| Display Name (Registration Not Required): |
|
|
|
| Security Code: |
|
|
|
| Subject: |
|
RE: Strategic default on VA loan - no deficiency? |
|
| Message: |
|
|
|
|
|
|
|
| Topic Review |  | |
WS902N
Posts:658
 |
| 05-19-2012 04:21 PM |
|
WOULD THE VA STOP MY DISABILITY PENSION IF I DEFAULTED ON MY VA LOAN? I AM
CURRENT ON MY PAYMENTS BUT UNDERWATER ON THE HOUSE BY UP TO $20k |
|
|
|
|
exJarhead
Posts:658
|
| 10-23-2010 02:56 AM |
|
| Does the VA go after a strategic default or not? Does anyone really know??? |
|
|
|
|
VR SAM
Senior Member
Posts:233
|
| 01-07-2010 09:21 AM |
|
The growing trend in short sales is for banks to require that they sign "note to pay the deficiency" prior to agreeing to the sale.
I think they are in for a big disappointment, but they are most fortunate to have a friend who trys to offer good advice. That's about all you can do.
Joe |
|
Joe Gladden, (Captain, USN, retired), Realtor
homesformilitary@vrsam.com
O: 703 754-3036 C: 703 585-3305
http://www.vrsam.com
|
|
|
Henbob6
Posts:658
|
| 01-06-2010 09:37 PM |
|
Thanks again for all your advice. My friends are moving forward with their plans regardless of any future ramifications or unsolicited concern from me. They even brushed off my question when I asked if we lived in a non-recourse state...they're just relying 100% on their realtor's advice, and could care less about having a lawyer review their short sale paperwork, if/when the sale happens. (FWIW - we don't live in a non-recourse state, and contract law allows 6 years unless the short sale paperwork specifies otherwise. )
Thanks again! Cheers! |
|
|
|
|
Karen
Posts:658
|
| 12-30-2009 09:09 PM |
|
A friend of mine, a realtor, just closed on a short sale which was a VA loan. They are being told that if they don't pay the money back to the VA then they will never be able to apply for a VA loan again. I am sure some people don't care about that and will go through with a short sale.
Karen |
|
|
|
|
anon1
Posts:658
|
| 12-22-2009 06:11 PM |
|
This may also be some help:
http://www.creonline.com/articles/art-233.html
It does sound like the only way banks will forgive a deficiency judgement is if they prove extreme hardship, which I'm not sure it sounds like your friend will be able to prove. The two vacations and expensive vehicle, etc. may all come into play with regard to things, but if they haven't paid off the vacations/car/etc, I guess it could maybe work in their favor adding to more debt? Just not sure how all that works, but at least the links show another reason to have the lawyers look at any short sale before its finalized.
Best of luck! |
|
|
|
|
anon1
Posts:658
|
| 12-22-2009 06:07 PM |
|
I'm not entirely sure this is what you're looking for, but this may be a starting point:
http://homebuying.about.com/od/foreclosures/f/120908_Def-Judg.htm |
|
|
|
|
Henbob6
Posts:658
|
| 12-21-2009 03:50 PM |
|
Anon1 - I agree with the fear that the VA would come after them for the $, but I haven't been able to find where that's explicitly stated. (I'd be a bit paranoid too when it comes to over $100K!!!!) I'm also not comfortable with their "full-service" realtor taking care of everything. At the beginning, he told them that they "might" need to sign a note, but it's no big deal - he's had people "fight" it and have it set aside.
Foreclosure and Chapter 7 or 11 are not on the table - they are far from being in financial trouble. Two vacations this year, and a $25k car. They're able to pay all their other bills. They simply want to move, but their house isn't worth nearly what they paid 18 months ago.
From what you're saying, I don't see how they bank or VA would even approve a short sale, so hopefully my concerns are moot.
