San Diego, CA January 26, 2012
VA Home Loan Centers announces new updates to the loan mod regulations may be too restrictive to provide adequate assistance for those seeking assistance with their VA loans.
The Department of Veterans Affairs has enacted temporary changes to the administrative law governing federal VA home loan modification.
VA Home Loan Centers comprehends that the intention of the short-term regulation reform was to allow loan servicers direct authority to modify VA loans in their portfolios. This adjustment would seemingly provide mortgage relief to veteran and active-duty homeowners who are in default on VA home loans.
Although the program was designed to streamline the modification process, the United States Department of Veterans Affairs has stated that an unintended consequence of the new law has been the emergence of additional obstacles for the borrowers and loan services.
The good news according to VA Home Loan Centers is that the program creates certain protections for military homeowners in trouble. The temporary law makes it faster to get assistance while limiting the costs lenders can charge for the loan modification. Late fees cannot be added to the new home loan balance, but unpaid taxes, homeowners association dues and insurance can be rolled into the mortgage.
The new rules allow VA loans older than one year to be repaid in a new 10- or 30-year repayment plan. If the borrower has a need, they may apply for another modification after three years. The new modified VA loan must provide a fixed interest rate, but this new rate can be higher than the rate of the prior VA loan.
VA Home Loan Centers interprets the law to reflect that while the good intentions are evident, an ironic result of the new regulation is that borrowers who need help the most may not be able to receive the benefits of the program.
The regulations state that as a condition of eligibility for loan modification, the borrower must have acceptable income, expenses, assets and credit history. The problem is that homeowners who are in default usually do not have what lenders would consider an acceptable credit or income history.
VA Home Loan Centers recognizes that this clause is too restrictive and may allow service providers the ability to deny many modification applicants. Once a borrower has been denied, the remaining options are usually bankruptcy, foreclosure or a short sale of the home.
VA Home Loan Centers acknowledges that while the new rules to the loan mod program are intended to give a second chance, many borrowers will not be able to get relief. The result is likely to keep the program from completing its objective.
While veteran borrowers are not guaranteed a loan modification, they can apply for one if they meet very restrictive criteria,” said Philip Georgiades, chief loan steward for VA Home Loan Centers. “Although some veterans can benefit from the loan mod program, many will not. The new update to the law was supposed to make it easier for veterans to obtain a loan modification. The adjustment to the law is an insufficient way to protect those who protect us.”
About VA Home Loan Centers
VA Home Loan Centers is a qualified lender of mortgage loans to United States veterans. The VA loan program helps veterans, active and former duty military, and certain spouses of U.S. service personnel to achieve home ownership. Services provided by VA Home Loan Centers include real estate representation, such as VA loan short sale processing, purchase assistance and VA loans application administration. VA Home Loan Centers offers no cost / low cost beneficial loans and services to all eligible veterans and their families.
A loan through VA Home Loan Centers is easier to qualify for than other loan programs by offering relaxed credit guidelines as well as the no-down-payment, no-closing-costs option (VA no/no). Other benefits include the ability to finance the funding fee, no mortgage insurance premiums, no prepayment penalties, low interest rates and monthly costs. VA loans available include 15-year and 30-year fixed-rate mortgages. Borrowers who apply directly through VA Home Loan Centers may also be eligible for a rebate of up to 1.5 percent of the total loan amount.
Borrowers with a Veterans Administration mortgage who would like to apply for a VA home loan modification, are advised to contact the company (mortgage servicer, lender, or bank) where they remit their payment.
Borrowers with a VA loan who have been denied a home loan modification, are advised to contact VA Home Loan Centers to apply for a VA Loan short sale. Free short sale VA loan assistance and grants are available to all borrowers who qualify.
To learn more or to apply for a VA loan, call 888-573-4496.