by Chris Birk on February 2, 2011
The recession has taken a heavy toll on homeowners nationwide, and America’s service members haven’t been spared.
But veterans who lose their homes to a short sale or a deed-in-lieu of foreclosure will now have some financial cushion to help them rebound.
The VA has authorized mortgage servicers to provide veterans with up to $1,500 in relocation assistance. Borrowers can use the money to cover moving expenses and other costs associated with the change in their living status.
Relocation assistance is the VA’s latest effort to help service members on the edge. The agency has for years incentivized mortgage companies to exhaust all alternatives when veterans are in jeopardy of losing their homes.
“VA has a longstanding policy of encouraging servicers to work with veteran borrowers to explore all reasonable options to help them retain their homes or, when that is not feasible, to mitigate losses by pursuing alternatives to foreclosure,” according to the two-page VA circular released on the subject. “These options generally provide a substantially better outcome than a foreclosure sale for borrowers, investors and communities.”
Veterans won’t receive the funds as part of their home’s overall sale. Mortgage servicers will be reimbursed by the VA.
While service members have certainly been hit by foreclosure, overall they represent one of the most committed and secure borrowing demographics on the market. Paying bills on time and staying out of debt are almost ingrained pillars for most service members.
In fact, VA loans in particular have proved especially safe in face of recession. They continue to have the lowest rate of foreclosure of any major loan program, an exemplary achievement given the fact that 90 percent of all VA loans come with no down payment.