On 12/26/19, the proposed update to the USDA loss claim process released on August 23, 2018 was finalized and published in the Federal Register, and will become effective on 4/24/20. The new process will eliminate the need for REO disposition plans and implements a streamlined approach in processing timely loss claim payments to lenders, and goes into effect for all loans where acquisition or possession is on or after 4/24/20. As described below, per the rule change the loss claim due date will be driven by the acquisition of title and possession. As a result, CRFS recommends that all USDA claims should be referred immediately following the possession of the property. Full details on the rule change follow:
CFR §3555.354 Loss claim procedures
All lenders must use a web-based automated system designated by the Agency to submit all loss claim requests.
(b) REO. If at liquidation, the title to the property is conveyed to the lender, the lender will submit a loss claim package, including a market value appraisal, within 60 days of the foreclosure sale date or the date the lender acquires title. If eviction action is required in order to obtain a market value appraisal, the lender must submit the loss claim package within 60 days of the date the occupants clear the premises. The lender must order a market value appraisal and include the market value appraisal with the loss claim package. The Agency will use the market value appraisal, along with other Agency required documentation, to determine the property value for the basis of the loss claim. The Agency will apply an acquisition and management resale factor to estimate holding and disposition costs, based on the most current VA Management and Acquisition Factor found at https://www.benefits.va.gov/homeloans/servicers_valeri.asp
