You lost your job. You are a Veteran. You cannot make your mortgage payments. You called your lender and their steely “debt collector” tone and threatening letter would scare anyone.
If you experienced loss of income on the Emerald Coast of Florida due to the COVID-19 crisis, the Veteran’s Administration has issued clarifications about how your VA mortgage lender must treat you. Initially, VA borrowers may have received intimidating letters, such as this:
In fact, this forbearance letter refers to foreclosure twice, as well as short sale, and credit implications. It implies that to catch up, the loan must be brought “current” through a reinstatement (e.g. lump sum payment), or another workout option. This is pretty scary stuff. The VA, however, has issued Frequently Asked Questions that should put you at ease regarding your VA mortgage and keeping your home, as specified in the Coronavirus Aid, Relief, and Economic Security – CARES Act:
- You may skip payments for 180 days and extend to 360 total days should you be economically impacted by Covid-19.
- Your credit score will not be changed to “delinquent” during this time (unless you were previously in default).
- You will not have to pay a late penalty, however, interest will accrue.
- You do not have to make a lump sum payment at the end of your forbearance payment (however, you can if you want to).
- Your VA mortgage lender may offer to modify your loan to extend the term, adding the missed payment months to the end or your loan (a type of deferment).
- Your VA mortgage lender may offer to make the missed payments payable in one amount at the end of your mortgage term. For example, if you missed $10,000 of payments, when you sell your house, the $10,000 amount would be added to your mortgage payoff.
- You could spread out the missed payments over time with an agreement from your lender.
- If you don’t recover financially at the end of the help period, you may do a VA Compromise short sale, a regular sale, or a deed-in-lieu of foreclosure.
Bottom line, if you contact your VA mortgage lender for help now during the Covid-19 crisis, they should respect you and your military service, and work with you, not force you to make a lump sum repayment.
If you decide to sell your Emerald Coast of Florida home, contact me to explore your options, whether by traditional sale or VA Compromise short sale.
Broker, Rulnick Realty, Inc.
Email Wendy: email@example.com
Wendy Rulnick, Broker, sells short sale, pre-foreclosure, REO and traditional real estate in Destin, Santa Rosa Beach, 30A, Miramar Beach, Crestview, Sandestin, Seaside, Rosemary Beach, Fort Walton Beach, Niceville, Bluewater Bay, Navarre, Florida.
This post, Wendy Rulnick or Rulnick Realty, Inc. is not providing legal or tax advice. The information provided is for educational and informational purposes only. It is recommended that sellers considering a short sale should consult an independent legal and tax advisor for more information.