VA Loan Reader Question: VA Loan Modification

When borrowers get into financial trouble and worry about their ability to pay their VA mortgages, some turn to the lender for VA loan modification. Unfortunately the process didn’t go very smoothly for one borrower, who writes;

“Having my current VA loan for 3 years now, my wife lost about half her income and we fell behind on our mortgage. We contacted the lender and the VA for paperwork on a loan modification. Today is 1-19-12. We first sent in our Mod paperwork on 8-8-11. We stay in touch with the lender and followed all the rules.

Here’s where it went wrong:

The lender said they lost or didn’t get our paperwork after they said they had received it. Then said they complained that it didn’t print correctly. I spent countless hours sending the approved PDF’s or JPEG’s file as requested. I even went as far as to open the attachments for them, so all they needed to do it download them or hit print. We even mailed in a 40 + page copy to their office. Every attempt we made to get these important documents to our lender failed. Finally, after about 3 months, they said they had what they needed. About 2 months later we found out they has denied our Mod request. They never sent us anything in writing. We never got a phone call, nothing at all.”

While none of what follows should be interpreted as direct commentary or advice on the situation mentioned above, it’s important to point out a few issues for other borrowers who may find themselves in a similar situation.

Any time a VA borrower gets into trouble on their VA mortgage, it’s important to contact the Department of Veterans Affairs as well as the lender. The VA can provide counseling, assistance and advice for the borrower at the same time the lender is considering a VA loan modification or other foreclosure avoidance program suitable for a particular borrower’s situation.

Another reason why it’s critical to be in touch with the VA from the start of any difficulty with a VA mortgage? The borrower will already have a record of help requests on file with the VA should there be any difficulty as described above.

A borrower who can’t seem to get the help they need from a lender can reach out to the VA once more to ask for assistance–call 1-877-827-3702 to speak to a VA financial counselor and get advice on clearing up the trouble or what to do next.

And finally, when borrowers submit important paperwork such as foreclosure avoidance or loan modification documents, applications, etc. it may be a very good idea to send this paperwork by registered mail and require a signature so the borrower can track the paperwork.

It seems the “we never got your paperwork” problem occurs far too often to not use registered mail or some other type of delivery that requires a signature. When trying to avoid VA loan default or foreclosure, it’s best to play it safe and submit both electronically where permitted AND by mail with tracking in order to protect your interests.

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