Thank you for your advice and opinions. I'll be seeing them over the holidays, and will gently suggest they talk to a lawyer and CPA who is not affiliated with their realtor. |
|
|
|
|
VR SAM
Senior Member
Posts:233
|
| 12-20-2009 10:23 AM |
|
There is no question that banks / lenders will look very closely at your income, assets, employment status before accepting an offer on a short sale. They will the decide whether to take the offer or counter with an offer that may have a higher price and / or require the homeowner to sign a note for any / all of the shortage. If there is a note, that may alter the state tax issue as well as it may negate any negative tax implications (check with your CPA!).
In some cases if they deem that their best option is to accept the offer and simply write off the shortgage, it is likely a case where the seller's next move would be a declaration of bankruptcy. You should know that not all bankruptcies are equal. There are chapter 7 bankruptcies and chapter 11. You would need a bankruptcy attorney to determine which is the best (or lease worst) course and the corresponding implications.
Your point is very well taken on short sales and foreclosures. Neither completely precludes the lender/s from later action for a period of years, unless the short sale documents specifically state that the debt is forgiven. Choose wisely and with the proper legal / accounting advice.
Joe
Veteran Realty Serving America’s Military, Inc., VR SAM®, is a partnership of retired Military Officers and Spouses, all Military Realtors, serving Military Families purchasing or selling homes in the Northern Virginia region including Fairfax County, Prince William County, Loudoun County, Fauquier County, Stafford County, Arlington, and Alexandria, Many of our purchaser clients are PCSing to the Pentagon, NRO, Fort Belvoir, Fort Meyer, Anacostia, Bolling AFB, Andrews AFB, Navy Yard, Quantico, Coast Guard Headquarters, and other NOVA military installations. VR SAM also serves a large number of defense contractor employees and Federal Employees from the FBI, NCIS, CIA and other agencies. Call VR SAM today to learn about our industry leading purchaser client credit and competitive listing programs and rates.
VR SAM is affiliated with Jobin Realty Manassas, 9327 Main Street, Manassas, VA 20110. 703 365-9090
|
|
Joe Gladden, (Captain, USN, retired), Realtor
homesformilitary@vrsam.com
O: 703 754-3036 C: 703 585-3305
http://www.vrsam.com
|
|
|
anon1
Posts:658
|
| 12-18-2009 10:02 PM |
|
Just my .02 here, and its not worth much, but I was told by my realtor that with short sales the bank can come after you for YEARS for the delinquincy. I also was under the impression that being a VA loan, one's wages can be garnished if in fact they do make enough to pay back some of the short sale. I may be incorrect in that, as a lot of what circulates nowadays is rumor, but it does make sense that the gov. (VA) would try to get their money back any way possible, especially if the military member promotes or their financial "needs" change in a positive way.
I guess unless they get something legal signed with an attorney on the short sale, I would not sleep tight at night wondering if at some point the bank will come back after them once they start faring better in their financial situation. But, I'm a paranoid person... Even after we have our HAP check in hand and have closed on our house, I will still wonder if they'll decide to take it back. LOL. So, maybe I'm just a skeptic.
Anyway, yes, making 130K per year and claiming financial hardship to sell for 170K seems a bit unreasonable, but one has to also account for other bills they have that may eat up that 130K pretty quickly. However, I was also under the impression that with a short sale, if they do have other assets, they can be forced to sell/cash them out as payment toward the loan prior to short sale, so they likely won't get away free and clear in that case either.
Again, just my .02, take it or leave it. I'm not a professional.  |
|
|
|
|
VR SAM
Senior Member
Posts:233
|
| 12-18-2009 06:53 PM |
|
I haven't heard of this specific situation, but my guess is that they would have to pay it back if they haven't met the minimum time living in the home. If they are considering this, they should certainly check with a CPA. Also, if a foreclosure is a possibility, they should not get confused between a foreclosure and a bankruptcy. Two different things. In many states, absent a chapter 7 bankruptcy, they may find that the lender can still come after them several years down the road if they foreclose. Again, not an attorney but they most certainly should check with one before they dive head first into what appears to be very shallow water!
