Posts (RSS)Veterans Prevent Their Homes from Becoming Foreclosure VA
Veterans who have taken out conventional loans, subprime loans, adjustable rate mortgage loans and hybrid ARM loans have until September 30, 2012 to refinance to loans guaranteed by the Department of Veterans Affairs.
Meanwhile, veterans whose homes are in danger of becoming foreclosure auction VA homes should contact immediately VA counselors in their areas. The counselors will help them examine foreclosure prevention options available to veterans.
As a policy, VA do not guarantee subprime loans and other risky home loans, but because of concerns about the rising number of veterans losing their homes to foreclosure, the Veterans’ Benefits Improvement Act was signed into law in October last year to enable veterans to convert their home loans into more affordable and safer loans guaranteed by the VA.
Veterans can now refinance for 100 percent of the value of their homes, an improvement from the previous loan limit of 90 percent of home value. In addition, loan amount limits for VA refinancing have increased. Previously, VA loan refinancings were limited to $144,000. Now, loan refinancings can reach $729,750, depending on the location of the property being refinanced. High-cost areas have higher refinancing limits.
According to VA officials, the increased loan-value ratio and the increased loan limits will help veterans reduce their monthly loan payments, avoid the readjustment of their original loans to higher rates and avoid foreclosure.
Unlike non-VA ARM loans, VA controls interest rate increases over the entire life of the VA home loans.
Since 1944, the year VA started guaranteeing home loans after the enactment of the original GI Bill, the VA department has guaranteed over 18 million veterans’ mortgage loans worth $911 billion. In 2007, approximately 135,000 veterans, service members and survivors obtained home loans worth almost $24 billion. Over 90 percent of VA-guaranteed loans were provided without requiring down payments from veterans.
For veterans facing foreclosure, there are options available to them that are not available to homeowners with non-VA loans.
For instance, they can avail of the Servicemembers Civil Relief Act if they qualify for protections under the Act. SCRA provides a low interest rate for one year or a forbearance option.
VA also helps delinquent veterans with a supplemental assistance to restore the home loan to current status. VA runs eight Regional Loan Centers including 2 special servicing centers across the country to help veterans in default. VA Loan technicians will help veterans negotiate affordable loan repayment with their lenders to prevent foreclosure.