Changed Date

September 15, 2004, Change 4

This section has been changed to create subsection lettering.

a. Policy

Generally, VA-guaranteed loans must be first liens.  Any existing liens on the property must be paid off or subordinated to the VA loan.

A loan to purchase property subject to unpaid delinquent taxes, special assessments, prior mortgage indebtedness, or other obligations secured by effective liens that the veteran agrees to pay or which constitute encumbrances on the property is not eligible for guaranty if the loan amount plus these unpaid obligations exceeds VA’s reasonable value of the property.