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1
How to Get
A VA Loan
After A
Short Sale
Foreclosure
or
Bankruptcy To Get the Complete Book Visit
Socalvaloans.com and signup in the sidebar
2
Contents About a VA Loan ....................................................................................................................................................................... 3
Veterans Experiencing A Short Sale/Foreclosure/Bankruptcy ........................................................................... 4
Bankruptcy ................................................................................................................................................................................. 4
Short Sale .................................................................................................................................................................................... 4
Foreclosure ................................................................................................................................................................................ 5
First About Credit Bureaus .................................................................................................................................................. 6
Building Good Credit after Bankruptcy .......................................................................................................................... 6
More in the Complete Book!
To Get the Complete Book Visit
Socalvaloans.com and signup in the sidebar
3
About a VA Loan
A VA loan is a mortgage loan that is guaranteed by Veterans Affairs. VA loans are not made
by the government, nor are they funded from the government, rather they are made by
private qualified lenders such as banks, savings & loans, or mortgage companies. They are
available to eligible veterans for the purchase of a home which must be for their own
personal primary residence.
An eligible veteran is one who one who is currently or who has served in the US Military for
at least 181 days. These branches of military include but are not limited to the Marines,
Navy, Army, Air Force, and National Guard. Surviving spouses of veterans may also be
eligible.
4
Veterans Experiencing A Short Sale/Foreclosure/Bankruptcy
The United States experienced a housing bubble in the late 2000’s. With the cost in house
prices reaching a peak around 2006, many homeowners were faced with upside down
mortgages in the following years. This, coupled with job loss in a struggling economy, have
forced millions of Americans to default on their loans whether it be from a credit card,
mortgage, bank loan, or other. Many people declared bankruptcy. If they had a mortgage,
many either sold their home through a short sale of their home, or walked away
completely.
Bankruptcy
American veterans were not sheltered from this trouble. As the California economy
continues to go through some tough times, some veterans are forced to go through
bankruptcy protection. Bankruptcy is when a person cannot pay his or her debt to their
creditors. By declaring bankruptcy, relief is received through restructuring or cancellation
of debt. Some debts are not released from responsibility such as spousal and/ or child
support, student loans, and some taxes.
Out of the six Chapters of Bankruptcy one can declare, most individuals declare Chapter 7
which is a basic liquidation of property. This property can include any valuable collectibles,
vacation homes, family heirloom, or a second vehicle. Any proceeds from the sale of this
property would be used to pay off unsecured creditors. By declaring bankruptcy, many
veterans can get back on their feet and re-establish their credit.
Short Sale
There are also thousands and thousands of VA eligible homeowners in California that have
gone through a short sale in the past few years in California. Many property sellers
experienced a “short sale” to sell their home because the sales price was lower than the
mortgage loan balance they had on the property. This is called a “short sale”. The lender
agrees to accept the new buyers’ price even though more is owed from when it was
originally purchased. When a borrower completes a short sale, the mortgage that was
involved is most often reported on their credit as a derogatory item stating “settled for less
than full balance”. The way this former mortgage is reported to the credit bureaus alerts
the VA underwriter to the fact the borrower applying for the VA loan had a previous short
sale.
The benefit to the seller is that they do not have a foreclosure on their record. In some
cases, this obligation to repay any deficiencies of the loan is released, but they will still have
5
a negative credit on their report. The benefit to the lender is avoiding foreclosure fees and
costs. Lenders also avoid having a house sit empty on street. Lenders are not in the
business of “owning a house”, and for the right customer, the lesser of the “two evils” is a
short sale over a foreclosure.
Foreclosure
There are many veterans across the state of California who also lost their home to
foreclosure in the past few years. A foreclosure is where the lender completely takes back
(repossess) the house for payments not made. When the homeowner defaults on their
loan, the lender takes possession to the property. The impact of a foreclosure is felt across
the board. Beside it affecting a neighborhood with lowering property values, high
foreclosure rates in cities experience higher crime and thefts. Empty houses invite being
broken into and also influence the visual esthetics of a neighborhood when there is no one
to take care of the house.
