VA Foreclosures

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.

18 thoughts on “VA Foreclosures”

  1. our mortage is with wells fargo is it true about the class action lawasuit against wells fargo could mean a full lein release ?

    1. Richard, I haven’t been able to find any updated information on this lawsuit (the newest I found was late 2010) and what I could find gave no information on what the specifics of the outcome is or might be. I’ll keep my eyes open but at them moment, there isn’t a publicly published result.

  2. I don’t know if anyone can provide any information, though I just recently went through a foreclosure myself on my VA loan. My loan was with Wells Fargo and I listed the house for sale and attempted a short sale. I had an offer on the house since December and struggled to get the Bank to consider the short sale. I had a second mortage also with Wells Fargo. I would have loved nothing more than to stay in my house however, I lost my job and was going through a divorce. I regained employment but could not find anything local so I had to relocate which disqualified me from President Obama’s programs. I have had a viable offer since December and the purchaser has hung in there and the bank sent it to Sherrifs sale anyway and sold it to bank of america for less than what the short sale offer was. It doesn’t make sense to me and I am confused. I don’t know what is going to happen nor do I understand why the bank would not entertain the short sale that was truly a viable offer and the purchaser was approved. The only thing we needed was approval from the Lender (Wells Fargo). I now live in another state in an appartment and I have no idea what to do or what is going to happen now. I am also concerned that Wells Fargo did not manage this in good faith.

    Do you have any thoughts or guidance? Thank you in advance.

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