VA-Owned Properties for Sale

Most homeowners never expect to fall behind on their mortgage. But when financial hardship strikes, foreclosure can become a reality. When a home goes into foreclosure, the lender takes ownership of the property and eventually sells it to recover the unpaid loan balance.

If the foreclosed home was purchased with a VA loan and the Department of Veterans Affairs takes ownership, it becomes what’s known as a VA REO property. “REO” stands for “Real Estate Owned,” meaning the lender now owns the home and offers it for resale.

With the purchase of any property usually comes the need for a mortgage loan of some kind. Repossessed houses are often fixer-uppers, and such properties may not pass muster when it comes to building code compliance, the ability to pass an appraisal, etc. That’s why these properties are sold under a program called VA Vendee Financing or VA Vendee Loans.

While many buyers use VA Vendee Financing to purchase VA REO properties, it is not the only option. If a property meets lender guidelines, buyers may also use conventional or other loan programs.

VA Vendee Loans For VA Foreclosures

VA Vendee Loans differ from traditional VA purchase loans available to eligible veterans and surviving spouses. VA Vendee Loans are offered to a wide range of buyers:

• Veterans
• Non-veterans
• Owner-occupiers
• Investors

For most loans associated with the Department of Veterans Affairs, investors and non-military borrowers are excluded. Not so for Vendee Financing; investors can apply for these loans as well as owner-occupiers. Vendee Financing allows purchasing REO homes as investment properties OR primary residences.

Perks of VA Vendee Loans for REO properties include:

• Low or no money down
• Origination fees can be included in the loan (for qualified borrowers)
• Funding fees may also be included in the loan (for qualified borrowers)
• 15- or 30-year loan terms
• Seller contributions toward closing costs are permitted
• No mortgage insurance
• No limits on how many VA REO properties can be owned as investments

Zero-down financing may be available to qualified owner-occupants. Investors typically must make a down payment, and requirements vary by lender, credit profile, and property condition.

VA REO homes are sold “as-is,” meaning the VA does not make repairs or guarantee the condition of the property. Many of these homes may require updates or repairs before they meet lender appraisal standards or local building requirements.

If you are daunted by the idea of performing a lot of do-it-yourself improvements or paying to have them done, a VA REO home may not be for you. Those who understand they are not getting a brand-new home in perfect condition will generally be more satisfied with their purchase decisions where REO properties are concerned.

The VA itself does not publish a minimum credit score requirement for Vendee financing. However, participating lenders typically establish their own credit standards. Borrowers should expect credit and underwriting guidelines to vary by lender.

How To Find VA REO Properties And Learn More

The VA contracts with VRM Mortgage Services to manage and market VA-owned properties. VRM provides a searchable online map of available VA REO homes.

VA literature on the official site directs those interested in such properties to use the map or contact VRM Mortgage Services by phone at 855-843-8334. You can also search for VA-owned properties on the federal government’s official real estate sales website.

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