Foreclosure and VA Loan Entitlement: VA Loan Reader Questions

A reader asks, I am confused on entitlement rules. I had a VA foreclosure due to a chapter 7 bankruptcy three years ago. I am sure I will probably owe money toward my entitlement but how would I find out if I do owe the VA money?”

“I read that you have to pay back the debt to the VA before they will restore full entitlement but does that mean I can use what is left of my entitlement without paying what I may owe?

Sequestration Cuts and VA Home Loans

According to a paper titled, “Budget ‘Sequestration’ and Selected Program Exemptions and Special Rules’ by Karen Spar, VA operations (including the VA loan program) should not be affected by possible government spending cuts that might take effect on March 1, 2013.

These cuts, known as “sequestration” are described in the paper as “a process of automatic, largely across-the-board spending reductions under which budgetary resources are permanently canceled to enforce certain budget policy goals.” Spar, who is a Coordinator Specialist in Domestic Social Policy and Division Research Coordinator, prepared the paper for Congress earlier this year.

VA Extends Appraisal Requirement Rule

The Department of Veterans Affairs issued a brief VA Loan Circular to announce the extension of a VA appraisal rule issued in 2009.

According to the original 2009 guidance, VA Circular 26-09-3, VA appraisal rules were amended to include a requirement that, “a copy of the agreement of sale or sales contract be provided to the fee appraiser by the requester of the VA appraisal immediately upon assignment.” This rule was created in order to insure the most accurate appraisal possible.

“When the value opinion to be developed is market value, Uniform Standards of Professional Appraisal Practice requires an appraiser to analyze all agreements of sale, options, or listings of the subject property, current as of the effective date of the appraisal, if such information is available to the appraiser in the normal course of business” the original VA circular says.

VA Loan Reader Questions: Escrow Accounts

A reader asks, “Do you earn any interest on this account to pay the escrow?

This question was in response to a previous blog post here titled, “Do VA Loans Require An Escrow Account?” There was no additional information or other questions with this reader comment, so we’ll assume the reader wants to know whether an escrow account used in conjunction with a VA home loan can accrue interest.

A bit of background: VA loan rules do NOT require escrow accounts, but they also do not forbid the lender from requiring one.

VA Loan Reader Questions: The Age of the Home

A reader asks, “Does the VA have any regulations on the age of a house being purchased? We are looking at homes to buy, and are uncertain whether or not an older home (early 1920s) would be acceptable.”

VA loan rules don’t specifically reference the age of a home in terms of whether it would be acceptable for a VA mortgage or not. Instead, the real issue is whether it meets VA minimum property requirements, state and/or local building codes, and whether the property has what’s known as “remaining economic life”.