NEED ADVISE/SUGGESTIONS - Posted by Madeline Falling

Posted by Stacy (AZ) on July 22, 2001 at 24:10:27:

That’s a possibility, Carl. But, when Madeline said she bought it via quit claim, I took it to mean she bought from the veteran/owner as a pre-foreclosure. In that case, the rules allowing a Land Contract would apply.

Maybe I assumed wrong, and she bought it from someone who purchased the house from the VA as a repo, and then deeded it to Madeline.


NEED ADVISE/SUGGESTIONS - Posted by Madeline Falling

Posted by Madeline Falling on July 20, 2001 at 02:18:49:

I purchased a VA forclosure through a quit claim last November. I’ve been making the payments since then and have a tenant who’s been there since December. The lender, Countrywide, is calling the loan due because of a clause regarding the assumption of the property. I’m being told that I can assume the loan or give title back to the original owner. For personal reasons, I can’t qualify to assume by myself. The note is approximately $72,000 @8%, payments are $621, I collect $675 in rent. I also have 4 other loans with Countrywide, all VA foreclosures in good standing for several years now. Unfortunately, this doesn’t matter. Are there any creative options that I don’t know about? Any help or suggestions would be appreciated. Also, I’m a licensed real estate agent, VA foreclosure specialist.
Many thanks, Madeline Falling


Posted by Dave T on July 22, 2001 at 01:16:12:

Undo the quit claim deed, and take over the property on a land sale contract. The seller retains title until you have satisfied the terms of the contract. Since the seller retains title, the seller also remains liable for the VA loan.

Therefore, no reason to call the loan due, Countrywide will back down, and you don’t need to qualify for loan assumption either.

Re: Hey Everyone, Loan Being Called. - Posted by Stacy (AZ)

Posted by Stacy (AZ) on July 20, 2001 at 11:56:58:

Madeline, I think you are the first person I’ve seen in the years I’ve been involved in REI, that is having a loan called due because of the DOS clause. Is the loan in arrears?

You could certainly tell Countrywide (I hate Countrywide) that you will NOT assume this loan, but you will be happy to continue to pay them their payments every month. Tell them that if they want to foreclose, that’s certainly their option. But it would be a shame for them to incur all the costs associated with a foreclosure on a loan that is performing.

You could also mention to them that if they choose to foreclose, that you would have no reason to continue maintaining this property, and that you cannot guarantee what condition it will be in when they get it back several months from now. (thanks Ron L.)

If all fails, you could find the seller and sign a Contract for Deed, which IS allowed on VA loans.


Re: Hey Everyone, Loan Being Called. - Posted by Bud Branstetter

Posted by Bud Branstetter on July 21, 2001 at 16:27:37:

I thought this had been discussed before that while the VA itself does not have a problem with contract for deed that does not mean that the lender themselves saction that practice. From not guaranteeing condition that might work before it were occupied. If there is equity in it or you have contracted with someone else that approach would be ill advised.

Since she took over via quit claim them she has violated the DOS. However they found out she still went public with it. How much anyone wants to spend to defend themselves if a lender does call a loan due is the question. I think I would spend the money on the TRO. But then I don’t think I violate the DOS clause. After that it becomes an economic question.

Countrywide - Posted by SandyFL

Posted by SandyFL on July 20, 2001 at 12:00:00:

I know of another investor who said she was getting a loan called due by Countrywide. What’s going on?

Re: Hey Everyone, Loan Being Called. - Posted by Stacy (AZ)

Posted by Stacy (AZ) on July 21, 2001 at 19:16:42:

Bud, I’m not sure what you’re getting at. There are rules for lenders under VA guaranteed loans. According to the VA documentation, a lender cannot call the loan due if a contract for deed is used. Here’s the link to the VA circular, and some excerpts. Am I missing something?



