foreclosure with va loan

[brista26]

Professor shays do you know what the va will do when you foreclose with a va loan I have read that the nonrecourse doesn't apply to them is that true? my short sale fell thru buyer backed out and does the tax relief apply to foreclosure also

[The Professor]

I did some quick research, which I'll admit confirms my initial understanding which is not good news for you. That research indicates, "VA loans are the only purchase-money transactions, within California, which allow for a deficiency judgment against the buyer in the event of foreclosure. Since the program is governed by federal statute, the state's real estate law provisions are pre-empted. Those veterans that allowed assumptions of their properties prior to March of '88 (without a specific release of liability) will still be held liable in the event of a foreclosure which results in a deficiency."

Another source indicated, "If a foreclosure takes place, the government usually takes the position that State laws regarding purchase money loans do not apply to these loans. Fortunately for borrowers, the government rarely sues for personal liability."

Daniel