Defaulting On Your VA Loan When Your Military Spouse Is Killed In Action: What Happens Next

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If your spouse is a veteran or military personnel, and your spouse and you decided for whatever reason not to name you as co-borrower on a VA loan, it can create some tricky situations. For example, if your spouse is called up to serve (or serve again) and dies in action on foreign soil, what happens to the house? Since the loan is only in your spouse's name, you may feel a sense of panic welling up inside of you. Not only do you have to make funeral arrangements, but now you also have to face the looming possibility of homelessness. 

Well, maybe you do not have to be homeless. There are things you can do when you reside in your deceased military spouse's home and the mortgage is not in your name. Here is what you need to know about what happens next. 

Legal Assumption of Responsibility

In most states, a spouse assumes the legal responsibility of debt. This applies to the mortgage and homeownership, and the VA loan your spouse took out to buy the house is not exempt. That means that the VA lender is already assuming that in spite of your spouse's death, you will be the one taking over payments on the mortgage. There are some other issues that might crop up if your name is not on the mortgage, but those may be resolved as well. 

Putting Your Name on the Mortgage and Removing Your Spouse's

When you have had enough time to grieve, it is time to sort out the matters your spouse left behind. Contact your spouse's lender and explain to them what has happened. They will be sympathetic and helpful as much as they can be. They will also help you figure out how to place your name on the mortgage and remove your spouse's name. This will require a death certificate as proof, so make sure you get a copy of the death certificate signed by a coroner. You will need a copy for the lawyers and the life insurance company anyway.

If You Default or Know That You Will Default

If you default on a VA loan or know that circumstances will cause you to default, contact the lender right away. There are refinancing options and programs for spouses of veterans that can help. Do not expect the lender to pay off your loan simply because your spouse passed away while serving his/her country. Debt is debt, and it has to be repaid no matter who you are. 

Talk with people who provide VA loan financing to see what you should do for your situation. 

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