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What is VA Loan Reamortization?

There are many ways homeowners can find help with foreclosure avoidance. Borrowers who get into financial trouble should know there more options than simply allowing the home to go into foreclosure; a little bit of information is sometimes all the difference between saving and losing a home if the borrower acts in time.

The VA urges borrowers to call the VA Home Loan Center (800-827-l000) at the first sign of trouble with a VA loan due to financial difficulty. There are more possibilities for homeowners in the right circumstances.

Some borrowers are eligible to use reamortization to avoid foreclosure on a VA home loan. This is where the amount of your delinquent payments is totaled and added back to your loan balance, which brings you up to date. This is not forgiveness of the delinquent loan amount–your loan increases by the amount you were delinquent and you may experience an increase in your monthly VA home loan payments.

According to the Department of Veterans Affairs, “The amount of the payment increase will not be as great if the life of your loan is extended at the same time. Your loan holder is allowed to extend and/or amortize your loan by VA regulations; however, we cannot require the holder to do so.”

Another option is to initiate a private sale of the home to avoid foreclosure. The VA allows homeowners to sell the property to either a private buyer who gets their own home loan to purchase the property or to a buyer willing to assume the VA home loan.

You may be required to get VA approval for the loan assumption depending on when you closed the deal on your home–contact the Department of Veterans Affairs for more information.