Sara Routhier, Managing Editor of Features and Outreach, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming worl...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Jan 11, 2013

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Defaulting on a VA loan can result in foreclosure, meaning that a homeowner loses their house to the lender. Just like regular mortgages, these veteran mortgages must be paid on time.

If a borrower is facing financial difficulty then he or she is given a short grace period to repay their mortgage. Some financers will be more forgiving than others and offer deferment options. However, even for veteran home loans, there is a limit to the mercy of lenders. Eventually, after several months of nonpayment, a financer will begin foreclosure proceedings.

“Once a VA guaranteed loan is 61 days delinquent, it becomes a reportable default,” said Monica Cabrera, Public Affairs Officer for the Phoenix VA Regional Office, in an interview with loans.org.

The foreclosure process ultimately results in ownership of the house returning to the lender and the homeowner ending up being evicted from the property. Worse still, the homeowner will be viewed by future financers with disdain for having failed to make payments to such a degree that the lender was forced to foreclose on the house.

Fortunately for veterans and their spouses, the VA offers a number of protections to borrowers who are near or facing foreclosure. This is one key benefit of VA mortgages; the VA actively works to keep homeowners in their houses.

“If a veteran has defaulted on a VA loan payment they should consult the VA as they will often work with the veteran and the mortgage servicer to determine alternative options available. The lender and the VA both have a vested interest in preventing a foreclosure,” said Grant Moon, founder and President of VA Loan Captain, in an interview with loans.org.

Moon continued to explain that there were several paths of recourse available to borrowers prior to defaulting on a VA mortgage. He advised that borrowers work with their financial provider to catch up on payments. Some financers may even agree not to foreclose on the home after some convincing from the VA.

“A VA representative will attempt to make contact with the borrower. The VA assists borrowers and servicers throughout the life of the loan. When a loan becomes a reportable default, the servicer repots this event to the VA. The servicer continues to work with the borrower to reach a resolution to cure the default and is required to report monthly updates on the status of the loan to the VA,” said Cabrera.