VA Loan Reader Question: VA REO Homes

Over the weekend, a reader left the following in our comments section:

“Is there a way to obtain a list of VA assumable home loans, and or is there a site for VA foreclosures?”

VA home loans are assumable, which means the borrower may allow another person to take over payments and have the property transferred into the new owner’s name. Loan assumptions are done on an individual basis, so unlike foreclosures and VA Real Estate Owned (REO) properties, if you Google “VA loan assumptions” you’ll find no central database for homes up for loan assumption.

For all VA insured loans after March 1, 1988 the VA must approve the assumption, so an individual borrower and an individual buyer must approach the VA first before the assumption can take place. The loan assumption is worked out first between the lender, the owner, and the buyer, then the transaction is submitted for approval to the VA. According to the VA official site at VA.gov, “Effective with VA loans committed and closed on or after March 1, 1988, VA loan assumptions are not allowed in most cases unless the veteran first has the assumption approved by the loan holder.”

VA insured loans that go into default and foreclosure eventually become the property of the Department of Veterans Affairs. These homes are known as REO properties, and on that subject the VA official site has the following:

“The Department of Veterans Affairs (VA) acquires properties as a result of foreclosures on VA-guaranteed and VA-financed loans. These acquired properties are marketed for sale through a property management services contract that was awarded to BAC Home Loan Servicing, LP.

Additionally, “VA acquired properties are listed for sale at http://va.equator.com and through local Multi Listing Systems (MLS) by local listing agents. If you are interested in buying a VA-acquired property, please contact a local real estate broker of your choice to see the property.”

The database at the site listed above is searchable by state and zip code.

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