Overview of Investing in Veteran Affairs Foreclosure Properties
The Department of Veterans Affairs recently awarded a contract to Ocwen Financial Corporation to manage all VA-owned foreclosure properties. Since Ocwen provides RealtyTrac with all their VA foreclosure properties, investors can also easily find the more than 12,000 VA foreclosures on RealtyTrac's website at www.realtytrac.com. To view VA foreclosures on RealtyTrac, simply type in a state, city and zip code and then click the "view list" button. In the "search results" page, click the "government-owned" button and you will be able to view VA foreclosures.
Because many of these houses are highly leveraged, the VA has a hard time selling many of these government-owned foreclosures - unless they offer them at a discount. For investors, if you happen to live in or near a large military base, the opportunities to invest in VA foreclosures are likely to be greater due to the higher concentration of veterans who live in the area.
Buying and selling VA foreclosures represents a viable investment opportunity for real estate investors. Frequently, VA foreclosures are listed below market value. But with VA properties, investors need to understand that all sales are "as is." That means investors must inspect a property as thoroughly as possible before placing a written offer. Many VA repos sit vacant for months or more. The VA does not guarantee foreclosed homes in any way, shape or form. Once you buy a VA foreclosure, it's yours for better or for worse. So a thorough inspection by a professional licensed home inspector is a must.
After your inspection, you'll need to have your realtor or the listing broker prepare the offer and complete all the necessary government documentation. The bid must be submitted on a special VA contract form and your broker must be registered with the VA to submit offers. Then, the listing broker will present the offer to Ocwen for approval. It typically takes two weeks or more to hear from the VA - and only the winning buyer will be notified by mail.
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Other benefits offered to veterans under the VA program include:
- No down payment required.
- VA closing costs and other fees can be financed.
- VA loans can be assumed.
- No mortgage insurance premiums.
- No mortgage prepayment penalties.
Lenders like to work with the VA because they provide lending institutions with a guarantee that loans made to veterans will be repaid in full in the event of default by a veteran borrower.
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