Self Help

The VA sends a monthly list of its offerings to brokers who have registered with it. The VA usually does not fix up properties but offers them at a fair price. The VA also offers very favorable financing terms, but the procedure is a bit different. It sells on an installment plan basis. You don’t have an actual deed, but you do have equitable ownership. That means, in essence, that the house is yours. You can improve it and do anything to it that does not minimize the security. As in a mortgage clause, you can’t divest any of the property.

If you choose to sell the property at a later date for much more than you paid for it, your purchaser may arrange his financing in the ordinary way. At the closing, the VA will act in much the same way a mortgagee would. Its claim will be paid directly, and your purchaser will receive a deed from the Administrator of Veterans Affairs.

At any time after your purchase of a VA foreclosure, if you have reduced the amount of the mortgage to 75 percent of the purchase price, you receive a deed and are removed from what was actually an installment contract. (If you had paid 25 percent down at purchase you would have received a deed outright.) Until the point where the mortgage amount is reduced to 75 percent of the original purchase price, the VA is in title and the deed for your sale to a third party would have to come directly from the Administrator of Veterans Affairs.

These VA installment contracts were (and still are) an excellent source of affordable housing. Through the years, People have sold many homes by this process to persons who never believed they had sufficient cash or credit to purchase a home. Again, your local broker should have access to these properties; he’s paid a commission by the VA.

In many regions, FNMA and FMAC have appointed management brokers to help dispose of their acquisitions. Some of these brokers are members of their local Multiple Listing Service; you’ll often find numerous foreclosure listings in the MLS bulletin. Your broker can access these.

For the person who needs bank financing, buying owned real estate from a bank can be the answer. If you’re a credit-worthy individual, you may be pleasantly surprised to learn that the bank is actually looking for you! Never approach a bank with hat in hand if you’re looking to purchase one of its owned properties. If your credit history is good, it will bend over backwards to help you purchase that property.