Military service members are less likely than the general population to have trouble paying their mortgage, judging by the comparatively low default rates for loans backed by the U.S. Department of Veterans Affairs (VA).
But that doesn't mean servicepersons never suffer financial difficulties. Rather, it demonstrates that additional help is at hand if you're a service member struggling with home loan payments.
VA loans are among the most likely to get a positive outcome in discussions with a loan servicer, according to Linda Davis-Demas, director of housing at the Consumer Credit Counseling Service of Greater Dallas, a nonprofit with 11 offices in Texas.
"As long as the homeowner reaches out and says, 'I need assistance,' then, for the most part," she says, "they usually do receive some type of resolution."
Here's a summary of what you need to know:
Servicemembers Civil Relief Act
The federal Servicemembers Civil Relief Act prohibits foreclosure while you're on active duty and for 90 days after your active duty ends.
It also gives you an opportunity to have the interest rate on your loan reduced to 6 percent (if you're on active duty and you took out the loan before you were deployed), according to Sheri Stuart, education manager at Springboard, a nonprofit consumer counseling agency in Riverside, Calif.
The VA-HAMP program is a variation of the federal government's Home Affordable Modification Program.
If you have a VA-guaranteed loan and your situation doesn't fit the parameters for other loss mitigation options or a standard HAMP modification, VA-HAMP allows "some leeway," Stuart says, for the loan servicer to offer you a modification on better terms. The property must be your principal residence.
VA-HAMP doesn't require the loan servicer to use the net present value (NPV) calculation that's applied in the standard HAMP approach, a potential advantage of the VA variation.
VA loan liaisons
The VA operates regional loan centers in 11 U.S. cities. Technicians at these centers can act as a liaison between you and your loan servicer to help you find out what your options are, according to Dean Eckes, a loan administration officer at the center in Phoenix, Ariz.
The VA can't force your loan servicer to offer you a repayment plan, forbearance, loan modification, approve a short sale or deed-in-lieu of foreclosure. But the technicians have what Eckes describes as "a fairly decent relationship" with the different servicers and, he adds, negotiation and persuasion can be effective in these situations.
The liaison function is limited to VA-guaranteed loans, Eckes explains, though you can still get good advice even if you have a different type of loan.
If you've not made a late payment on your mortgage in at least 12 months, you might be able to refinance to reduce your housing cost, according to Nathan Long, CEO of VA Mortgage Center, a mortgage company in Columbia, Mo.
"This is not an option if you're already in trouble on your mortgage," Long explains. "It's more of a preventative measure if you start feeling the water getting deeper."
The VA offers a streamlined approach, which allows you to refinance an existing VA-guaranteed loan into a new VA-guaranteed loan with a lower interest rate.
An upfront funding fee is required as is a property appraisal, though Long says the loan-to-value ratio can be up to 100 percent, a more generous standard than would be allowed for a conventional loan.
If you're on active duty or soon to be deployed, contact the readiness officer at your local military base and ask about local community services that can help you resolve your situation.
If you're a veteran, access the VA benefits website, www.benefits.va.gov/homeloans, or call the VA home loan hotline at (877) 827-3702.
If you're facing homelessness, access the VA National Call Center for Homeless Veterans website, www.va.gov/HOMELESS/NationalCallCenter.asp, or call the center at (877) 424-3838 to get immediate assistance from the VA.
To find a nonprofit agency that offers free housing counseling services and is certified by the U.S. Department of Housing and Urban Development (HUD), access the HUD website, http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm.
Another helpful resource is HopeNow, a mortgage industry alliance created to assist homeowners. The website is www.hopenow.com, and the telephone number is (888) 995-HOPE.