If you are one of the millions of Veterans experiencing or have experienced a short sale,
foreclosure, or bankruptcy, the dream of owning your own home is still possible. Many may
want to take advantage of today’s low home prices in California and get a VA loan to buy a
new residence. You may already be eligible to use a VA home loan to buy once again with
100% financing. Getting your credit back on track is the key, but how does one go about
doing so?
6
First About Credit Bureaus
There are three National credit agencies: Experian, Equifax, and TransUnion. Each is
independent of each other. They gather their information on consumers from credit card
companies, banks, lenders, and others. In turn, these companies obtain information on
consumers to make decisions on whether to approve loans, or to even adjust current
consumer accounts.
Each of the three credit bureaus gives a score to each consumer. The most common score
is the FICO score (named because it was developed by Fair Issac and Company), it is
calculated based on type of accounts that you have opened. Also taken into consideration
is how long accounts have been open, their balance, available credit, length of credit history
and payment history. Closed accounts are taken into consideration by how long they were
open and how many there are. Closing an account may NOT lower your score. They will still
show on your credit report. Also, having a longer history of managing a credit card can be a
good thing. Each credit bureau may have a different name for their score but each is based
on the principals of FICO.
Lenders use a score from the credit bureaus but each score may be different based on what
data was reported to what agency. Lenders may include other information about you.
Scores change over time, so your score might change month to month as you rebuild your
credit.
Consumers are allowed to receive a free copy of their credit report from all credit bureaus
once every 12 months. Call all three to request your copy. Pull your credit and correct any
errors. One example of a mistake is that people with common names will find other
people’s information in their own file. Some studies show that one in four people have a
mistake or error on their credit report. By receiving your own copy, you’ll be able to catch
or correct these mistakes.
Building Good Credit after Bankruptcy
If you are one of the millions of Americans who have declared bankruptcy and think you
have “bad credit”, it may not be as bad as you think. Though your credit score may fall as
much as 200 or more points after a bankruptcy, it is possible to qualify for 100% financing
with a VA loan just two year after filing Chapter 7 Bankruptcy. VA loans only require two
years compared to FHA of 3 years and conventional of 4 years.
.
7
To Get the Complete Book Visit
Socalvaloans.com and signup in the sidebar
Resources 1. www.socalvaloans.com
2. www.socalvaloans.com/get-a-va-loan-after-a-short-sale/
3. www.socalvaloans.com/va-loan-after-foreclosure/
4. www.socalvaloans.com/va-loan-after-bankruptcy/
5. www.facebook.com/valoanaftershortsale
6. www.benefits.va.gov/homeloans/
7. www.va.gov/
8
About the authors:
Amanda White is licensed real estate professional. She worked many years with adults
with developmental disabilities in assisting them to get their credit restored. She has been
in the real estate business since 2006 investing in buying and selling single family
residences including short sales. She also draws her experience from living and working in
San Diego which is home to 16 significant naval and military locations including Marine
Corps base, Camp Pendleton and Naval Base San Diego. Amanda enjoys reading, travel, and
entertaining. She is married with 3 special needs dogs.
Rob Chomentowski is a Sr. Loan Officer with Affinity Financial, a highly respected customer
focused San Diego CA based Mortgage Company run by 20+ year veterans of the mortgage
industry and made up by only highly experienced loan officers. Rob has been assisting
Californians obtain mortgages to purchase homes and refinance for the last 10 years. Prior
to working in the mortgage industry, Rob spent many years as a market research analyst
and product manager in the high technology industry in Silicon Valley. Rob specializes only
in 1-4 unit residential financing and prides himself on an especially deep knowledge of the
ever changing mortgage lending guidelines, and a broad expertise spanning VA loans, FHA
loans, conventional loans, jumbo loans and investment property loans. Rob is licensed with
the California Department of Real Estate and the Nationwide Mortgage Licensing System. In
his spare time Rob enjoys traveling, hiking, golfing, attending sporting events, reading and
investing in real estate.
Thank You
www.SocalVALoans.com
888.242.1723