VA Home Loans: Getting Help if You Can't Pay
Loss-mitigation refers to several different methods that are used by lenders to help you avoid losing your home prior to and during the foreclosure process. The VA provides strong incentives for lenders under the Loan Guarantee Program to work with you to avoid foreclosure. In addition, the VA has specialized loan representatives who can help you work with your lender to resolve problems. You can call a VA loan representative by dialing 1-877-827-3702. Below is a list of the specific loss-mitigation techniques that the majority of VA lenders will use to avoid foreclosing on your loan. For more information about all of the following programs see our Loss-Mitigation FAQs. Legal Professionals and Advocates should see VA Lender Forbearance Obligations for a discussion of a lender's legal obligations concerning loss-mitigation.
- Repayment Plans: Repayment plans are designed to help you pay back amounts that you owe in back mortgage payments. The goal is to get you paying your normal mortgage payments again and set you up with a repayment plan to make up for the mortgage payments you have already missed. To be eligible, you must be able to show that you can afford the repayment plan.
- Special Forbearance: This is when the lender allows you to temporarily stop making payments on your mortgage with the promise that you will resume making payments at a set time in the future. Usually, you must be able to show the lender a guaranteed source of income that you are expecting, such as a new job, or tax return in order to qualify.
- Loan Modification: This is when your lender or the VA changes the terms of your loan contract to alleviate some of the current financial pressure on you in order to help you get back to making mortgage payments. This may include building your missed payments into a new, longer loan
- Compromise Sale: This option, also known as a "short sale," requires that you sell your home to a third party at a loss in order to generate money to pay down your VA loan. Often, this option will allow you to cover your loan and walk away without hurting your credit score. However, as you lose you home in this case, it should be considered only after Repayment Plans, Special Forbearance, and Loan Modifications have been exhausted.
- Deed-in-lieu of Foreclosure: This is a last resort option before foreclosure whereby you sign your deed over to the lender as payment of your debt. This allows you to keep your credit history intact, but will result in you losing your home.