Tips & Special Topics
Forms Used in VA Loan Assumption
Added March 14, 2011
When a VA-guaranteed mortgage is assumed by another veteran there are certain forms that need to be completed. The forms used in VA loan assumption assure that the seller is released from liability and that the liability is transferred to the buyer. The forms used during VA loan assumption include:
• VA Form 26-6381, Assumption Approval and/or Release of Personal Liability to Government of VA Home Loan – This form is to be completed by the seller/ original holder of VA loan
• VA Form 26-6382, Statement of Purchaser or Owner Assuming Seller’s Loan – This form is to be completed by the buyer/assumer of the VA loan
• VA Form 26-6807, Financial Statement – This form is to be completed by the buyer/assumer of the VA loan
• VA Form 26-8106, Statement of Veteran Assuming VA Loan – This form is to be completed by the buyer/assumer of the VA loan
Release of Liability (ROL) is necessary in the VA loan assumption process because it eliminates responsibility on the seller’s part for making further payments on the VA mortgage being assumed by another military member.
For loans closed after March 1, 1988, there are two entities from which a seller must seek release of liability during the VA mortgage assumption process. The first is the VA itself, and the second in the lender. The VA cannot require the lender to release liability to a borrower. Therefore, the seller must approach the two entities separately.
The VA requirements for release of liability include:
• The VA loan being assumed must be up to date with payments
• The buyer must sign a purchase contract that indicates assumption of liability
• The buyer/assumer must be VA credit and income qualified
• The required VA forms for loan assumption must be completed in full
The VA provides a convenient checklist for the seller and the buyer to make sure all the requirements are met for VA mortgage assumption to take place. For VA loan assumption to occur the seller and buyer/assumer must work together to complete a checklist. The checklist contains required elements for both the seller and the buyer.
The seller provides:
• A completed VA Form 26-6381
• A copy of the most recently paid mortgage statement including date, account number, name of mortgage company and telephone number
The buyer/assumer provides:
• Completed VA Form 26-6382
• Completed VA Form 26-6807
• Copy of two most recent pay stubs showing all current employment
• Copy of all most recent bank statements
• Copy of W-2s or IRS 1040s for two years
• Copy of tax returns and most recent quarterly cash flow statements for three years (if self-employed)
• Credit reporting fee of $5.00 payable to the VA (cashier’s check or money order only)
• Copy of Purchase Agreement (N/A if assumption is a divorce release)
• Copy of Divorce Decree (only if assumption is a divorce release)
• Copy of Executed Quit Claim Deed (if assumption is a divorce release)
• Copy of DD Form 1747, Status of Housing Availability (if in active duty)
The original borrower on the VA mortgage should understand that his or her entitlement is not automatically restored by the VA once release of liability is approved. Full restoration is granted to the original borrower when the loan principal is paid in full or the assumer has ample VA entitlement to put in place of the seller’s.
If a buyer is substituting his or her entitlement in place of the seller’s, then the following must also be submitted:
By seller:
• All required checklist items listed above for seller
• Original Certificate of Eligibility (COE used in the original VA loan)
By buyer/assumer:
• All required checklist items listed above for buyer
• Completed VA Form 26-8106
• Original Certificate of Eligibility (required)
The 12-digit VA loan number for the mortgage being assumed must appear on every page of the documentation being submitted for consideration. All required elements must be sent for VA approval to:
U.S. Department of Veterans Affairs
Loan Production (MDP 261)
1240 E. Ninth Street
Cleveland, OH 44199
For further information about forms used in VA loan assumption, contact an experienced VA mortgage professional.
