[WSBAPT] Garn–St Germain Act and VA Loan

[Thomas Sandstrom]

Hello All,

Putting this out there in the case there is something I am missing.  I have a Surviving Spouse/PR who is receiving all assets including the real property from decedent husband.  There is a VA Loan in both names and it was created when the rates were favorable.    I had just completed a Personal Representatives Deed, sent if off to client for review and the next day I received an email that client’s trusted loan officer friend told her we should not be doing this because of the due on sale clause will mean she has to renegotiate the low interest VA loan at a higher rate.   First, I was of the understanding that VA loans typically do not have “due on sale” clauses because they are “assumable”.  Second, my understanding has been that a spouse (relative under the Code) is exempt under Garn-St Germain and should be able to assume the mortgage.   Third the loan is in both Spouse and decedent Spouse’s name.

I am hoping I am not missing something – the loan officer friend has been so adamant that the client is now completely unwilling to sign the Deed.   We can no longer proceed with distribution under the terms of the Will and I suppose I will have to withdraw.  Anyone out there aware of any issue with VA loans and a surviving spouse not being able to assume the loan under same terms?

Best Regards,

Thomas D. Sandstrom

SANDSTROM LAW, PLLC
Mail to: P.O. Box 668, Friday Harbor, WA  98250
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