Frequently
Asked Questions
General
- Eligibility - Pre-loan
- Construction/Valuation - Post
Loan
Post
Loan FAQs
Questions
that arise AFTER you have obtained your VA guaranteed loan
- My
home was appraised by VA and now I am having problems with its condition.
Wasn't the appraisal an inspection of the property and can't VA
help me with these problems?
- I
purchased a newly constructed home that was inspected by VA (or
HUD/FHA) during construction and I have complaint items which the
builder is not taking care of. Is there anything VA can do to help
me?
- My
lender has increased my payments into the escrow account for taxes
and insurance. What can I do?
- The
amount my lender is collecting for taxes and insurance doesn't seem
right. What can I do?
- Does
having a VA loan limit a veteran's right or ability to sell the
property?
- When
a veteran sells the property to someone who will assume the existing
VA loan, is the veteran released automatically from personal liability
for repayment of the loan?
- If
a veteran obtains a release of liability, is restoration of entitlement
automatic?
- If
a veteran has trouble repaying the loan, what should he or she do?
- What
is VA refunding?
- How
does a VA compromise claim payment work?
- If
a veteran dies before the loan is paid off, will the VA guaranty
pay off the balance of the loan?
1. My
home was appraised by VA and now I am having problems with its condition.
Wasn't the appraisal an inspection of the property and can't VA help
me with these problems?
Although the VA
fee appraiser must view the property from both the exterior and interior
to determine its overall condition, the appraisal process is not intended
to be an "inspection" of the property. While the appraiser
is an experienced observer, and is required to recommend needed repairs
based upon his or her observations while completing the appraisal,
the appraiser is not expected to recommend cosmetic repairs, ensure
that mechanical, electrical and plumbing systems work properly, climb
on the roof, etc. VA cannot guarantee that all defective conditions
will be seen by the appraiser, or that the property will otherwise
be satisfactory to the buyer in all respects, and we have no authority
to assist veteran homeowners with the correction of defects in existing
homes. VA encourages homebuyers to satisfy themselves that the home
they intend to purchase is in a condition that is acceptable to them.
2. I purchased
a newly constructed home that was inspected by VA (or HUD/FHA) during
construction and I have complaint items which the builder is not taking
care of. Is there anything VA can do to help me?
If the new home
was inspected by a fee compliance inspector assigned by VA or HUD
during construction, VA has complaint processing procedures that are
used to attempt to get the builder to correct construction defects
which the VA determines are the builder's responsibility. A complaint
must be registered with VA within the first year of ownership. Ultimately,
VA does not have the authority to force a builder to make corrections
to a property. Also, some problems about which a veteran complains
may be determined by VA to be within minimum standards of acceptable
building practice. In such cases, VA will not look to the builder
for correction. However, when builders refuse to correct items which
VA determines are their responsibility to correct, VA will take administrative
sanctions against them and refuse to do further business with them.
In the end, some veterans may still need to pursue legal action against
the builder.
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3. My
lender has increased my payments into the escrow account for taxes
and insurance. What can I do?
or
4. The
amount my lender is collecting for taxes and insurance doesn't seem
right. What can I do?
VA does NOT require
lenders to maintain escrow accounts. VA does require that lenders
ensure that the property is covered by sufficient hazard insurance
at all times and that property taxes are paid. Most lenders decide
to use escrow accounts to do this, but they are not required by VA
and VA has no standards governing them.
They are governed
by RESPA which is administered by the US Dept. of Housing and Urban
Development. For more information, see http://www.hud.gov/offices/hsg/sfh/res/respamor.cfm#GS
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5. Does
having a VA loan limit a veteran's right or ability to sell the property?
No. A veteran
may sell the property to a veteran or nonveteran at any time. However,
if the loan was closed after March 1, 1988, and it will be assumed,
the qualifications of the assumer must be reviewed and approved by
the lender or VA.
6. When
a veteran sells the property to someone who will assume the existing
VA loan, is the veteran released automatically from personal liability
for repayment of the loan?
No. If the loan
was closed after March 1, 1988, the lender or VA must be notified
and requested to approve the assumer and grant the veteran release
from liability. If the loan was closed prior to March 1, 1988, the
loan may be assumed without approval from VA or the lender. However,
the veteran is strongly encouraged to request a release of liability
from VA in order to avoid owing a debt to the Government if the loan
assumer (or a subsequent assumer) fails to pay the loan.
7. If
a veteran obtains a release of liability, is restoration of entitlement
automatic?
No. The assumer
must not only qualify from a credit and income standpoint, but he
or she must be a veteran with sufficient entitlement to substitute
for that used by the original veteran in obtaining the loan and meet
occupancy requirements.
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8. If
a veteran has trouble repaying the loan, what should he or she do?
It is best to
talk with the lender as soon as possible to explain why the payments
are late and when and how those late payments will be made. If there
was a job loss, divorce, or other serious problem, and the regular
monthly payments cannot be made, then it may be best to sell the home
to avoid foreclosure. VA may be able to assist in arranging a repayment
plan or other alternative to foreclosure. VA offers home loan counseling
through its 9 Regional Loan Centers (RLCs). Call our toll-free number
(800-827-l000) to request a call-back from a Loan Service Representative
or click here for the phone number and address of the RLC closest
to you.
9. What
is VA refunding?
When VA refunds
a loan, the loan is purchased from the private lender. VA only refunds
a loan when the veteran has had problems making the payments due to
circumstances beyond his or her control, the problems have improved
so that payments can now be made or will be in the near future, but
the loan holder is not willing to wait before taking action to terminate
the loan. Refunding is rare because most lenders prefer to work out
the problems, if at all possible, rather than selling the loan to
VA and thereby giving up the right to future income from that loan.
10. How
does a VA compromise claim payment work?
When a veteran
attempts to sell his or her home and the expected proceeds from the
sale are not enough to pay off the existing loan, and the veteran
has no other source of funds to complete the transaction, a VA compromise
claim pays the difference. As with any claim payment by VA, the veteran
usually remains liable to VA for the amount of the claim payment.
However, the compromise claim is usually less than the claim which
would have been payable if the sale had fallen through, the veteran
had failed to make the loan payments, and the lender had foreclosed
on the loan.
11. If
a veteran dies before the loan is paid off, will the VA guaranty pay
off the balance of the loan?
No. The surviving
spouse or other co-borrower must continue to make the payments. If
there is no co-borrower, the loan becomes the obligation of the veteran's
estate. Mortgage life insurance is available but must be purchased
from private insurance sources.
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Veterans