This form is for the situation where the seller is to apply for a release of liability from an assumed loan or reinstatement of VA entitlement.
Washington Addendum for Release of Liability on Assumption of FHA, VA or Conventional Loan, Restoration of Seller's Entitlement for VA Guaranteed Loan
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US-00472-A1
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How to fill out Addendum For Release Of Liability On Assumption Of FHA, VA Or Conventional Loan, Restoration Of Seller's Entitlement For VA Guaranteed Loan?
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FAQ
Addendum for Release of Liability on Assumed Loan and/or Restoration of Seller's VA Entitlement. Description: This Addendum is used in conjunction with the Loan Assumption Addendum if the Seller wants to be released from future liability of the loan.
An important thing to know about VA loans is that they are assumable. This means that a borrower can take over the terms of an existing VA loan, even if they are not eligible to take out a VA loan for themselves. With that, the home buyer will have the same mortgage payment the home seller had.
If the purchaser(s) is creditworthy and assumes the liability to the lender and VA to the same extent that you did when you obtained the loan, you will be released from liability on the loan. To obtain a release from liability, you should check with the company to whom you make your payments before you sell your home.
Find a home seller who will allow you to assume their VA loan. Verify that you meet the VA's minimum credit score and income requirements. Agree to assume all obligations of the existing loan. Pay the funding fee, down payment (if required) and closing costs.
To receive VA home loan benefits and services, the Veteran's character of discharge or service must be under other than dishonorable conditions (e.g., honorable, under honorable conditions, general). Generally, there is no character of discharge bar to benefits to Veterans' Group Life Insurance.
However, borrowers who allow another buyer to assume their mortgage ?remain liable to the VA for any loss that may occur as a result of a future default and subsequent claim payment,? ing to VA Pamphlet 26-7, ?Unless the property is sold to a creditworthy purchaser who agrees to assume the payment obligation.?
Funding fee: A VA loan assumption will come with a funding fee equal to 0.5% of the loan balance.
An FHA/VA financing addendum is attached to a purchase contract to state that a buyer with FHA/VA financing can back out of the sale if the appraised property value is less than the asking price.
