VA Loan Foreclosure

VA Loan Foreclosure Information For Buyers
Can I use a VA loan to purchase a foreclosure property?
Can I get a VA loan after foreclosure?
Can I get another VA loan if I foreclosed on my last VA loan?
How can I get a list of homes foreclosed by the VA?
Loan Foreclosure Information For Sellers
How can I avoid foreclosure on my VA loan?
Can I sell my home to avoid foreclosure?
What is the difference between a foreclosure and a short sale?
How will a foreclosure affect my credit?
How will a foreclosure affect my security clearance?


va home foreclosureThoughts of foreclosure bring many thoughts swirling about the minds of homeowner and potential homebuyers. At almost opposite ends of the spectrum, these ideas may conjure up dread or possibilities of a new future. Either way, the foreclosure process can be overwhelming for both parties. There is certain hope to be found, regardless of which side of the foreclosure side an individual may find themselves. In addition, there may be alternatives for homeowners who may be facing foreclosure. One suitable option in many cases is to short sale the property instead of succumbing to a bank ordered foreclosure. 

VA Loan Foreclosure Information For Buyers

In a volatile housing market, many potential buyers are able to take advantage of the low home prices. This means that they can purchase more home for the same or even less money than just a few years ago. There are many ways to make the most of a down housing market, such as purchasing short-sale or bank foreclosed homes. Foreclosures can be sold at an auction, on the open market or offered as a pre-foreclosure sale. VA loan foreclosures can offer a unique opportunity for potential buyers.

There are some advantages to the buyer of purchasing a foreclosed home.  The obvious advantage is that distressed properties are often available at a discount from the standard market value because the sellers are highly motivated. When a property is being sold by the lender, they are often only concerned with receiving a sale price high enough to cover the outstanding mortgage balance. However, this may be a fleeting benefit. Because of the massively increasing number of foreclosed properties, mortgage companies are beginning to offer bank owned homes at a less competitive market price. Selling for an additional profit enables banks to offset the losses on homes that are severely dilapidated or simply not selling. If the property is still considered to be real estate owned lender (REO), the buyer will not assume any liens or past due taxes associated with the deed. If the property is being sold by the homeowner because of missed payments and is in a pre-foreclosure state, the buyer can often negotiate many terms such as necessary repairs and closing cost help.

There are also some disadvantages to purchasing a distressed property. For example, depending on how long the property has been vacant, the home could be in severe disrepair and may require significant improvements to make it livable. In the case of REO properties, additional paperwork will likely be required from the interested buyer, making the purchase less convenient than a standard foreclosure or pre-foreclosure purchase. Additionally, the lender is not required to disclose a complete history of the REO property, so buyers may not have a complete picture of the home before purchase.  Foreclosure auctions do not allow time or permit potential buyers from performing any type if inspection prior to purchase. The VA Home Loan Centers can provide additional details about the pros and cons related to foreclosed properties, and can provide a complete listing of available foreclosures to interested buyers. For immediate assistance, please call 888-573-4496.

Here are some of the most frequently asked questions from buyers to the experienced mortgage counselors at the VA Home Loan Centers:

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Can I use a VA loan to purchase a foreclosure property?

Yes, as long as the home is habitable. The special restrictions for the VA loan do require that a buyer intends to live in the property. Although foreclosed properties can be deeply discounted from the true market value and make good investment properties, the VA loan options are not meant to be used for investment purposes (purchasing a property to rent it out). While you can rent a home out that you have bought using your VA benefit, you are not allowed to purchase a property unless you plan on living in it. To find out if you are eligible, call 88-573-4496.

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Can I get a VA loan after foreclosure?

Yes, the maximum you would have to wait is 24 months after the foreclosure is complete, regardless of the original mortgage type (conventional, FHA or VA) used for the property. Sellers who opt for a short sale  instead of foreclosure can buy another home sooner than two years.  With the distressed housing market, VA loan foreclosures have unfortunately become a rather common occurrence. VA Home Loan Centers will help you short sale your home at no cost to you. To begin the short sale process, call 888-573-4496.

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Can I get another VA loan if I foreclosed on my last VA loan?

Yes, although some restrictions, such as a waiting period may apply. Many borrowers who previously faced short sale or foreclosure themselves opt to seek out a VA loan to use for their next purchase. For more information based on your unique situation, contact a VA Home Loan Centers mortgage counselor to begin the process at 888-573-4496.

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How can I get a list of homes foreclosed by the VA?

Call 888-573-4496 and speak to a mortgage counselor for a complete listing of available properties, including foreclosures. The experienced staff and provide full details about the purchasing process and any information based on your specific needs.

