Regional Loan Center - Loan Administration

If you anticipate getting behind on your mortgage payments, or are behind, the Department of Veterans Affairs (VA) may be able to help. The information below addresses options you may have to bring your loan current and save your home from foreclosure.

When you fall behind with your payments, your mortgage company is responsible for contacting you, the mortgagor, to determine the reason for the delinquency and attempt to make arrangements to cure the delinquency. The mortgage company is required to notify VA that your loan is in default. After the notification is received, VA will attempt to contact you to discuss your current situation and help you determine the best course of action. We can also help you communicate with your mortgage company. To contact our Loan Administration Customer Service, please click here Customer Service.

Most foreclosures result in losses to everyone involved, the veteran, the mortgage company, and VA. Many foreclosures can be avoided, particularly when all parties work together.

The following are methods of avoiding foreclosure:

Pay the Delinquency
Forbearance and Repayment
Payment Assistance
Reamortization
Private Sale
Deed in Lieu of Foreclosure
Refunding

Pay the Delinquency

Under most circumstances, lenders are required to accept payment of the full delinquency and reinstate the loan. The delinquency may include certain legal costs if you are already in foreclosure. Many lenders require certified funds for reinstatement.

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Forbearance and Repayment

The most common way of resolving a loan default is to work out a plan which will let you repay part of the delinquency each month, along with your regular monthly installment. If you are temporarily unable to meet your monthly mortgage obligation, your holder may extend forbearance by agreeing to suspend payments for a limited period of time until you will be able to begin a repayment schedule. VA cannot require the holder to extend forbearance or to agree to a specific repayment schedule; however, holders will usually cooperate so long as you can show that you will be able to resume payments on a specific date in the near future. For additional assistance or information, please visit Help for Homeowners in a Changing Economy or Consumer Credit Counseling Service.

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Disclaimer

Payment Assistance

Many state and local governments, as well as private charitable organizations have programs which will pay all or part of your mortgage obligation for a fixed period of time. VA can provide information on these programs; we do not, however, have a program which would enable VA to give you direct payment assistance.

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Reamortization

If your loan is reamortized, the delinquency is added to the loan balance in order to bring your payments up to date. This increases your loan amount and will also increase your monthly payments. The amount of the payment increase will not be as great if the life of your loan is extended at the same time. Your loan holder is allowed to extend and/or reamortize your loan by VA regulations; however, we cannot require the holder to do so.

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Private Sale

If you do not believe you will be able to reinstate your loan and cure the default, a private sale of the property will enable you to meet your obligations and receive any equity in the property. Most private sales are for more than the amount owed on the loan. You may sell the property to a buyer who gets his or her own financing and pays off your GI loan or to a buyer who will assume your responsibility for the loan. If the buyer is assuming your loan, you should contact VA and obtain a release of liability before the sale is closed. If your property cannot be sold for an amount which is greater than or equal to what you owe on the loan, VA may pay a “compromise claim” for the difference in order to help you go through with the sale. You must contact VA to discuss the situation and get prior approval for a sale with a compromise claim payment.

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Deed in Lieu of Foreclosure

If you will be unable to cure the default, and a private sale does not appear realistic, VA will consider accepting a deed in lieu of foreclosure. If there are no liens on the property, and VA agrees to accept a deed, you will have to sign legal papers making VA the owner of the property. Normally, VA will have to pay your loan holder a claim for the difference between the value of the property and the amount you owe on the loan. If a deed is accepted, you may be released from all further liability, or you may be asked to agree to repay the Government for all or part of the claim we paid. VA representatives can discuss this with you in detail.

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Refunding

VA has the discretionary authority to buy a loan from the holder and take over the service. This is called “refunding”. We consider this alternative for every loan before foreclosure is completed. If you have the ability to make mortgage payments, or will have the ability to in the future, but your loan holder has decided it cannot extend further forbearance or a repayment plan, you may qualify for refunding.

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