Refunding and Other VA Loan Mortgage Foreclosure Options

The VA is committed to ensuring that eligible Vets, active and reserve military and their families have a place to call home through home ownership. This commitment extends into the situation  of mortgage delinquency too.
If you have a VA mortgage,  and have fallen behind on your payments the IRRRL – or VA Streamline Refinance – may not be an option for your, but the VA has listed out some options for you. Below is a summary of the options – including refunding – that the VA has laid out.

VA Options to Foreclosure

Catch up your mortgage – Sorry to start with this one, but it is the most preferred. If you have gotten behind on your VA mortgage, or any mortgage for that matter, the best scenario is that you catch up your late payments and fees. One option may be to tap into a Roth IRA (which under certain circumstances you may be able to do so without penalty).

Repayment and Forbearance – Forbearance is the process of adding a portion of what you owe in back mortgage payments to your next few months of mortgage payments until all of the past due money is caught up. You will need to get your mortgage company’s agreement to do this. You cannot just start sending them partial payments to catch up. They may reject all the money until you work something out with them. Make sure if you work something out with them that you get it in writing.

Assistance with your payments – you may be able to get some payment relief or assistance from your state or local government or even a non profit organization. Check with the VA to see who they can recommend – they do make some recommendations. The VA, however, is not in a position to provide payment assistance directly.

Loan modification – you may be able to get your lender to modify your mortgage by lowering your interest rate, or extending your payback period, or even a principal reduction. You can get loan modification help by doing a loan modification by yourself, through some government options, or through a professional loan modification company like an attorney.

Short sale your home – one way to get rid of your foreclosure woes is to sell your home. You can sell your home through a process of a short sale if you owe more on your mortgage than your home is worth. Make sure you contact your lender before you decide to try a short sale – your lender must agree to it.

Sell your home – in the case that you owe less than your home is worth then one great option to foreclosure would be to sell your home. In this case, you won’t necessarily need your lender’s approval unless your back payments and fees plus your principal balance exceed your home’s value and respective sales price. If this turns out to be the case you will need to get approval from your lender.

Deed in lieu of forclosure – this option is simply like giving your keys to your car to the dealer and walking away. Except in this case, you will want to negotiate with your lender to accept your home in exchange for paying off your mortgage and dismissing you from your financial responsibilities.

Refunding – this is a little known solution that you may qualify for when all else fails. This is a situation where the VA would pay your lender and take over your loan from them. This is a last resort, and the VA considers this options on all VA loan foreclosures before the foreclosure process is completed.

The VA will look at several items to help them determine if you are eligible for a refunding including: what happened, what is your current financial situation, who else lives in your home, and how attached to the home you are. In fact, you should be ready to discuss this information with your mortgage lender too when looking for a mortgage foreclosure options.