VA Servicer Handbook M26-4 Chapter 7
VA Servicer Handbook M26-4 Chapter 7, verbatim from VA KnowVA (article 554400000314376, updated Dec 16, 2025).
Verbatim regulatory text
Verbatim provisions from VA Servicer Handbook M26-4 Chapter 7 — 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 7 — 7.01
7.01 INCENTIVE PAYMENT (38 C.F.R. 36.4319) a. VA administers the incentive payment program toencourage servicers to provide every opportunity for Veterans to retainhomeownership, or avoid foreclosure. Servicers are eligible for an incentivepayment upon the successful completion of a loss mitigation option which meetsVA regulatory requirements. Incentive payment amounts may vary based upon theloss mitigation option, and the servicer’s tier ranking. VA does not charge anyportion of an incentive payment to the borrower, and the payment does notaffect the guaranty of the loan. b. If an incentive payment is denied by VA, servicershave 30 days from the denial date to exercise the option to appeal the decisionin the VA Loan Electronic Reporting Interface (VALERI). For more informationon appeals, refer to Chapter 16 of this handbook.
VA Servicer Handbook M26-4 Chapter 7 — 7.02
7.02 ELIGIBILITY FOR PAYMENT a. If the loss mitigation option meets all VA regulatoryrequirements, VALERI automatically generates a routine incentive payment byopening a Certify Incentive Payment process. If the completed loss mitigationoption does not meet VA regulatory requirements, VALERI will initiate the ReviewNon-Routine Incentive process, which requires technician review, andrecommendation. If the payment is approved, VALERI presents the payment to acertifying designee for certification of the payment. If the recommendation todeny the incentive is approved, the process is then complete.
VA Servicer Handbook M26-4 Chapter 7 — 7.03
7.03 DETERMINATION OF INCENTIVE AMOUNT a. VA determines the incentive payment amount based uponthe: 1. Most recent home retention option, or alternative toforeclosure event submitted on the loan. 2. The servicer’s tier ranking at the time the loan isbrought current through a home retention option, or completed alternative to foreclosure. b. Incentive amounts for each loss mitigation option arereviewed, and published in the Federal Register when a change occurs. The listsof incentive amounts are located in 38 C.F.R. 36.4319.
VA Servicer Handbook M26-4 Chapter 7 — 7.04
7.04 PAYMENT TIMING, AND FREQUENCY a. The incentive is presented for payment on homeretention options after VALERI processes a Default Cured Loan Reinstated (DCLR)event, or at time of claim for alternatives to foreclosure. Servicers areeligible for one incentive payment per reportable default when a successfulloss mitigation option is completed. For home retention options, VA can pay anincetive payment at any time, prior to loantermination, or paid in full. b. Repayment Plan. VALERI automatically generatesa repayment plan incentive payment for certification when all of the followingcriteria are met: 1. The loan was at least 61days delinquent during the default period. 2. The servicer reported the Repayment Plan Approvedevent. 3. VALERI processes a DCLR event. 4. The repayment plan reported by the servicer wasfor at least 3 months in duration. (The servicer is entitled to an incentiveif the borrower reinstates prior to the estimated cure date as long as the planwas established for at least 3 months). 5. VA did not prevent any incentives to theservicer. 6. There are no business rule failures that wouldrequire further review. c. Special Forbearance. VALERIautomatically generates a special forbearance incentive payment forcertification when all of the following criteria are met: 1. The loan was at least 61 days delinquent duringthe default period. 2. The servicer reported the special forbearance approvedevent. 3. VALERI processes a DCLR event. 4. The special forbearance event indicated atleast 1 month in duration, and the servicer provided an estimated cure date. 5. VA did not prevent any incentive to theservicer. 6. There are no business rule failures that wouldrequire further review. d. Loan Modification. VALERIautomatically generates a loan modification incentive payment for certificationwhen all of the following criteria are met: 1. The loan was at least 61 days delinquent duringthe default period. 2. The servicer reported the Loan ModificationApproved event. 3. The servicer reported the Loan ModificationComplete event. 4. VALERI processes a DCLR event. 5. There are no business rule failures that wouldrequire further review. e. Compromise Sale. VALERIautomatically generates a compromise sale incentive payment for certificationwhen all of the following criteria are met: 1. The loan was at least 61 days delinquent during thedefault. 2. The servicer reported the compromise sale completeevent. 3. VA did not prevent the incentive to the servicer. 4. The servicer has submitted the claim event, and theevent has successfully processed in VALERI. 5. There are no business rule failures that wouldrequire further review. f. Deed-in-Lieu (DIL) ofForeclosure. VALERI automatically generates a DIL of foreclosure incentivepayment for certification when all of the following criteria are met: 1. The loan was at least 61 days delinquent during thedefault. 2. The servicer reported the DIL Complete event. 3. VA did not prevent the incentive to the servicer. 4. The servicer has submitted the claim event, and the event has successfullyprocessed in VALERI. 5. There are no business rule failures that would require further review.
Operationalizing VA Servicer Handbook M26-4 Chapter 7
This is verbatim, source-snapshotted regulator text from the Claude for Compliance open corpus. To turn a rule like this into compliance work product: gap-analyze your policies and procedures (P&Ps) against these requirements to surface stale, conflicting, or missing provisions; operationalize any change with a ready-to-run update kit; and produce audit-ready evidence — every step grounded only in the regulator’s own words, never invented.
To work from the whole rulebook rather than this one page: download the corpus — every register on this site, verbatim, each with its source snapshot and effective date — then follow the methodology. It asks your assistant to answer only from the downloaded text, cite the register id and effective date it used, and tell you when the corpus does not cover something instead of filling the gap from memory. Running it locally also means no one sees which regulations you are looking at.
Source of record: https://claudeforcompliance.com/regs/va-m26-4-ch07/
· register va-m26-4-ch07 · Claude for Compliance. Free to read and download;
see regulatory updates and methodology.