Veterans Get Help with VA Home Loan and Foreclosures

Are you currently struggling or behind on your monthly house payments? Are you looking at a possible foreclosure? This article might show you some possible solutions to avoid foreclosure. The most important thing is to know what are ALL your options and how can the VA help you save your home.
When your VA home loan goes into default the financial institution that services your account must contact you to find out exactly why you are behind to try to put you on a plan to bring the account current. Once you are three payments behind then the bank has to let the VA know that your loan is now in default. Once the VA is notified they will contact you to talk about your loan and discuss a possible solution and what you should do next. At that time be prepared to discuss:

• Why you have fallen behind?
• Employment status/Financial status?
• Are you living in the house currently?
• Do you wish to keep the house?

Obviously a VA home loan in foreclosure is a lose-lose for all parties. It is a fact that a lot foreclosures can be stopped and a solution reached that is agreeable to everyone if everyone works together.
Some possible solutions to avoid losing your home include:

• Pay the Delinquency
• Forbearance and Repayment
• Payment Assistance
• Reamortization
• Selling the Property
• Deed in Lieu of Foreclosure
• Refunding

Pay the VA home loan Delinquency

With some exceptions, banks have to accept your payment to bring the account current and reinstate the loan. Of course if you are already in foreclosure there could be additional legal fees and the bank most likely will only accept certified funds as payment.

Forbearance and Repayment of VA home loan

Many veterans are able to get on a plan that allows repayment of the past due amount each month as well as the monthly payment. Also, there is something called “forbearance.” This is for people who have a temporary or short term situation where they cannot make payments now but in the future they will with no trouble. The bank can agree to a specific amount of time until you have the ability to start making payments each month again. It should be noted that the VA by law cannot force the bank to offer a forbearance or to any repayment program. However, banks typically want to do this if they are convinced you can begin making normal installments for your VA home loan in a reasonable amount of time.

Payment Assistance

There are private charitable organizations that offer programs that cover a portion or in some cases all of your payment for a specific amount of time.  The VA can provide information on these programs. Some state and local governments also have programs available to assist with monthly payments.

Reamortization

What happens essentially with a loan reamortization is the lender brings the account current and then they wrap the delinquent amount to the back end of the balance. This does bring your account up to date which is a good thing but you must be aware that the balance of the VA home loan will increase which means slightly more interest paid and slightly higher monthly payments. The amount of increase will not be as much if the term of your VA home loan is extended also. The bank can reamortize as per VA regulations but the VA cannot require it.

Selling the Property

Once you reach a point where you know that you cannot do anything to bring your account current or begin any type of payment program to get you out of default then you might consider selling the home. In today’s economy it could be a challenge to sell the home depending on your area but if you have some equity then you might be able to at the very least pay off the loan and be released from the obligation. Typically you sell your home for more than the loan amount. It is possible that you find a buyer that either pays cash or provides their own financing which pays off your note. Another solutions is to have the buyer assume the loan.
Then they begin to make the payments and you are released from paying the monthly payments. In order for you to be 100% free of this debt you must get a release of liability certificate from the VA before closing. In a case where the property sells for less than the amount owed to the bank and you have a deficiency balance the VA has the ability to pay what is called a compromise claim on your behalf. This is in order to complete the sale. If this is your situation then it is up to you to get in touch with the VA to obtain approval for the sale to be closed with a compromise claim.

Deed in Lieu of Foreclosure

Another option is deed in lieu of foreclosure. This could happen when the veteran is not able to bring the account current and when they are not able to sell the property or have someone assume the loan. When this happens the VA can accept a deed in lieu of foreclosure. If the property has no liens on it and the VA accepts the deed then you sign it over to them and the VA actually becomes the owner of that property.
In most cases the VA will have to pay the bank the difference between the value of the property and what is owed to the bank. Once the VA accepts the deed then you are released from all further obligation. You may be asked to repay part or all of the claim the VA paid. Contact the VA for all details concerning VA home loan deed in lieu of foreclosure.

Refunding

At the VA’s discretion, they can and do buy the loan from the bank and then you make your payments directly to the VA moving forward. A solution known as“refunding”. This is a consideration for each and every loan prior to a foreclosure. If you have the ability to make monthly installments or you can in the near future this might be a solution for you. This is especially helpful when your bank has made a decision that they will not grant a forbearance of any kind or make special payment arrangements. The VA will contact you regarding your VA home loan if refunding is the answer to your problem.
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