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Loan Foreclosure Information For Sellers

A foreclosed property means something very different for sellers. While buyers may benefit from the high number of foreclosures available, sellers are usually left with the burden of a distressed property due to some type of financial hardship. Even though this is not an ideal situation, there are some viable solutions for sellers facing missed payments, pre-foreclosure, short sale  or even foreclosure.

The most important thing for sellers who experience their mortgage payment becoming financial burden is to call VA Home Loan Centers at 888-573-4496. Although it can be an emotionally trying time for homeowners, the communication will definitely result in making more options available before a mandatory foreclosure takes place.  The biggest mistake that homeowners who have fallen behind in their mortgage payments make is to do nothing and avoid their mortgage company. VA Home Loan Centers can help you sell the property at no cost to you. We will handle the entire process form finding a buyer to closing escrow.

Here are some of the most frequently asked questions from sellers to the experienced mortgage counselors at the VA Home Loan Centers:

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How can I avoid foreclosure on my VA loan?

If you are facing an impending foreclosure, it is important that you get assistance right away. Call the VA Home Loan Centers at 888-573-4496 for a free consultation with a real estate counselor. They will review your situation, discuss your intentions and review various options that will work based on your circumstances.

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Can I sell my home to avoid foreclosure?

Yes, there are options available for you to avoid foreclosure. Be sure to contact a member of the VA Home Loan Centers staff to discuss the various seller assistance programs that are available. In most cases, it is possible to avoid foreclosure by taking action quickly and staying in close communication with the lender. For example, a military short sale option will be much more amicable than a bank directed foreclosure. To begin the process, call 888-573-4496.

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What is the difference between a foreclosure and a short sale?

A foreclosure may be the result of an auction ordered by the bank, or a listing on the open market which can be ordered by the bank or an attorney. Sellers who are behind on payments and possibly facing foreclosure may choose to work with an agent to arrange a pre-foreclosure sale. Although they may still take a loss on the property compared to the current market value, a pre-foreclosure sale will make less of an impact on the consumer credit report for the burdened homeowner. In contrast, a short sale is one alternative to a foreclosure. Short sales are typically directed by the homeowner or an authorized representative. They allow a property to be sold, often at a discount from the market value, rather than repossessed. The name short sale derives from the fact that the proceeds of the sale may not cover the outstanding mortgage balance. Therefore, even though the property was sold, the homeowner is still “short” the required amount to pay the mortgage debt in full. Generally speaking, it is much better for the homeowner to avoid foreclosure and opt for a short sale whenever possible. To see if you are eligible for a short sale, call 888-573-4496.

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How will a foreclosure affect my credit?

A forced sale by the bank of your property will negatively affect your credit for up to seven years. With constant credit improvements, such as making all other payments on time and not incurring new debts, the impact will lessen over time. By far, the best option for homeowners facing foreclosure is to proactively short sale the property. This may result in less financial obligation for the homeowner and will definitely be more appealing as far as the consumer credit report is concerned. If you are facing foreclosure or considering a short sale, contact an experienced loan counselor at VA Home Loan Centers right away. We can help you review options available, such as the VA HLC HAP, and make the best decision for your situation. To begin the process, call 888-573-4496.

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How will a foreclosure affect my security clearance?

Similar to the credit report, the security clearance may be affected by a foreclosure. Although the military and government security clearances are issued and reviewed based on a number of factors, each case is considered unique. For example, if any given homeowner is facing foreclosure but has no other outstanding delinquent debt obligations, the security clearance may not be revoked. However, if there is a pattern of delinquencies or other symptoms that lead to financial mishaps, the security clearance may be suspended or revoked. The best option to avoid the risk of impact to security clearance is to choose a short sale rather than foreclosure. Stay in contact with the current mortgage lender and determine if foreclosure proceedings have already begun or will begin soon.  Then, contact a qualified mortgage counselor at the VA home Loan Centers to review your situation and possibly begin the short sale process. To reach a counselor, call 888-573-4496.


These scenarios represent only a few of the many questions that homeowners facing foreclosure may encounter. Likewise, potential buyers considering purchasing a foreclosure or short sale property need accurate and complete information before making a decision. The best place to find all the information available is at the VA Home Loan Centers. Knowledgeable representatives will offer personalized consultations for buyers and sellers in order to uncover the needs and develop an action plan to reach a suitable solution. More importantly, many services and representation are provided free of charge. Call 888-573-4496 to speak with an agent or mortgage counselor today. 

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