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Written by Isaac F. Davis
The recession throughout 2008 has affected unemployment. In 2009, families are struggling to make ends meet. Shrinking home values and rising mortgage delinquencies are causing the U.S. housing market to be in crisis — a situation that intensified in late 2007 and climaxed in 2008. A surplus of bank-owned properties only added fuel to the fire in November of 2008. And, in early 2009 even more Americans experienced foreclosure.
When a borrower defaults, or fails to repay a mortgage debt and the lender proceeds to sell the property that served as collateral for the loan. This is known as foreclosure. And, building enough credit to qualify for a mortgage again after foreclosure is a huge undertaking.
It goes without saying that a foreclosure is not pleasant for anyone. The homeowner loses a home and the lender is left with the unpaid debt and a property that may or may not sell. But, foreclosure can be avoided for many VA borrowers through mortgage counseling.
The VA Outreach Program offers mortgage counseling as a resource against foreclosure for VA-eligible borrowers. The Program provides extensive mortgage counseling services as a benefit for those with military affiliation. The Program provides outreach to two different groups of veterans: those with VA home loans and those with other types of loans, in efforts to keep the military affiliated in their homes. Veterans and active-duty personnel can better deal with financial crises by applying the program’s proven methods.
In certain dire situations, VA counselors can intercede with the lender on the veteran’s behalf to pursue mortgage-saving options such as repayment plans, forbearance, and even loan modifications. All of these offer an alternative to foreclosure and allow a homeowner to keep a home.
VA counselors are owed much of the credit for the success of the VA Outreach Program. There are counselors in nine regional loan centers throughout the country. Each counselor is trained to assist people in avoiding foreclosure through advice and special financial arrangements. Counselors are also educated in assisting veterans with other financial problems.
The free VA mortgage counseling has a proven track record for saving loans from foreclosure. Through the outreach program, borrowers learn of improved VA mortgage options which may be particularly beneficial to veterans experiencing financial distress and those who are in loan default.
The newest VA outreach mission is to contact veterans experiencing financial distress due to high monthly mortgage payments and inform them of new and improved options for refinancing at lower rates with VA loans. Since the Veterans’ Benefits Improvement Act of 2008 was signed into law in October of 2008, VA-eligible borrowers have been able to get up to 100% refinancing with VA loans.
A VA mortgage counselor will most likely discuss one hundred percent refinancing with the VA Home Loan Program with qualified veterans whether they have a VA loan or some other type of loan. The best time to take advantage of this option is before default or delinquency occurs. One hundred percent refinancing with VA loans can help relieve financial stress for many veterans, save mortgages from foreclosure and even provide cash out of equity to pay down debts.
Another refinance tool that a VA Outreach counselor might very well discuss is the VA Streamline loan. As the name implies, the qualification process is streamlined. For example, a veteran’s mortgage payment record must be good, but there is no need for an appraisal, income verification or full credit report.
Since 2000, VA counselors have helped 74,000 veterans, active-duty members and survivors keep their homes. The Program has generated a savings of $1.5 billion in saved mortgages due to foreclosure-alternative counseling.
Ultimately, repayment plans, forbearance, loan modifications, 100% refinancing, and VA Streamlines can all be effective in saving a VA loan from foreclosure. And, the VA outreach program continues to work hard to keep veterans in their homes.