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What Are VA Foreclosures & Who Can Buy Them?

What Are VA Foreclosures & Who Can Buy ThemForeclosure isn’t an easy subject to talk about and, as a result, many of us are confused and uninformed about the foreclosure process. It should go without saying that any foreclosure is an incredibly unfortunate and somber event and most end up being bank-owned properties or are hand over to the original lender. However, it’s even more distressing to know that a foreclosure may have been caused as the result of a system that doesn’t properly support our veterans once they return home.

The US Department of Veteran’s Affairs (VA) home loan program offers an amazing opportunity for veterans and service members to purchase, refinance, or even build a new home. However, as with any other loan, terms and conditions apply. The VA home loan program is not a grant, and the money provided must be paid back.

If a service member or veteran is unable to afford payments on their home, just as with a conventional mortgage, their home will go through the foreclosure process and ultimately resold. It’s a tragic reality for many veteran homeowners, but it also offers an opportunity for others, who may be able to purchase the property through a foreclosure sale at a much more affordable price than other properties on the market.

If learning more about VA foreclosures and how to purchase them sounds appealing to you, then read our guide below.

Buying a VA Foreclosure Home 

As unfortunate as it is, a foreclosed home offers the opportunity for future buyers to secure a great deal on a home.

The only thing that separates a foreclosed VA home with any other foreclosure is the fact that the latter was purchased with a VA home loan. After the home is foreclosed, any person can purchase the home, regardless of whether they themselves are veterans. Currently, there are homes available in every state that are available as the result of VA foreclosures.

The VA home loan program offers a diverse range of benefits for veterans and service members, including a guaranteed loan and no down payment. These benefits can make the initial purchase of a home much easier, but it can backfire if veterans are unable to make regular payments in the future.

When this happens, the original lender will go to the VA that originally guaranteed the loan and ask to be paid back for the loan that they made. Once this happens, the VA will cover the cost of the mortgage, but the VA will then own the home.

Post-foreclosure  

After the foreclosure, the VA will seize the property and sell the foreclosed home to the public. Although absolutely anyone is eligible to purchase a VA foreclosed home, it still presents a great opportunity for veterans looking to invest in a new property.

When selling foreclosed homes, the VA will use a property management group called Ocwen Loan Servicing LLC, who will handle all sales. If you are a veteran interested in purchasing a VA foreclosed home, visiting their company website is a good place to start.

Here, you will find a listing of each VA foreclosed home currently for sale, organized by state. Each listing will include all the relevant property information, along with in-depth information about the process of purchasing VA foreclosures.

Once you’ve found properties that work for your budget and desired location, then you should contact a real estate professional and plan to view the property. All the VA foreclosed properties are listed in the real estate Multi Listing System (MLS), so any agent should be able to access the home’s information and set up a showing without too much trouble.

The good news is that all VA foreclosed homes can be purchased with VA home loans, meaning you don’t need to sacrifice the VA supports available to you to take advantage of a well-priced real estate opportunity. 

Finding the right home for your family 

Finding the right home for your familyAlthough purchasing a VA foreclosed home may seem like a quick, easy, and affordable way to find a home and, the truth is, you often can secure a great deal. According to a real estate statistic organization called RealtyTrac, in 2017, average home buyers of distressed properties saw savings of nearly 40%.

However, it is important to note that purchasing a VA home foreclosure can be just as challenging, lengthy and yes, expensive, as any conventional home buying process. Although home buyers generally find lower prices with foreclosures, some properties that are in great condition will have prices comparable with homes in the area.

It’s also important to do your due diligence to ensure you’re purchasing a home in good condition. It’s always critical to do research and ask your realtor as many questions as possible but this is especially important when it comes to foreclosed homes.

Tips and Suggestions

Some things to look out for when looking at VA foreclosures including any mandatory repairs or renovations, insulation quality, broken windows and floorboards, and the quality of the plumbing and electrical systems. Particularly if you’re looking at an older home, ask your realtor about any potential hazards, including lead-based paint.

Of course, fixer-uppers are available in any market, but it’s important to compare the need for repairs with the cost of the home. If the property is in truly poor condition, you may not end up saving money in the long run. If you are a disabled veteran, you should also consider the accessibility of each home and how easy it would be to make the necessary modifications.

It’s also a good idea to be skeptical of any initial valuation that you’ve been given. Particularly in neighborhoods with very high rates of foreclosure sales, it can be a challenge for experts to come to an agreement of value, meaning the price you originally expected could change at a moment’s notice.

Ultimately, VA foreclosures present an opportunity for your family to make a valuable investment, or potentially lead to a more confusing, challenging home buying process. However, if you approach the process of buying a foreclosed home as one with just as many hits and misses as other markets, you are more likely to find the perfect place to call your own.

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