Arizona Mortgage Team

Arizona Mortgage Rates. Refinance FHA, VA and Jumbo Mortgage Loans.

  • Loan Programs
    • FHA Loans
      • FHA 203k Loan
      • FHA Streamline Refinance
      • FHA Kiddie Condo Loan
    • VA Loans
    • USDA Loans
    • HomePath Loans
    • Interest Only Mortgage Loans
    • Refinancing
    • Reverse Mortgages
      • Reverse Mortgage Quote
  • Insurance
    • Arizona Car Insurance
    • Arizona Homeowner Insurance
    • Arizona Life Insurance
    • Arizona Renters Insurance
  • Press
  • Blog

Can You Assume a VA Mortgage Loan?

April 18, 2013

Interest rates can’t stay low forever – they go up and down. When interest rates are down, people get mortgages that are locked in for the term of the loan at a very low rate. What happens when rates go up and people want to sell their house? The buyer may ask about whether or not their loan is assumable. Two of the most popular loan programs over the last few years are the FHA loan and VA loan programs.

Are VA Mortgages Assumable?

In order to find out if VA loans are assumable, the VA manual on loans is the source of the answer. Look in Chapter 5, section 7. From the source:

General Information about Assuming a VA Mortgage

Under certain circumstances, properties that are security for VA-guaranteed loans may be sold even though the loans are not paid in full. Borrowers who sell their properties under these conditions remain liable to VA for any loss that may occur as a result of a future default and subsequent claim payment, unless the property is sold to a creditworthy purchaser who agrees to assume the payment obligation.

Who Can Process VA Assumptions

While procedures for processing requests for assumption approvals previously depended on the date of loan (commitment made on or after March 1, 1988), the new VA Loan Electronic Reporting Interface (VALERI) regulations authorize loan holders or servicers with automatic authority to determine creditworthiness on all assumption approval requests processed by their servicers.

VA Mortgage Assumption Review Procedures

Transfers of ownership on properties securing loans for which commitments were made on or after March 1, 1988, must have the prior approval of the loan holder or its authorized servicing agent if either of them have automatic authority. If neither the holder nor the servicer has automatic authority, the servicer must submit a credit package to VA for underwriting. The following subparagraphs describe processing details. A seller must apply for approval of the transfer prior to completing the sale. Servicers and holders with automatic authority must examine the application to assess compliance with the provisions of 38 U.S.C. 3714. VA will make the determination in a case where neither the servicer nor the holder has automatic authority, following receipt of a complete application package from the servicer.

To approve the transfer of ownership:

  • The loan must be current or will be brought current at the closing of the sales transaction,
  • The prospective purchaser of the property is creditworthy, as determined in accordance with 38 CFR 36.4840 and VA Pamphlet 26-7, Lenders Handbook, and
  • The prospective purchaser has agreed to assume all of the loan obligations, including the obligation to indemnify VA if a claim is paid.
  • A processing fee may be collected in advance, including a reasonable estimate for the cost of the credit report. The maximum fee for processing a request for assumption approval and changing the loan records is the lesser

of:

  • Automatic authority – $300 plus the actual cost of a credit report;

or

  • No automatic authority – $250 plus the actual cost of a credit report; or any maximum prescribed by applicable state law.

Note: VA does not specifically regulate when the processing fee may be assessed. However, when the processing fee is collected prior to signing the sales contract, the portion of the fee attributable to changing the servicer’s records (usually $50) must be returned to the seller if the application is denied or the process is not completed. Therefore, VA recommends that the processing charge accompany the complete package.

VA Assumable Loan Processing Time Guidelines: How Long Does It Take?

Automatic Authority: Servicers or holders with automatic authority must complete the examination and notify the seller of the decision within 30 days after receiving a complete ownership transfer approval application package. Without Automatic Authority: Servicers without automatic authority (where the holder also does not have automatic authority) must submit documents to VA within 21 days after receiving a complete application package.

VA Review: VA has 14 days to complete its underwriting review and notify the servicer of its decision. Servicers have 7 days to notify all parties of VA’s decision.

Note: These time periods may be extended by the time lost if delays are beyond the servicer’s control, such as employers or financial institutions not responding to requests for verification or follow-up requests.

Decision Notices

Approvals: If the application for ownership transfer is approved, the servicer must notify the seller and include instructions for the assumption of liability by the purchaser, the amount of funding fee that must be paid, and documentation needed to complete the process.

Disapprovals: If the application is disapproved, the seller and purchaser must be notified. The disapproval notice must include:

  • The reason for the decision and a notice that the decision may be appealed to VA within 30 days
  • The VA address to which the appeal should be sent, which will be the RLC that has jurisdiction over the state where the property is located, and
  • If the application was disapproved for credit reasons, the purchaser must be informed of the basis on which the adverse decision was made in accordance with the Fair Credit Reporting Act.
  • If the application remains disapproved after 45 days (to allow time for appeal and review by VA), the $50 fee for changing the account records, if previously collected, must be refunded.

Yes, VA Mortgages Can Be Assumable

The short answer is yes, VA mortgages may be assumable if approved by the lender. If you are interested in assuming a VA loan be sure to get a quote on a new VA mortgage from multiple lenders so that you have all of the information needed to make the best financial decision possible. Get a free quote on a VA mortgage today.

Filed Under: VA loans Tagged With: Are VA Mortgages assumable, Assumable VA mortgages, Assume a VA mortgage, Can you assume a VA mortgage

Recent Items

  • How Does a VA Streamline Work?
  • Can you Use a Mortgage Assumption after a Divorce?
  • What are the Major USDA Streamline Guidelines?
  • How is the USDA Monthly Guarantee Fee Calculated?
  • How to Purchase USDA Foreclosed Homes?

Latest News

  • How Does a VA Streamline Work?
  • Can you Use a Mortgage Assumption after a Divorce?
  • What are the Major USDA Streamline Guidelines?
  • How is the USDA Monthly Guarantee Fee Calculated?
  • How to Purchase USDA Foreclosed Homes?

Search

IMPORTANT MORTGAGE DISCLOSURES:

When inquiring about a mortgage on this site, this is not a mortgage application. Upon the completion of your inquiry, we will work hard to match you with a lender who may assist you with a mortgage application and provide mortgage product eligibility requirements for your individual situation.

Any mortgage product that a lender may offer you will carry fees or costs including closing costs, origination points, and/or refinancing fees. In many instances, fees or costs can amount to several thousand dollars and can be due upon the origination of the mortgage credit product.

When applying for a mortgage credit product, lenders will commonly require you to provide a valid social security number and submit to a credit check . Consumers who do not have the minimum acceptable credit required by the lender are unlikely to be approved for mortgage refinancing.

Minimum credit ratings may vary according to lender and mortgage product. In the event that you do not qualify for a credit rating based on the required minimum credit rating, a lender may or may not introduce you to a credit counseling service or credit improvement company who may or may not be able to assist you with improving your credit for a fee.

Copyright © Mortgage.info is not a government agency or a lender. Not affiliated with HUD, FHA, VA, FNMA or GNMA. We work hard to match you with local lenders for the mortgage you inquire about. This is not an offer to lend and we are not affiliated with your current mortgage servicer.

Contact Us | Terms of Use | Privacy Policy

Buy Mortgage Leads

Mortgage.info

NMLS ID #1237615 | AZMB #0928735

8123 South Interport Blvd. Suite A, Englewood, CO 80112

CLICK TO SEE TODAY'S RATES

Contact Us