6 Ways a Distressed Veteran Homeowner Can Avoid Foreclosure
Losing one’s home through a foreclosure is a frustrating experience for any homeowner. Financially troubled homeowners, especially veterans, are often vulnerable to mortgage fraud schemes that could further increase the risk of losing their homes. It’s important for veterans to know that there are several options available for them if they’re threatened with foreclosure.
Just recently, multiple mortgage fraud-related charges including conspiracy, grand theft, filing false or forged documents in a public office, engaging in a prohibited act as a foreclosure consultant and elder abuse have been filed against three people and were indicted by a Sacramento grand jury. Robert Sedlar, Steven Rogers, and Audrey Gan allegedly stole more than $7 million from troubled homeowners in multiple counties in California stretching from Mendocino and Placer counties south to San Diego county. The three have put up Grand View Financial LLC through which they offered foreclosure assistance programs and mortgage relief since 2015. Attorney General Xavier Becerra on October 18 said that the alleged perpetrators targeted seniors and financially distressed homeowners.
As a VA loan borrower, you need to know that there are viable options available if you think that you’re falling behind on your mortgage payments.
Lenders and mortgage servicers typically use several loss mitigation methods to possibly help you stay on your home. Depending on your situation as a distressed veteran homeowner, you may want to try any of these six options to possibly avoid foreclosure:
- Repayment plan – This option helps you get back on track with your mortgage payments by spreading out the missed payments over a longer period. If you missed a mortgage payment or two and expect to recover from financial distress soon, your lender may allow you to repay any missed payments by distributing them to your monthly payments.
- Special forbearance – If you qualify with this option, the lender may temporarily allow you to stop making mortgage payments without being threatened with foreclosure. Although many VA lenders may grant you a special forbearance, you need to prove that you’ll have funds to cover late payments. You may consider this option if you’re expecting to get retirement funds or a large tax return.
- Loan modification – This can be a good option if you are fully current on all your property taxes. Your lender may help you avoid foreclosure by extending the term of your loan so you can have smaller monthly payments. Your late payments could be built in the loan modification plan that you would agree with your lender.
- Extra time to arrange a private sale – You may want to consider this option if you plan to sell your home. Your lender could delay a foreclosure, given you’ve decided to sell your home.
- Short sale – There could be situations when your lender allows you to sell your home for a much lower price or less than the full amount owed on the mortgage instead of initiating a foreclosure procedure. Many lenders find a short sale or compromise sale a practical option for them to recover some of its funds as a result of granting you the loan.
- Deed-in-lieu of foreclosure – This could be the only available option for you to avoid foreclosure if your lender or servicer doesn’t allow you to sell your home in a short sale or modify your loan. Although you’re going to lose your home in the process as you sign over the deed to the home to your lender, deed-in-lieu of foreclosure is worth considering for you to possibly ask to lower your deficiency and move to a much more affordable home.
Only work with the VA or with your mortgage servicer
Immediately getting in touch with your servicer is the best recourse if you think you’re falling behind on your mortgage payments as a VA loan borrower. However, if you’re uncomfortable speaking with your servicer, you can get help and advice from a loan technician at the U.S. Department of Veterans Affairs by calling 1-877-827-3702.