VA Loan Articles
Why VA Borrowers Should Avoid Foreclosure ProceedingsNo veteran applies for a VA home loan thinking about default or foreclosure as a likely outcome of the loan application. But circumstances can and do change; spouses lose jobs, military people get hit by reduction-in-force cuts, rising cost of living expenses make it difficult to pay the bills.
It's important to know the implications of a foreclosure; some mistakenly believe that foreclosure equals loss of the property and money already invested and nothing more, that notion leads some desperate home owners to simply walk away from the home completely.
But foreclosure is much more than the bank taking the home after a borrower quits making VA mortgage loan payments. Legal fees are one of the first things a borrower is liable for, whether the loan is a VA insured mortgage, conventional loan or a sub-prime mortgage.
Any fees the bank pays to initiate foreclosure proceedings could be passed on part or in whole to the borrower. Some borrowers who try to save the home with refinancing or loan modification discover they're responsible for legal fees in addition to the delinquent loan amount in some circumstances.
But that is not the only reason why borrowers should avoid foreclosure proceedings if at all possible. A lender may not foreclose and/or repossess the property right away--foreclosure can drag on from the end of one year to the beginning of another or even longer in some cases
When this happens, the borrower is liable for any property taxes incurred as long as they have legal possession of the home.
From the time foreclosure proceedings are certain to the time they are carried out, the home owner may be responsible for two years (or more?) of property taxes they can't afford to pay on top of their other debt.
If you have a VA loan and feel you are at risk for default on a VA loan or are afraid of foreclosure, don't delay--contact the VA immediately to make arrangements for VA loan or credit counseling, plus intervention between the VA and your lender where appropriate.