These immortal words have become part of the American lexicon. Though the phrase has become synonymous with the US Armed forces, there is some debate as to the origin of its use. The film “Black Hawk Down” lays claim to these words as the motto of Delta Force, the legendary (and still officially unrecognized) special forces unit, a claim supported by Chuck Norris, starring as a Delta Force operative in the eponymous 80’s action flick. Despite this, a simple Google search of the phrase reveals that many contest this fact, including but not limited to Marine Reservists serving in Iraq, Army Rangers, and even armchair historians who claim that the earliest derivation of phrase was coined by none other than Alexander the Great. Whatever the source, the message seems to resonate most with those who have served in combat. With reverent stoicism, it is a pledge of allegiance to the fraternity of soldier hood. Their fears are less tied to notions of self-preservation than how they cherish the lives of their friends, for some the last family they will ever know, and thus the true reminder of home. They are not motivated by the protection the unit offers, as much as they are compelled by the nobility of their membership to it. Theirs is a nobility born amid chaos when the trappings of their normal lives erode, and their consciousness distils into a clear purpose. They serve our country, they serve our values, but most of all, they serve one another.
These tough economic times have made the line between soldier and civilian blurry at best, particularly when one thinks of “leaving no man behind”. Don’t our veterans deserve better than this? What about the veteran borrower returning home after his second tour in Afghanistan, only to find that the home he bought in Detroit for 80k is now worth less than $15k and the manufacturing job he was counting on died with the rest of the city’s work infrastructure? As he falls behind on his payments, how can he not feel even just a bit slighted by the system?
The intent of this post is to offer a hand out to government loan borrowers wishing for assistance on their VA loans. Though there are many options available, few are being utilized effectively. Even if you are only using this post as a means to expand and clarify your options, please, feel free to contact James at a time that works best for you and I’d be happy to answer them.
I. COMMON ALTERNATIVE OPTIONS TO FORECLOSURE THAT WORK
“An ounce of prevention is worth a pound of care.” Benjamin Franklin
Before exploring any foreclosure option, I would recommend checking out the free credit repair for veterans. This is an internal division that provides basic credit management education and assists borrowers with disputing and updating their reports to the greatest point of accuracy. It is said that 70% of all credit reports have errors on them and an astonishing 1 in 4 have errors on them serious enough to prevent someone from getting the credit they are rightfully entitled to.
II. COMMON ALTERNATIVE OPTIONS TO FORECLOSURE THAT WORK
If you wish to stay in your home but have fallen behind on your VA mortgage payments there may be a way to save you from foreclosure. Contrary to popular belief, most lenders don’t want to have to resort to a costly and time intensive foreclosure process, particularly in a housing market such as this one. The following alternatives have been recommended from the VA Borrower Delinquency Page
A. Repayment Plan – The borrower makes regular installment each month plus part of the missed installments.
B. Special Forbearance – The servicer agrees not to initiate foreclosure to allow time for borrowers to repay the missed installments. An example of when this would be likely is when a borrower is waiting for a tax refund.
C. Loan Modification – Provides the borrower a fresh start by adding the delinquency to the loan balance and establishing a new payment schedule.
D. Additional time to arrange a private sale – The servicer agrees to delay foreclosure to allow a sale to close if the loan will be paid off.
E. Short Sale – When the servicer agrees to allow a borrower to sell his/her home for a lesser amount than what is currently required to pay off the loan.
F. Deed-in-Lieu of Foreclosure – The borrower voluntarily agrees to deed the property to the servicer instead of going through a lengthy foreclosure process.
III. Non-VA SPECIFIC ALTERNATIVES TO FORECLOSURE
A. Service Members Civil Relief Act (SCRA) SCRA may provide a lower interest rate for up to one year, and provide forbearance, or prevent foreclosure or eviction up to nine months from the period of military service. In order to qualify for certain protections available under the Act, his or her obligation must have originated prior to the current period of active military service.
B. If VA is not able to help a veteran borrower retain his/her home (whether a VA-guaranteed loan or not), the HOPE NOW Alliance may be of assistance. HOPE NOW is a joint alliance consisting of servicers, counselors, and investors whose main goal is to assist distressed borrowers retain their homes and avoid foreclosure. They have expertise in financial counseling, as well as programs that take advantage of relief measures that VA cannot. HOPE Now provides outreach, counseling and assistance to homeowners who have the willingness and ability to keep their homes but are facing financial difficulty as a result of the crisis in the mortgage market. The HOPE NOW Alliance can be reached at (888) 995-HOPE (4673), or by visiting www.hopenow.com.
IV. DIRECT ASSISTANCE with non-VA Guaranteed Home Loan Veteran’s Affairs
A. For a veteran or service member who may have obtained a conventional or sub-prime loan, VA has a network of eight Regional Loan Centers and two special servicing centers that can offer advice and guidance. Borrowers may visit VA’s Loan Guaranty website at www.homeloans.va.gov or call toll free (877) 827-3702 to speak with a VA Loan Technician. However, unlike the case of a veteran or service member with a VA-guaranteed home loan, VA does not have the legal authority or standing to intervene on the borrower’s behalf. Therefore, it is imperative that a borrower contacts his/her servicer as quickly as possible.
B. VA Refinancing of a non-VA Guaranteed Home Loan
C. Veterans with conventional home loans now have new options for refinancing to a VA-guaranteed home loan. These new options are available as a result of the Veterans’ Benefits Improvement Act of 2008, which the President signed into law on October 10, 2008. Veterans who wish to refinance their subprime or conventional mortgage may now do so for up to 100 percent of the value of the property, which is up from the previous limit of 90 percent.
D. Additionally, Congress raised VA’s maximum loan amount for these types of refinancing loans to $729,750 depending on where the property is located (this limit is significantly higher in Guam, Alaska, and Hawaii). These changes will allow more qualified veterans to refinance through VA, allowing for savings on interest costs and avoiding foreclosure. A VA refinancing loan may help a veteran who is facing a big payment increase.
V. DIRECT ASSISTANCE on VA Guaranteed Home Loan Veteran’s Affairs
C. When a VA-guaranteed home loan becomes delinquent, VA provides supplemental servicing assistance to help cure the default. The servicer has the primary responsibility of servicing the loan to resolve the default. However, in cases where the servicer is unable to help the veteran borrower, Loan Guaranty has Loan Technicians in eight Regional Loan Centers and two special servicing centers who take an active role in interceding with the servicer to explore all options to avoid foreclosure. Veterans with VA-guaranteed home loans can call (877) 827-3702 to reach the nearest Loan Guaranty office where loan specialists are prepared to discuss potential ways to help save the loan.