The Department of Veterans Affairs (VA) is helping soldiers forced to leave their homes following a short sale or a deed-in-lieu (DIL) of foreclosure when the home in question was purchased with a VA back home loan. The VA is mandating that their mortgage servicers give borrowers $1,500 to relocate, which the VA will then reimburse. This $1,500, however, is not counted toward the money being borrowed.
The amount of money the VA will reimburse is limited. The VA will not reimburse past their maximum guaranty placed on the loan in addition to either the cost of a short sale or reselling it as a government owned property (REO). Further, any money on the loan above and beyond the VA’s guaranty claim is the servicer’s responsibility and whichever is larger between the proceeds from the short sale and the home’s net value.
For the last 15 years the VA has been giving servicers financial incentives as motivation to adjust mortgages for those facing foreclosure. The tactics they are using now with their servicers are along the same lines, albeit somewhat more geared toward creating the safest loans possible. The VA is also recommending their servicers stick to the Treasury Department’s HAFA guidelines if they plan on loaning to a borrower for a short sale. They also insist their servicers use written agreements with borrowers.
Servicers usually prefer DIL and/or short sales to foreclosures because the property is generally kept in better shape. No matter what happens, the soldier has to vacate his house, and the VA has stepped in to give what help they can.
If you are a disabled veteran who has been denied disability compensation or have not yet applied for benefits from the VA, contact LaVan & Neidenberg. You may be entitled to certain programs and benefits so contact our veterans disability rights firm today.