VA Announces Withdrawal of Proposed Rule on Loss Mitigation Options
By Jordan D. Beumer, Esq.
Scott & Corley, P.A *
USFN Member (SC)
The Veterans Affairs (“VA”) published advance notice of proposed rulemaking (“ANPRM”) at 87 FR 62752 for “Loan Guaranty: Loss Mitigation Options for Guaranteed Loans” in October 2022. This proposed rule was published in the Federal Register.
The purpose of ANPRM is to gather important input from the public, stakeholders, and interested industry parties regarding proposed regulatory changes. This formal process allows agencies to consider various perspectives, insight, and data before finalizing upcoming rules. The feedback provided through ANPRM can influence the development of proposed regulations and rules, ensuring they are well-informed and achieve the intended outcome.
This rule was an effort by the VA to explore the possibility of changes to their incentivized loss mitigation options to further assist veterans, who have VA-backed loans, to retain their homes. The VA had anticipated incorporating responses from the ANPRM into the proposed rule, thereby amending the VA's loss-mitigation regulations to include some of the feedback received.
The proposed rule had received numerous public comments, some noting concerns regarding the efficacy of the proposed rule. One such public comment stated, “The average interest rate for VA-guaranteed loans originated after 2019 is 3%, which is less than half the current market rate. Because VA ties its foreclosure relief options to the market interest rate, the dramatic difference between the market rate and the note on existing loanssignificantly reduces the effectiveness of the available loss mitigation options.”
On January 21, 2026, the VA announced the withdrawal of the above cited proposed rule on loss mitigation options for guaranteed loans. The VA stated this decision was made due to ongoing assessments of agency “needs, priorities, and objectives.” The VA went on to state that it “appreciates the public comments submitted and continues to consider the best means of addressing some or all of the issues covered in the ANPRM. If, in the future, [the] VA decides it is appropriate to issue regulations on this topic, [the] VA will do so through a new notice of proposed rulemaking, subject to the requirements of the Administrative Procedure Act, 5 U.S.C. 551, et seq.”
Additionally, and as a reminder, on July 30, 2025, President Trump signed the VA Home Loan Program Reform Act. This Act established a partial claim program that, by design, provided federal assistance to veterans struggling to make their mortgage payments. This program replaced the Veterans Affairs Servicing Program (“VASP”) as a “last-resort option” for qualifying borrowers. It was specifically designed to aid delinquent borrowers in avoiding foreclosure by lowering their mortgage rate and thereby making their monthly payments more affordable.
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[1] See FEDERAL REGISTER, available at https://www.federalregister.gov/citation/87-FR-62752 (last visited February 4, 2026).
[2] See Comment on AR78-Advance Notice of Proposed Rulemaking-Loan Guaranty, NATIONAL CONSUMER LAW CENTER, available at https://www.regulations.gov/comment/VA-2022-VBA-0023-0007 (last visited February 4, 2026).
[3] See FEDERAL REGISTER, available at https://www.federalregister.gov/citation/87-FR-62752 (last visited February 4, 2026).
[4] See Title 5- Government Organization and Employees, AUTHENTICATED U.S GOVERNMENT INFORMATION, available at https://www.govinfo.gov/content/pkg/USCODE-2024-title5/pdf/USCODE-2024-title5-partI-chap5-subchapII-sec551.pdf (last visited February 4, 2026).
[5] See H.R.1815 - VA Home Loan Program Reform Act, available at https://www.congress.gov/bill/119th-congress/house-bill/1815 (last visited February 4, 2026).
[6] See How to Avoid Foreclosure with a VA Mortgage, DAV, available at https://www.dav.org/learn-more/news/2025/new-law-offers-foreclosure-help-to-veterans/ (last visited February 4, 2026).