January 17, 2023 — Letter

In response to the questions posed in the VA’s October 17, 2022 Advance Notice of Proposed
Rulemaking, the National Consumer Law Center (on behalf of its low-income clients) and the
Center for Responsible Lending urge VA to expand the opportunities available to help veteran
borrowers avoid foreclosure. The mortgage relief options available for veteran borrowers should
not be less favorable than the options available to other borrowers and should provide relief in
all market conditions. We appreciate the VA’s engagement with stakeholders and look forward
to working with you to find solutions.

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 loans
significantly reduces the effectiveness of the available loss mitigation options. While VA has
historically fared well in limiting the impact of borrower financial hardship, the current level of
interest rates provides an unprecedented challenge that will require new tools.

Our proposals below include suggestions for addressing the current challenge presented by
elevated interest rates and for shaping loss mitigation in all market conditions.