VA Loan Reader Questions: Refinancing A VA Loan Without the Spouse
A reader asks, “My wife has moved out, but will not agree to remove her name off deed. What need to know is what can I do in refinancing the VA loan since her name is not signed for the loan, in which the payment statements only come in my name? I do not want to walk away from my loan agreement, what are my options?”
The answer to this question depends on several factors including state law, which we cannot speak to here. It’s best to consult a legal expert for assistance in situations like these as state law may affect the outcome of refinancing a VA loan just as much as VA loan rules.
We CAN address VA loan rules for these circumstances–but only to the extent that VA loan rules are enforceable.
VA Pamphlet 26-7, Chapter Six states that for Interest Rate Reduction Refinancing Loans (IRRRLs), “Generally, the party(ies) obligated on the original loan must be the same on the new loan (and the veteran must still own the property). The lender should contact VA regarding a proposed IRRRL involving a change in obligors unless the acceptability of the IRRRL is clear. ”
That said, the VA loan rules for IRRRLs do state that the divorced veteran alone can apply for VA Streamline (IRRRL) Refinancing. To that end, Chapter Six states, “For death or divorce cases, obtain a statement from the obligor(s) on the ability to make payments on the new loan without the co-obligor’s income. Obtain a statement about the addition of a different spouse, change in number of dependents, as applicable.”
Additionally, “The lender should satisfy itself that the lower payment and interest rate, and the minimum 25 percent guaranty compensate for no re-underwriting on the new loan when there has been a change in obligors.”
It’s important to point out that these rules apply only to the loan itself–the question of the deed is a different matter. That issue may be affected by state law. Consult a lawyer for assistance in this area.
Do you have questions about VA mortgages? Ask us in the comments section.