VA borrower wants to lose the home purchased with a VA guaranteed loan, but in some cases it's unavoidable due to personal financial issues, job loss, or other problems. Foreclosure is a difficult process-it negatively affects the borrower's credit rating and requires a waiting period before the VA borrower is eligible to try to buy a home again.
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VA Relocation Assistance Program
VA borrower wants to lose the home purchased with a VA guaranteed loan, but in some cases it's unavoidable due to personal financial issues, job loss, or other problems. Foreclosure is a difficult process-it negatively affects the borrower's credit rating and requires a waiting period before the VA borrower is eligible to try to buy a home again.

But there are plenty of options a buyer can explore before going through the foreclosure process. Some of those alternatives still mean the buyer must give up the home purchased with a VA guaranteed loan, but even these can be preferable to foreclosure.

The Department of Veterans Affairs offers foreclosure alternatives to VA borrowers and financial incentives to lenders to encourage all possible alternatives to entering foreclosure procedures. The Department of Veterans Affairs official site says, "For over 15 years, VA has paid incentives to servicers successfully completing alternatives to foreclosure, and beginning in 2008, VA started paying incentives to servicers for successful repayment plans, forbearance
agreements, and loan modifications."

New policies at the VA offer homeowners and loan officers more options when it comes to processing a VA short sale or deed-in-lieu of foreclosure, including a recent program offering relocation assistance when a home owner decides to sell the home with a VA short sale or make arrangements with the lender for a deed-in-lieu of foreclosure agreement.

"Effective immediately, VA is authorizing servicers to advance $1,500 in relocation assistance to borrower occupants who complete a short sale with a VA compromise claim or who execute a Deed-In-Lieu". That according to the VA official site at VA.gov.

VA rules also point out that this relocation assistance is to be listed as a reimbursable expense on the bank's claim--this is due to laws which prohibit the buyer from getting cash proceeds from a short sale. In the eyes of the law, the new relocation assistance money would not be viewed as part of the cash proceeds of the sale.

Relocation assistance is helpful in many ways, and not just to the homeowner. Deed-in-lieu and short sale agreements require the home to be presented in good condition, and under the short sale or deed in lieu arrangements the home doesn't sit vacant for extended periods of time. (It's generally accepted that the longer a home sits vacant, the worse off it will be.) The former owner gets some financial help in the process and avoids having a foreclosure listed in his or her credit history. Giving up the home or short selling may not be the ideal outcome for a VA borrower, but it is definitely preferable to foreclosure.




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