VA guidelines

VA Loan Reader Questions: Co-Borrower Legal Issues

May 22, 2014

VA Loan Reader Questions: Co-Borrower Legal Issues

017-logoA reader asks, “I am a co-borrower on a VA mortgage loan. I am a civilian and my ex-husband is a veteran. We divorced two years ago. In our Property Settlement Agreement he was given the house with 90 days to refinance on his own to get my name off the mortgage.”

“He agreed to this as did I. I gave him the house. He did not refinance in 90 days and I took him to court. At the hearing, the judge ruled that he was 100% liable for the house as agreed. He was to make the payments on time and given another 90 days to refinance on his own. Another 90 days went by and he didn’t refinance. Long story short the house is in foreclosure for almost a year and he is currently incarcerated. What are my options as the co-borrower?”

There are many factors that affect a situation like this, and there are two very important things any co-borrower in these circumstances should do immediately.

The first is to contact the lender and make arrangements as the co-borrower to stop the foreclosure until other arrangements can be made. The VA should be contacted also for the same reasons.

The second thing to do is to consult a lawyer with expertise in these areas. State law can and does affect how the co-borrower on a VA mortgage loan may proceed, especially when the co-borrower is married to the veteran borrower.

Community property laws may have a say in how a case like this is handled.

Community property laws basically govern how a married couple’s debts are viewed in the eyes of the law in the context of the legal partnership of marriage. All states that have community property laws have different ways of administering and interpreting them–we can’t give advice on legal issues except to say that you should consult a lawyer.

The VA may be able to help in cases like this when it comes to working with the lender–a co-borrower who wants to avoid foreclosure, initiate a short sale, or otherwise manage the situation they are in should definitely get the advice and assistance of a VA rep. Contact the VA directly at 1-800 827-1000 for help and advice.

Do you have questions about VA home loans? Ask us in the comments section.

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