VA Servicer Handbook M26-4 Chapter 17
VA Servicer Handbook M26-4 Chapter 17, verbatim from VA KnowVA (article 554400000314386, updated Dec 16, 2025).
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Verbatim regulatory text
Verbatim provisions from VA Servicer Handbook M26-4 Chapter 17 — 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 17 — 17.01
17.01 BILL OF COLLECTION A bill of collection (BOC) is issued any time VAdetermines that a servicer should not have received all or part of a paymentfrom VA. BOCs can be generated automatically by the VA Loan Electronic ReportingInterface (VALERI) or by VA. Once the BOC is certified, the servicer has 45days to satisfy the debt. If the debt has not been satisfied timely, VA willoffset future payments to the servicer until the amount of the BOC isrecovered. Servicers can view the Bill of Collection Status and Offsets reportfor a detailed description of each debt established.
VA Servicer Handbook M26-4 Chapter 17 — 17.02
17.02 BILL OF COLLECTION TYPES a. The following is a list of potential BOCs that may beissued on a loan: 1. Cancelled Guaranty. VA only makes payments on guaranteed loans. VALERI automatically opens a BOCprocess for review if a payment was made on a loan and the Web Enabled LoanGuaranty System (WebLGY) later notifies VALERI that the loan was not eligiblefor guaranty. This can happen as a result of an Inspector General review or adetermination that either the Veteran or the property was ineligible forguaranty. The BOC is issued for the amount of any payments previously paid tothe servicer on the loan. 2. Incentives. A BOC for an incentive paymentmay be issued if VA erroneously made a duplicate incentive payment for the samedefault or the Default Cured Loan Reinstate (DCLR) event is reported by theservicer in error. 3. Property Acquisition Overpayment. VALERIgenerates a BOC for a negative claim when the credit to indebtedness (proceedsof sale/acquisition payment) exceeds the total eligible indebtedness calculatedby VALERI and the property is conveyed to VA. 4. Invalid Sale Identified after VA paid anAcquisition and/or Claim Payment. When an Invalid Sale event is reportedby the servicer, a BOC will be generated to collect the acquisition amount,plus the property management assignment fee. The servicer may receive anadditional BOC from VA’s Contract Assurance – Property Management (CA-PM) unitfor any additional management expenses incurred while the property was in VA’scustody. All BOCs must be satisfied before VA will accept any future transferof custody (TOC) on the loan. If VA previously paid a claim to the servicer,VALERI will issue a separate BOC for any claim payments. 5. Improper TOC Identified after VA Paid anAcquisition and/or Claim Payment. When an Improper TOC event is reportedby the servicer or VA, VALERI calculates the BOC to include the acquisitionamount, plus the property management assignment fee. The servicer may receivean additional BOC from VA’s CA-PM unit for additional management expensesincurred while the property was in VA’s custody. Although custody was returnedto the servicer, the servicer may still be entitled to a claim payment. If thebid was a total debt bid, VA will issue a BOC to recover both the acquisitionamount and all claim payments. If the bid was a net value bid and VA paid aclaim, VALERI may include a separate BOC for any amount no longer payable tothe servicer. In some instances, the BOC may not be necessary on maximumguaranty claim payments. 6. Post Audit. A BOC may be issued on a post-auditreview for the following reasons: (a) Failure to substantiate claimed items with the exceptionof the VA appraisal. (b) Failure to support home retention options withincentives paid. (c) Credits not previously reported on the claim, butsubstantiated by the ledger. (d) If VA’s liability was increased at time of claim dueto an egregious loan modification identified by an early payment default review. (e) Regulatory infraction identified. 7. The servicer may appeal a BOC within 30 days of VAcertifying the post-audit review. For more information on appeals, refer toChapter 16 of this handbook.
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