This is archived content from the U.S. Department of Justice website. The information here may be outdated and links may no longer function. Please contact if you have any questions about the archive site.

87. VA Loan Claims

Veterans who default on VA insured or guaranteed loans remain liable for any deficiency, after foreclosure by the lending institution, by virtue of 38 C.F.R. § 36.4323(e). The VA indemnity regulation permits recovery notwithstanding state anti-deficiency judgment statutes. See United States v. Shimer, 367 U.S. 374 (1961). When suit is brought on the indemnity regulation, only the veteran is liable. However, the veteran's spouse may be liable on the theory of subrogation. Thus, if there is no state anti-deficiency judgment statute, a second count on the subrogation theory is desirable, particularly in states recognizing estates by the entirety, and in community property states.

[cited in USAM 4-4.520]

Updated December 7, 2018