the State of Massachusetts on VA-acquiredproperties, and any incentive paid for a compromise sale or DIL of foreclosure. d. Open Issues. All open issues must be resolved and adjustments made priorto claimpayment. This includes, but is not limited to, cases with potential fire loss,extenuating property conditions, or where VA requested a postponement offoreclosure.
VA Servicer Handbook M26-4 Chapter 14 — 14.08
14.08 CREDITS TO CLAIM a. Allcredits applicable to the indebtedness are listed separately on the claim toshow the description for each credit. Most credits, such as insurance premiumrefunds, any rents collected by the holder, and any funds the servicer appliedto the account to reduce the indebtedness, must be credited prior to loantermination or the servicer’s submission of the Basis Claim event. b. The following are examples of credits to claim: 1. Escrow Balance - The last positiveescrow balance and/or any funds applied to the tax and insurance account will be credited unless theholder has also claimed advances for the payment of taxes, and/or insurancepremiums. If this is the case, advances will be reduced by applying thebalance in the tax and insurance account to the earliest advances. 2. Origination Buy-down - The amount ofany unspent funds escrowed with a third party for application to the loan, such as fundscontributed by the seller to pay part of the interest due on the loan accordingto a fixed schedule. These funds will be applied as a credit to reduce theindebtedness on the loan. 3. Unapplied Funds - Any payments held insuspense because they are less than the amount of a full-monthly installment will be applied as acredit to reduce the indebtedness on the loan. 4. Insurance Loss Proceeds - Any hazardinsurance proceeds received by the servicer during the life of the loan must be credited to theindebtedness upon receipt, unless the proceeds were used to restore theproperty. If the proceeds are received during the delinquency or aftertermination of the loan, the funds should be listed as loss proceeds credit onthe Basic Claim Event. Proceeds of an insurance loss arising from a total ornear total destruction of the property, should normally be sufficient to coverthe mortgage debt. A terminated loan with a net claim under the guarantyindicates that either the property was not adequately insured or if thecoverage was adequate, that the insured loss was settled for less than theinsurer's full liability. If it is established that any insurable damage tothe security was inadequately insured or that any damage settlement wasinequitable, Regional Loan Centers (RLCs) will submit the claim to VA CentralOffice for review.
VA Servicer Handbook M26-4 Chapter 14 — 14.09
14.09 SERVICER RECEIVES CLAIMPAYMENT a. VA will review and make a determination on a claimpayment. Payment information can be located on the Payment History link on theSWP. For information on how VA calculated the claim payment, including anyinformation on items that were allowed or disallowed, servicers may view theClaim Payment Status Report in VALERI. Servicers may contact the VA-assignedtechnician to research a claim payment if the funds are not received within 14days after the Financial Management System (FMS) issued a payment transactionnumber. b. On initial claims, the servicer has 30 days from theclaim decision or rejection to exercise the option to appeal. For moreinformation on appeals, refer to Chapter 16.
VA Servicer Handbook M26-4 Chapter 14 — 14.10
14.10 SUPPLEMENTAL CLAIMS a. Aservicer may submit a Supplemental Claim event with fully-supporteddocumentation for VA to review any additional credits, advances, or expensesthat were NOT submitted on the original Basic Claim event. All previouslysubmitted claims (original, appeal or supplemental) must be certified beforethe servicer can submit any additional supplemental(s) for consideration. Items not supported with adequate documentation will be denied.
VA Servicer Handbook M26-4 Chapter 14 — 14.11
14.11 CLAIM PROCESS FOR MOBILE HOMES (38 C.F.R.36.4824) a. Servicers must file all claims for manufactured(mobile) homes not affixed to a permanent foundation by submitting required documentationto the St. Paul RLC. Mobile home claims differ from terminated or refund claimsbecause they require manual claim calculation. b. Servicers are required to submit one of the followingforms along with supporting documentation after the sale or other liquidationof the security for the loan: 1. VA Form 26-8629, ManufacturedHome Loan Claim Under Loan Guaranty (ManufacturedHome Unit Only),OR 2. VA Form 26-8630, ManufacturedHome Loan Claim Under Loan Guaranty- (ManufacturedHome Unit and Lot or Lot Only). c. Servicers do not upload any documentation in the SWP. d. The payment information will not be displayed on theClaim Payment Status Report or on the Payment History link in VALERI becausethe mobile home loan does not exist in VALERI. e. Once the claim payment information is properlyentered into FMS, the servicer should receive their claim payment within 14days.
VA Servicer Handbook M26-4 Chapter 14 — 14.12
14.12 FUNDS RECEIVED BY VA AFTER CLAIM PAYMENT a. VA may receive funds from a servicer after receipt ofthe claim payment. If it is determined that these funds are due to VA for thereduction of the Veteran’s debt, funds will be retained. If the credit wouldnot reduce the net claim payable, the funds will be returned to the servicer. The Eligibility Center must be able to identify allsubsequent credits to the loss associated with a Veteran’s use of entitlementin order to issue future Certificates of Eligibility, and the Debt ManagementCenter must also accurately track each credit to a Veteran’s debt, whereappropriate. b. Upon receipt of funds, the RLC should annotateWebLGY’s liquidation screen to account for the credit. In VALERI, the VA-assignedtechnician should document the case notes and create an “issue” to identify andconsider the recovered amounts in any future claim reconsideration request. TheRLC will submit the funds to the Administrative Loan Accounting Center forprocessing. If the loan is outside 365 days, the servicer should reach out tothe office of jurisdiction.
Operationalizing VA Servicer Handbook M26-4 Chapter 14
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