The Veterans Administration had provided some extra help for Veterans and military members who may be having problems with their mortgages. The first thing a veteran or military member should do is contact the VA at 877-827-3702 or http://www.homeloans.va.gov/ and talk with a counselor.
Their options include:
The Servicemembers Civil Relief Act – to qualify for this program, the military member has to have gotten the mortgage prior to the current period of active duty service. The program can provide a lower interest rate for up to ONE year and can provide forbearance, or prevent foreclosure or eviction up to 9 months from the period of military service
If the military member or Veteran has a VA Loan, it is VERY important to remember that the VA guarantees the loan. If the member defaults, they will lose their VA loan eligibility up to the amount that the bank loses and the VA covers, but the bank CAN NOT go back against them if they accept the VA payout!! The VA WILL work with the veteran or military member and the bank to explore all options first, before the home is foreclosed on – Call 877-827-3702 for help.
If the military member or Veteran has a NON-VA loan, (ie a conventional, FHA or sub-prime loan) the VA can offer guidance and advice, but they cannot legally intercede on the veteran’s behalf.
The Veteran or military member CAN however, refinance their loan to a VA loan as a result of the Veterans Benefits Improvement Act of 2008 which was signed into law on Oct 10, 2008. Veterans can refinance up to 100% of the value of the property now (previously they could only refinance up to 90%).