  1. Purpose. This circular describes the requirements for processing by lenders, holders and servicers of assumption approval requests and releases of liability under title 38, United States Code, section 1814.

and under item 12…

  1. Sale Agreements Not Subject to 38 U.S.C. 1814. When a borrower sells on an installment contract, contract for deed, or similar arrangement in which title is not transferred from the seller to the buyer, this is not considered a “disposition” of residential property securing a GI loan as stated in 38 U.S.C. 1814, and therefore does not require approval by VA or the loan holder prior to the execution of such an agreement. However, any borrower considering a sale in this manner should be cautioned that under such an arrangement he or she remains liable for repayment of the loan. Even if the agreement calls for the contract purchaser to make payments directly to the GI loan holder, the holder is not required by VA to change its records, and the contract seller is responsible for forwarding payment coupons and other information to the contract purchaser. Depending on the particular circumstances of a case, a holder may agree to change the account address to read in care of the contract purchaser, although the contract seller must promptly advise the holder of any change in his or her address.

Re: Hey Everyone, Loan Being Called. - Posted by Matt_IL

Posted by Matt_IL on July 23, 2001 at 13:48:21:


First, I have tried to contact you by email several times, and it always returns as undeliverable, so I’ll post my Q here:

Thanks for that reference. I had been looking for it on the web myself.

Do you have a lot of experience with the VA/CFD wrap? Have you heard of lenders attempting to call these anyway, in spite of VA regs? With all the chaos lately, I’m getting jittery about subject-to’s. I’m curious as to whether the VA/CFD wrap is really safe or just supposed to be safe.

Any war stories on this? Thanks.

  • Matt

Re: Hey Everyone, Loan Being Called. - Posted by Carl A

Posted by Carl A on July 21, 2001 at 21:28:52:

If this was a VA repo, chances are this is not a VA gauranteed loan. Check into the details, it is probably conventional. The clause posted applies to assumed VA gauranteed loans only.

Since I own 4 VA repo’s, I recently looked into streamline refinancing. All of the loans are held by Countrywide. Turns out these are not the same loans that vet’s get.

Re: Hey Everyone, Loan Being Called. - Posted by Stacy (AZ)

Posted by Stacy (AZ) on July 23, 2001 at 17:56:41:

Sorry about my email, Matt. I’ve been having problems with it lately.

I have absolutely no experience wrapping VA loans. I wish I had some war stories to tell you to ease your mind. I’m a subject-to sort of guy. However, I’ve read in this newsgroup, in several courses, and on Bill Bronchick’s site that houses with VA guaranteed loans can be bought via land contract without violating the DOS clause. In case you didn’t know, Bill is an attorney who also does creative real estate, and offers some great courses. He is the one that pointed me to the VA Circular that spells out the rules and regs for VA loan servicers. If it would help, you could go to his site and post a question. It’s


Re: Hey Everyone, Loan Being Called. - Posted by Dave T

Posted by Dave T on July 22, 2001 at 01:03:56:

VA repo loans, if VA financing is used, are guaranteed by the Department of Veterans Affairs. VA does not permit VA streamline refinancing for non-owner occupied properties. It seems that Countrywide is following and applying the VA rules to your loans.

VA repo loans have a qualifying assumption clause, saying: “This loan may not be assumed without the prior approval of the Department of Veterans Affairs, or its authorized agent, successors or assigns.”

Further on there is another clause that says:

“This loan may be declared due and payable upon transfer of the property securing such loan to any transferee, unless the acceptability of the assumption of the loan is established either pursuant to the provisions of 38 U.S.C. Section 3714, or by the loan holder if the loan has been sold without recourse.”

Elsewhere in the document the maximum assumption fee is set at $300 (unless a lower amount was in force when the loan originated).

If you can find all these clauses in your note (or deed of trust note), then you have a VA guaranteed loan.

The chief difference between a VA repo loan and a veteran’s loan is that you get to bring a down payment to the settlement table, but you don’t have an owner-occupancy rule. Veterans get 100% financing, but they must owner-occupy. Veterans can also add closing costs and the VA funding fee onto their loan. You must pay these items out of pocket. In these respects, your VA repo loan is not the same as a vet’s loan. Otherwise, the loan guarantee program is the same, the loan servicing is the same, the assumability features are the same, and the DOS provisions are the same.