VA Foreclosures
This information has been presented for educational and informational purposes only. The writer is not an attorney or accountant or Realtor–nor has he ever belonged to any branch of the military. For legal advice please speak to your attorney. For tax advice please speak to your tax professional. For advice about the VA please contact the Department of Veterans Affairs. There are six VA foreclosure loan workout programs currently available to stop foreclosure. Here are the six programs the VA offers: * Forbearance Agreement A forbearance agreement is essentially a repayment plan, in which typically, you will be asked to pay 1/2 of what you owe at the time of your agreement–and the other 1/2 over a 12-18 month period–added to your regular monthly payment. Therefore, your monthly payment during that time period will be 25% to 50% higher than your regular payment. A VA refunding agreement is when the VA buys your loan from your lender and you start paying VA’s Servicer your mortgage payment. If you qualify for a forbearance agreement you do not qualify for VA refunding; although it is easier to qualify for VA refunding if you first are disqualified for a forbearance agreement. The VA Vendee loan is a loan program. It is purchase money financing provided by the Department of Veteran Affairs to the purchaser of a VA property–taken back in foreclosure. In others words, you buy a VA REO. There are many benefits to such a loan. However, for the purposes of this discussion, if you own a home with a VA Vendee loan and that loan becomes delinquent–the basic workout program is a forbearance agreement. The Servicemembers Civil Relief Act (SCRA) OF 2003 is a federal statute signed into law that gives ALL military members–as they enter active duty–the right to suspend or postpone some civil obligations so that they can devote their full attention to military duty. To receive protection under some part of SCRA, the member must be able to show that ‘military service’ had a ‘material effect’ on their hardship ( explained below). In a VA Compromised Sale, you sale your home–usually, for less than what you owe–prior to a foreclosure sale. This pre-foreclosure sale is usually called a short-sale. Although you do have to move–this is better than a foreclosure because usually you are released from the mortgage obligation and therefore you do not have to worry about a deficiency judgment being filed–if the house were to sell for less than your mortgage amount. In a VA deed-in-Lieu of foreclosure, you voluntarily transfer ownership of your property to the mortgage lender or directly to VA. The benefit to the transfer is that you are usually released from the mortgage obligation and therefore you do not have to worry about a deficiency judgment. If you have a second mortgage on your property, VA will not accept a Deed-in-Lieu. Although each situation is unique, here are SOME important considerations that qualify you for the different programs: * The type of HARDSHIP condition that triggered the foreclosure. Hardship conditions are circumstances that caused you to get behind on your payments. Examples are job loss, divorce, loss of income, military service and property problems–to name only a few. In summary, there are six VA foreclosure workout programs available to help you stop foreclosure. Which one you use depends on your VA loan type, income and hardship. |
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