|
Regional Loan Center - Loan Production Release of Liability
Loan Production Home | Employee Directory | 5 Easy Steps to a VA Home Loan |
Training | Release of Liability
| Funding Fee Chart | Florida Housing First Time Homebuyer Program | Lender Information Page
INSTRUCTIONS FOR A RELEASE OF LIABILITY OR SUBSTITUTION OF ENTITLEMENT OF YOUR VA GUARANTEED MORTGAGE
WHY IS A RELEASE OF LIABILITY (ROL) IMPORTANT?
If you sell your VA guaranteed home or have the loan assumed you may still have liability for any loss to the VA if you do not
complete a Release of Liability. VA Pamphlet 26-68-1 explains the reasons for a Release of Liability (ROL) as follows:
"If you sell the property which secures your GI loan, remember that you will still be legally liable to the Government on that loan, even though you no longer will be the owner of the property, unless (a) your loan is
paid in full in connection with the sale, or (b)
the VA releases you in writing from liability on the loan, or (c) you sell the property to an eligible veteran with sufficient loan entitlement who agrees to assume your loan and substitute his or her loan entitlement for yours. Please keep in mind that being released from liability does not enable you to have your loan guaranty entitlement restored unless a substitution of entitlement has been completed.
If your loan is not paid in full,
and you are not released from liability by the VA, or granted a substitution of entitlement, and the person to whom you sell your home or any later owner defaults on your GI loan, any amount which the VA is required to pay to the holder of your loan under the loan guaranty contract will represent an amount which you will owe the Government.
This is so even though your purchaser assumes personal liability for the repayment of your loan!
Therefore, if you are thinking of selling your property and allowing your GI loan to continue
on the property, you should write, or call, the VA office that guaranteed your loan before you sign a sales contract and ask for the necessary forms and instructions on how to obtain a substitution of entitlement, or how you can be released from personal liability to the Government.
Be sure you do this to protect yourself from continuing liability.
CAUTION: If your GI loan closed on or after March 1, 1988, and the GI loan will not be paid in full as part of the sale, then the approval of the VA or your lender is required prior to selling your home. Should you fail to obtain this approval, your lender has the right to declare your entire loan balance due and payable at once and may foreclose the mortgage and file a claim with the VA. You would be liable to the VA for the amount of any claim paid in such a situation. You can avoid future liability by obtaining a release from liability from the VA or your lender prior to the purchaser assuming your loan."
The Department of Veterans Affairs (VA) can approve a Release of Liability or a Substitution of Entitlement ONLY if the loan is current and the person who will assume your liability meets the VA guidelines for income and credit.
It should be clearly understood that if you close the sale of your property before the VA approves your purchaser, you will have no assurance of being released from personal liability.
If your VA guaranteed home loan originally closed PRIOR to March 1, 1988, or the Release of Liability is due to a divorce:
- Send a $5.00 check or money order payable to the Department of Veterans Affairs to pay for a credit report on your purchaser.
- Send the most recent pay stub from your current employer.
- Follow the instructions below.
If your VA guaranteed home loan originally closed AFTER march 1, 1988:
- Contact your lender for further instructions.
WHAT YOU NEED TO DO
- Your application cannot be processed until all the required forms and
documents listed below are submitted to the Department of Veterans Affairs
at the following address:
Department of Veterans Affairs
St. Petersburg Regional Loan Center
ATTN: Loan Production (262)
PO Box 1437
St. Petersburg, FL 33731
(NOTE: The forms are available by clicking
here.)
- A Quit Claim Deed or a Warranty Deed showing transfer of the property
must be recorded in the appropriate county (the NEW recorded book and page
number must be stamped on the deed).
- Please be sure the approved assumption clause, as shown in the
enclosed sample, is contained within the deed PRIOR to the recording.
FORMS
FORMS TO BE COMPLETED BY THE SELLER
26-6381 Application For Assumption Approval and/or Release From Personal
Liability
FORMS TO BE COMPLETED BY THE PURCHASER
26-6382 Statement of Purchaser or Owner Assuming Seller's Loan
26-6807 Financial Statement
26-8497 Request for Verification(s) of Employment
26-8497a Request for Verification(s) of Deposit (This form is not required
for
Divorce Cases)
26-0503 Federal Collection Policy Notice
26-0551 Debt Questionnaire
ADDITIONAL DOCUMENTS FOR A SUBSTITUTION OF ENTITLEMENT
- Original Certificates of Eligibility from BOTH the purchaser
and the seller or, if lost, VA Form 26-1880 from BOTH the purchaser and the
seller to include their DD214's or, if on active duty, a Statement of
Service.
- VA Form 26-8106, Statement of Veteran Assuming GI Loan
VA Pamphlet 26-68-1, Selling Your GI Home?, concerning releases of
liability and substitutions of entitlement is available by contacting the
information line listed below.
IF YOU HAVE QUESTIONS
If you have any questions, please call our Information Line at
1-800-827-1000 ext. 7500 if you are calling from within Florida, or
1-888-611-5916, ext. 7500 if you are calling outside of Florida.
|
