- Once a VA underwritten mortgage payment is 30 days past due, the loan is in a default status. At this point, mortgage collectors will begin contacting the homeowner to collect the past-due payment and/or make payment arrangements. A mortgage will stay in default status for as long as 180 days in most states before the lender will take the next step toward foreclosure.
- Once the mortgage is over 180 days past due, the lender will contact the VA and call upon a clause in the contract called the acceleration clause. This clause stipulates that the homeowner must pay the lender immediately the entire amount due on their mortgage, or current principal balance by a specific date. If this is not done, the lender will take steps with the VA toward a home foreclosure.
- The VA will contact a licensed appraiser in the state where the home is located and request that they perform an appraisal on the property. The appraisal will be the deciding factor in what price the bank will set for the home at the foreclosure auction. If the homeowner does not redeem the loan by paying all past-due payments 21 days prior to the foreclosure sale, the foreclosure will be posted at the courthouse and, subsequently, sold to the highest bidder. Once the home is sold, the resident of the property will be forced to vacate their home and give up all rights to the property.