The VA urges all Veterans who are encountering problems making their mortgage payments to speak with their servicers as soon as possible to explore options to avoid foreclosure. Contrary to popular opinion, servicers do not want to foreclose because foreclosure costs a lot of money. Depending on a Veteran’s specific situation, servicers may offer any of the following options to avoid foreclosure:
• Repayment Plan — The borrower makes regular installment each month plus part of the missed installments.
• Special Forbearance — The servicer agrees not to initiate fore closure to allow time for borrowers to repay the missed installments. An example of when this would be likely is when a borrower is waiting for a tax refund.
• Loan Modification - Provides the borrower a fresh start by adding the delinquency to the loan balance and establishing a new payment schedule.
• Additional time to arrange a private sale — The servicer agrees to delay foreclosure to allow a sale to close if the loan will be paid off.
• Short Sale — When the servicer agrees to allow a borrower to sell his/her home for a lesser amount than what is currently required to payoff the loan.
• Deed-in-Lieu of Foreclosure - The borrower voluntarily agrees to deed the property to the servicer instead of going through a lengthy foreclosure process.