A reader asks, "I am a surviving spouse I have a mortgage through Citimortgage. I am currently one month behind due to being out of work for medical. I have been trying to get a HAMP and principal reduction but keep getting turned down. Can I participate in a VA refinance even though my current mortgage is not through VA but I am VA eligible?"
There are two basic issues to review with regard to this reader's question. The first is whether a surviving spouse is eligible for a VA mortgage. According to the VA official site, on the page titled Home Loan Guaranty Benefits For Surviving Spouses, you'll find the following:
"The unmarried surviving spouse of a veteran who died on active duty or as the result of a service-connected disability is eligible for the home loan benefit. If you wish to make application for the home loan benefit as a surviving spouse, contact our VA Home Loan Eligibility Center. Or, you may call the Eligibility Center's toll free number, which is 1-888-244-6711.
In addition, a surviving spouse who obtained a VA home loan with the veteran prior to his or her death (regardless of the cause of death), may obtain a VA guaranteed interest rate reduction refinance loan."
The second part of the question concerns whether there's a VA refinancing loan option for those with conventional mortgages. The VA published a press releaase titled, "Enhanced VA Mortgage Options Now Available for Veterans Of Potential Benefit to Those in Financial Distress" which includes this information for eligible VA borrowers with conventional loans:
"Veterans with conventional home loans now have new options for refinancing to a Department of Veterans Affairs (VA) guaranteed home loan. These new options are available as a result of the Veterans’ Benefits Improvement Act of 2008, which the President signed into law on October 10, 2008.
“These changes will allow VA to assist a substantial number of veterans with subprime mortgages refinance into a safer, more affordable, VA guaranteed loan,” said Secretary of Veterans Affairs Dr. James B. Peake. “Veterans in financial distress due to high rate subprime mortgages are potentially the greatest beneficiaries.”
"VA has never guaranteed subprime loans. However, as a result of the new law VA can now help many more veterans who currently have subprime loans.
The new law makes changes to VA’s home loan refinancing program. Veterans who wish to refinance their subprime or conventional mortgage may now do so for up to 100 percent of the value of the property. These types of loans were previously limited to 90 percent of the value.
Additionally, Congress raised VA’s maximum loan amount for these types of refinancing loans. Previously, these refinancing loans were capped at $144,000. With the new legislation, such loans may be made up to $729,750 depending on where the property is located."
For more information, contact the VA directly at 1-877-827-3702.
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