VA Post Loan Q&A

Questions that may arise AFTER
you have obtained a VA Loan

My home was appraised by VA, but now I’m having issues with its condition. Since VA appraised my home, can they assist me with these issues?

The appraisal is not intended to be an “inspection” of the property. The appraiser examines both the interior and exterior of the property only to determine its overall condition. The appraiser is also required to recommend any cosmetic, mechanical, electrical, plumbing, and roof repairs. VA does not guarantee that the appraiser will spot all of the defective conditions and they have no authority in assisting homeowners with fixing defects in their new homes. VA encourages prospective home buyers to thoroughly check their potential homes for any damages before closing.

I purchased a newly constructed home that was inspected by VA (or FHA/HUD) during construction and I have complaints which the builder has not taken care of. Can VA do anything to assist me?

If your new home was inspected by a fee compliance inspector during construction, VA has a complaint processing procedure that is used to get the builder to correct construction issues that the VA determines was the responsibility of the builder. Each complaint must be brought to VA within the borrower’s first year of ownership. Ultimately, VA does not have the authority to make a builder correct defects on a property. Also, some issues that a borrower may complain about may be deemed by VA to have met the minimum requirements of acceptable building practice and in these cases, VA will not require the builder to make corrections. However, if a builder refuses to correct items that VA considers them responsible for, VA will take an administrative sanction against them and refuse to do further business with their company. Some veterans may still need to pursue legal actions against builders if they feel their complaints are not fixed.

My lender has increased my payments into the escrow account for taxes and insurance. What can I do?

VA does not require lenders to maintain the same escrow accounts. What VA does require is for property taxes to be paid and for the property to be covered by adequate hazard insurance. Many lenders choose to use escrow accounts to do this, but technically, they are not required to.

Does having a VA loan limit a service member’s right or ability to sell the property?

No, a service member can sell the property to another service member or to a civilian at any time. However, if the loan was closed after March 1, 1988, the assumer’s qualifications will be reviewed and approved by the lender or VA.

 When a borrower sells the property to someone who will assume the existing VA loan, is the borrower released automatically from personal liability for repayment of the loan?

No. If the loan was closed after March 1, 1988, VA or the lender must be notified and a report must be filed to approve the assumer and grant the borrower release from the liability. If the loan was closed earlier than March 1, 1988, then the loan may be assumed without further actions from VA or the lender. However, it is strongly encouraged that the borrower requests a release of liability from VA in order to avoid any debt penalties if the loan assumer fails to take on the loan.

If a borrower has trouble repaying the loan, what should they do?

If you find yourself in this position, then you should speak with your lender as soon as possible and explain to them why your payments are late. If the cause is due to a serious problem and the monthly payments cannot be made, then the best option may be to sell the home to avoid foreclosure. VA does not guarantee being able to assist in arranging a repayment plan or any other alternatives, but VA does offer loan counseling. Call their toll free number at 800-827-1000 to request a call back from a Loan Service Representative.

What is VA refunding?

VA can refund a loan by purchasing it from the private lender. The only time VA refunds a loan is if the borrower has had problems making monthly payments due to circumstances that are out of their control or if the problems have improved and the borrower can now make their payments, but the loan holder is unwilling to wait before taking any actions to terminate the loan. Refunds are rare because most lenders choose to work out the problems rather than selling the loan to VA.

How does a VA compromise claim payment work?

When a borrower attempts to sell their home and the proceeds of the sale are not enough to pay off the existing loan and the borrower has no other funds to complete the transaction, then a VA comprise claim pays for the difference. Even though the veteran remains liable to VA for the amount of the claim payment, the compromise claim is usually less than the claim which would have been payable if the sale had been null.

Who pays for the remaining loan if the borrower passes away?

The surviving spouse or co-borrower would be responsible for the remaining loan if the borrower were to pass away. If there is no co-borrower, the loan then becomes the responsibility of the veteran’s estate.