The VA Foreclosure process

The VA Foreclosure process is similar to the FHA (Federal Housing Administration) foreclosure process. The Department of Veterans Affairs (VA) guarantees 25-50% of the loan amount up to a limit of $60,000. Unlike the FHA which is on the hook for almost the entire loan amount, the VA is only on the hook for a certain amount. However, like the FHA, it is required to make every effort to find a solution other than foreclosure.

The process is as follows:

1. Once you are 3 months or more behind, the lender has to notify the local VA office.
2. The VA can actually bring this loan current with an advance to you the veteran. It can later go after you for this money.
3. The lender is also required to make every effort to help you avoid foreclosure.
4. If the lender has exhausted every other option, then it can proceed to foreclose on the property.
5. The foreclosure process is the same from this point on, except that if the lender gets the property, it applies for a claim for losses to the VA.
6. If the VA wants, it can take title to the property. Because they are not in the homeownership business they'll also prefer to do a short sale if at all feasible.


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