In May, foreclosures fell about 3 percent, according to RealtyTrac, an aggregator of foreclosed property listings. It’s not a big decrease, but it is at least a drop. Given the economic climate of the last few years and deteriorating housing market, foreclosures are commonplace.
But May 2010 saw the fewest default notices since November 2008. Nevada, Arizona, Florida and California led the country in foreclosures during the month, with the latter state accountable for more than 22 percent of all May foreclosures.
Despite the sheer abundance of foreclosures and defaults, one loan program gives its borrowers a great chance of avoiding foreclosure: the VA loan program. Through the mortgage crisis/subprime fiasco, VA loan borrowers seldom foreclosed. For the last quarter of 2009, the Mortgage Bankers Association broke down foreclosure rates:
-Subprime loans: 15.58%
-FHA loans: 3.57%
-Prime loans: 3.31%
-VA loans: 2.46%
The reason VA loans boast such a low foreclosure rate is due to the program’s safeguards. Whenever a borrower is on the verge of default or foreclosure, the VA strongly recommends that the borrower contact his or her lender. Also the VA features several options, such as repayment plans and short sales, to help borrowers avoid foreclosure.
There’s even a chance that lenders will give borrowers more time to cover missed payments or let them sell the property to pay for the loan. The VA adheres to an underwriting process that is strict yet pragmatic. During the underwriting, the borrower’s financial health is the No. 1 priority.
The Servicemembers Civil Relief Act (SCRA) allows qualified veterans to land a lower interest rate for a year. Newly discharged military personnel can use SCRA to stave off evictions or foreclosures for up to nine months.
One more resource is a non-profit group called the HOPE NOW Alliance, recommended by the VA. Operating nationally, the Alliance counsels homeowners dealing with defaults, evictions and foreclosures.
Photo thanks to AndrewBain under creative common license on Flickr.