Joe
Veteran Realty Serving America’s Military, Inc., VR SAM®, is a partnership of retired Military Officers and Spouses, all Military Realtors, serving Military Families purchasing or selling homes in the Northern Virginia region including Fairfax County, Prince William County, Loudoun County, Fauquier County, Stafford County, Arlington, and Alexandria, Many of our purchaser clients are PCSing to the Pentagon, NRO, Fort Belvoir, Fort Meyer, Anacostia, Bolling AFB, Andrews AFB, Navy Yard, Quantico, Coast Guard Headquarters, and other NOVA military installations. VR SAM also serves a large number of defense contractor employees and Federal Employees from the FBI, NCIS, CIA and other agencies. Call VR SAM today to learn about our industry leading purchaser client credit and competitive listing programs and rates.
VR SAM is affiliated with Jobin Realty Manassas, 9327 Main Street, Manassas, VA 20110. 703 365-9090
|
|
Joe Gladden, (Captain, USN, retired), Realtor
homesformilitary@vrsam.com
O: 703 754-3036 C: 703 585-3305
http://www.vrsam.com
|
|
|
henbob6
Posts:658
|
| 12-18-2009 05:25 PM |
|
Thank you for your reply. One other question - will they have to pay back the First Time Homebuyers tax credit they got last year?
(I'm a bit leery of what their realtor is telling them also. Their combined income is around 130K, so I'm a bit incredulous that the bank/VA would accept their claim of "financial hardship." ) |
|
|
|
|
VR SAM
Senior Member
Posts:233
|
| 12-15-2009 04:59 PM |
|
I would be extremely skeptical that they will walk away w/o being required to sign a note for part or all of the deficiency. Regardless of what you hear about government programs to the contrary, banks are making short sales a less desirable option and in many cases are requiring people to sign notes for at least part of the deficiency.
Almost certainly, they can expect a major credit hit for at least two years.
Also, just because they list their house for a certain amount, doesn't mean the bank will sign off on an offer for that amount. We frequently see banks coming back and demanding considerably more than the contract price.
Either they aren't understanding everything their Realtor is telling them, or they aren't getting the straight info. No Realtor can "guarantee" a client an outcome on such a deal. Joe Gladden, VR SAM
Veteran Realty Serving America’s Military, Inc., VR SAM®, is a partnership of retired Military Officers and Spouses, all Military Realtors, serving Military Families purchasing or selling homes in the Northern Virginia region including Fairfax County, Prince William County, Loudoun County, Fauquier County, Stafford County, Arlington, and Alexandria, Many of our purchaser clients are PCSing to the Pentagon, NRO, Fort Belvoir, Fort Meyer, Anacostia, Bolling AFB, Andrews AFB, Navy Yard, Quantico, Coast Guard Headquarters, and other NOVA military installations. VR SAM also serves a large number of defense contractor employees and Federal Employees from the FBI, NCIS, CIA and other agencies. Call VR SAM today to learn about our industry leading purchaser client credit and competitive listing programs and rates.
VR SAM is affiliated with Jobin Realty Manassas, 9327 Main Street, Manassas, VA 20110. 703 365-9090
|
|
Joe Gladden, (Captain, USN, retired), Realtor
homesformilitary@vrsam.com
O: 703 754-3036 C: 703 585-3305
http://www.vrsam.com
|
|
|
Henbob6
Posts:658
|
| 12-14-2009 10:34 PM |
|
Civilian friends of mine are planning to default on their VA loan so they can move out of state (no financial hardship - they just want to be closer to family). They took out a $300k mortgage to buy a new house 18 months ago, and are listing it for $170K - about the going rate now. Their realtor is taking care of all aspects of the short sale, including dealing with the bank and VA, and tells them that they will not have to bring any money to closing, nor will they have to pay back the VA.
Is it true that they will be able to walk away from their house with no financial repercussions other than loss of their entitlement? |
|
|
|
|
|
|
|
|