September 14, 2010,
S.B. asks from Wylie, TX on September 13, 2010
VA Loan and Divorce
Here is the situation...My husband at the time and I bought a home with a VA loan (my ex is the veteran). We have since divorced and I got the house in the divorce settlement. I want to assume the VA loan but been told that the VA would have to approve me to assume the loan. My ex's name is off the deed but is still on the mortgage. I have excellent credit and have been able to make the payments on the house. Has any of you out there gone thru this? If so how did you assume the loan? What VA standards did you meet to be approved. I am afraid of contacting the VA for information and have them tell me that since the veteran is not living in the house that the house would need to be put up for sale. I don't want to lose this house. The house was purchased in 12/08. Any information would be appreciated since my ex is pressuring me to take his name of the mortgage but I don't have the down payment to refinance and at this time my home has no equity. I am going crazy, as I have no idea how to approach this. My ex and I have a 6 yr old son together. Again anyone that knows anything about VA loans or has gone thru this situation I would appreciate your input. Thanks in advance...
M.R. answers from Columbus on September 13, 2010
Are you sure your not from Ohio? I have a friend who was in the same situation. I don't think that the VA can force you to sell the house, but you need to speak to your divorce attorney about the kind of pressure your ex can put on you. What does the decree say about the loan? If your ex did not specify anything in the decree about how the actual loan would be handeled, he may be out of gas. In my friends decree, all she had to do was to "try" to refinance the house, she did, and it did not go through so she met the standard. I would look to your decree first, because that is the document that really tells you what you have to do, and if he is asking for something that he forgot to ask for during the divorce, then you may just be able to get the judge to order that he quit hounding you about it. There was not a problem with my friend living in the house without the veteran, she was awarded the home in a court document, I would bet that the same is true for you. Ask your lawyer, and have them bill your ex!
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M.H. answers from Dallas on September 14, 2010
Hi S., Va Loans can be assumed by non veterans under certain circumstances. Since you are not Veteran, your exes elegibility will not be restored but his name will be off the mortgage. He can get a Release of Liability but he won't be elegible 100% for another VA loan until you sell the property or the loan is fully paid off.
Loan assumptions or transfers are allowed regardless of the date of the loan in cases described as “unrestricted transfers.” These include cases where the borrowers get a divorce. Although a release of liability is not mandatory, the parties may wish to obtain a release for legal or credit purposes, which I'm sure your ex wants! VA, not the loan holder, must process the application for release in these cases.
The risk of having the house put for sale can happen. If an assumed loan is closed on or after March 1, 1988, which your is, and is not approved by the loan holder, failure to obtain approval of the assumption even though payments are current, may result in an immediate “due on sale” notice from the loan holder. VA should be contacted in these situations for guidance. So you do need to get this resolved officially through the VA. You have to qualify for the loan according to VA Home Loan guidelines. Call the VA and ask about the steps to go through this application, the forms, and the qualifying guidelines. The VA Loan Guaranty Division is probably where you need to start. Since you have no equity, refinacing is probably not going to be an option.
Best wishes and God bless!
K.G. answers from Dallas on September 14, 2010
You will most likely need to refinance the loan into your name. My husband is an experienced mortgage banker...if you would like to ask his advice, his name is Doug Gott and his number is ###-###-####. Good luck!
M.H. answers from Dallas on September 13, 2010
I would recommend contacting a mortgage broker who is experienced in VA loans. I do believe that a non-veteran can assume a VA loan but if you ever defaulted they would still come after the veteran for payment.