Mortgage IIB 2 years ago/ VA compromise claim Question

[BobMango]

i'm not really certain about that. we attempted a VA after 2 years and were denied....

That is a decision by the lender/underwriter, not the VA and it could have been for a number of factors not related to timing. The VA Lenders Handbook specifically states that a bankruptcy or foreclosure can be disregarded after 2 years, provided the borrower has reestablished credit worthiness. I know many people do have difficulty obtaining a VA loan after only two years, but many others are able to. It's really a matter of finding the right lender for a particular situation.

the op say that the VA wants the loan repaid. why???

My reading of the situation is NOT that the VA is demanding repayment. There is no liability or tax consequences. The OP would only need to repay the VA if they wish to use their VA entitlement again. Compare this to a situation where you filed on a debt with a local bank. You want to obtain new credit with that bank and they say, "sorry, but we took a loss last time we loaned you money. If you want to make us whole we might consider it though." You're not on the hook, but in order for them to extend credit again they want to be repaid.

Many people offer to pay discharged debts in order to reestablish credit or maintain a relationship with a particular creditor, doctor, etc. This seems no different. No you don't technically owe it, but if you want to keep doing business you may decide it's worth it to pay.

[tobee43]

That is a decision by the lender/underwriter, not the VA and it could have been for a number of factors not related to timing. The VA Lenders Handbook specifically states that a bankruptcy or foreclosure can be disregarded after 2 years, provided the borrower has reestablished credit worthiness. I know many people do have difficulty obtaining a VA loan after only two years, but many others are able to. It's really a matter of finding the right lender for a particular situation.
what you say makes good sense, however, is not in the actual spirit of what the laws are on bk's.

i do know a few people after many years going to a credit card company and they saying no way since we had to write off a debt in the past, however they never had to pay back the debt and after a few years this creditor ended up extending credit again.Many people offer to pay discharged debts in order to reestablish credit or maintain a relationship with a particular creditor, doctor, etc. This seems no different. No you don't technically owe it, but if you want to keep doing business you may decide it's worth it to pay.

also, i'm certain your correct in as much as it may depend on who's doing the lending and unfortunately nowadays not many or anyone is. while i understand what you're saying about repaying, and perhaps via the VA's view the repayment will make them whole and then they may consider lending to the the debtor again, ...even IF they collected the amount from PMI??? just a thought.

i'm not stating there is any tax liability at all. and, i do understand some people CAN pay a debt after a discharge. but then what was the purpose of the concept of going bk in the first place if you pay back most likely one of the largest debts on one's petition. but i get what you're saying here bob.

[BobMango]

also, i'm certain your correct in as much as it may depend on who's doing the lending and unfortunately nowadays not many or anyone is. while i understand what you're saying about repaying, and perhaps via the VA's view the repayment will make them whole and then they may consider lending to the the debtor again, ...even IF they collected the amount from PMI??? just a thought.

i'm not stating there is any tax liability at all. and, i do understand some people CAN pay a debt after a discharge. but then what was the purpose of the concept of going bk in the first place if you pay back most likely one of the largest debts on one's petition. but i get what you're saying here bob.

Just one clarification, there is no PMI on a VA loan so the VA did experience a loss in this case. I personally wouldn't pay it since you might as well just use those dollars for a down payment anyway. But it's not like the VA is asking to be paid twice.

[tobee43]

Just one clarification, there is no PMI on a VA loan so the VA did experience a loss in this case. I personally wouldn't pay it since you might as well just use those dollars for a down payment anyway. But it's not like the VA is asking to be paid twice.

really? never? do you think the VA was helped during the bail out by the government on their losses when so many mortgages went belly up.

[Tryingagain]

I agree with the posts in that I would rather use other avenues to obtain a loan than to pay the VA. I had a lender that was willing to overlook the BK and short sale so I'm sure they will work with me to find other options. I am mostly concerned with being made to pay the VA w/o using the entitlement again and the fact that we did not sign anything concerning the VA during the sale. I still have not called the VA (I have guests in the house and don't want them to hear me on the phone) but intend to ASAP.

[BobMango]

really? never? do you think the VA was helped during the bail out by the government on their losses when so many mortgages went belly up.

The VA funding fee (basically a one time fee equal to 1-3% of the loan value) plays the part of PMI for VA loans. The VA's potential for losses is capped at the entitlement amount, not the value of the loan. The VA generally does not make direct loans, so if a VA loan goes south, the VA could lose up to the amount of the entitlement, around $34K in most cases. The actual lender, not the VA, would lose any amount between the loan amount minus the VA guaranty and the value of the property.

For a simplified example, say a property with a loan balance of $200K was foreclosed and the property sold at foreclosure for $100K. The lender loses $100K at this point, but the VA will make good on the guaranty and reimburse the lender $34K. So the actual loss by the lender would be $66K and the VA would lose $34K. In a compromise situation the VA will step in to basically allow a short sale where the VA will lose less money. In the above example, if the house could have been short sold for $180K, then the VA can approve the compromise and pay the lender $20K to make them whole, instead of incurring the entire $34K loss associated with a foreclosure. This is not the governement being compassionate, but simply working to reduce their costs.

Since the VA is the governement, not sure what a bailout would accomplish. It would just be moving money from one gov't bucket to another. In the case of Fannie and Freddie, these are private corporations that have government backing and those bailouts have real financial consequences for taxpayers because they represent the transfer of tax pay funds to private entities.

[BobMango]

I agree with the posts in that I would rather use other avenues to obtain a loan than to pay the VA. I had a lender that was willing to overlook the BK and short sale so I'm sure they will work with me to find other options. I am mostly concerned with being made to pay the VA w/o using the entitlement again and the fact that we did not sign anything concerning the VA during the sale. I still have not called the VA (I have guests in the house and don't want them to hear me on the phone) but intend to ASAP.

Your bankruptcy absolved you of any liability for the mortgage loan, to your lender or the VA. They (VA) cannot and will not force you to pay back anything, unless you want to reuse your VA entitlement. And as previously stated, just use that money as a down payment for an FHA or USDA loan and forget about the VA.