Investors should know that the Veteran’s Administration (VA) can provide excellent opportunities for non-veterans looking to purchase foreclosures. While typical VA financing offers lower rates for veterans purchasing a home, non-veterans purchasing foreclosed VA homes can also receive financing benefits through the VA Vendee Financing program.
The VA does not give loans; rather, they guarantee the loans of qualified borrowers. Because of this, lenders are more willing to offer lower interest rates or take risks on applicants with questionable credit. In the event that a loan goes into default, the VA pays off the mortgage, takes possession of the house and lists it for resale.
VA Vendee Financing offers a form of seller financing at a low fixed interest rate set by the VA. The interest rate at the time of publishing was 6.5 percent.
Additionally, investors can make a down payment as low as five percent, and there is no required mortgage insurance, no required tax service, no appraisal fee and no flood certification fee.
Investors whose bids are accepted can expect to pay a $350 application fee and a $500 closing fee. Also due at closing is the VA funding fee, typically 2.25 percent of the loan amount. Applicants must be able to provide two years’ employment and income verification, prove they have the funds to close, submit a contract for sale and purpose, submit VA Form 26-6705 and pay the application fee.
As with other foreclosures, properties owned by the VA are sold as is. The VA will not undertake any necessary repairs, so investors would be wise to have an inspection done prior to bidding.
When listing foreclosure properties, the VA employs a Simultaneous Offer Period that typically lasts for 10 days after the listing date. All bids are opened at the end of this period and are considered to have been received simultaneously. If no bids meet the VA’s minimum requirements, the property will remain listed and all further bids will be treated on a first-come, first-serve basis.
All VA foreclosures are marketed through Ocwen Loan Servicing LLC; listings and further information can be found via their website.