How Much Time to Vacate a Home in a VA Loan Foreclosure Process

By Karina Hernandez

The Department of Veterans Affairs guarantees mortgages made by approved lenders to members of the military. The VA insures a portion of the mortgage, paying a claim to the lender in the event of default or foreclosure -- the legal process by which a lender can take possession of real property. The amount of time a borrower has to vacate a home in foreclosure depends on various factors.

Foreclosure laws vary by state with general rules and time lines to which VA lenders must adhere. The process in which a lender exercises its rights against the property occur in two phases: preforeclosure and foreclosure. The VA borrower retains possession and title during preforeclosure, and generally loses ownership on the foreclosure sale date, when the home is either auctioned or repossessed by the lender. In some states, the borrower is entitled to a redemption period of up to several months after foreclosure to cure the default and redeem ownership of the property.

During the preforeclosure period, the VA may allow a delinquent borrower to sell their home to liquidate the debt, or at a loss, if the loan is underwater. The VA lender may accept a compromise sale for a mortgage with negative equity. In a compromise sale, the home sells at fair market value but falls short of covering the balance owed. VA homes may be sold to private party, non-VA borrowers or to VA borrowers that take over the loan via loan assumption. The sales contract dictates when the delinquent borrower must surrender possession to the new owner. Agreements typically require the seller to vacate by the closing date. Generally, a new owner must occupy a primary residence within 60 days of closing.

Although the foreclosure process varies by state, the amount of time the VA borrower has to vacate the home also depends on how aggressively the lender pursues it. In general, after three months of missed payments, the lender will issue the borrower a notice of preforeclosure known as a Demand Letter, Notice of Default or Notice to Accelerate. If the borrower fails to resolve the delinquency within 30 days of the notice, the lender can set the foreclosure sale date. The auction may occur in as few as two to three months after the notice, according to the Department of Housing and Urban Development.

The VA offers foreclosure alternatives for distressed borrowers. Those whose financial hardship is temporary may qualify for: the Interest Rate Reduction Refinancing Loan (IRRRL) Program to permanently reduce monthly payments, a forbearance repayment plan that allows the borrower to catch up on missed payments; or reamortization of the loan which adds the delinquent amount to the loan's balance. The VA may also agree to refunding the loan; that is, buying it from the lender and servicing it directly. A last resort to avoid foreclosure involves a deed-in-lieu, where the borrower deeds the property to the VA. Lenders may offer the borrower cash-for-keys to encourage them to move out quickly. Because the eviction process can be costly and time-consuming, the lender may offer a lump sum rather than force the borrower out through the legal process after a foreclosure takes place. They may require to them to vacate within a few weeks.

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