If someone assumes my VA mortgage, will I be penalized if they default?

Yes.. if there is a default, you or the other vet must pay the balance off before either one of you can purchase again using VA benefits.. I would not advise this at all.. If someone can qualify to assume your VA mortgage, they can qualify for a new mortgage, since VA mortgages are assumable, they are assumable WITH qualifying, so they have to go through the same process either way.. so why not just sell it without the assumption??I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

Yes, but you must apply for the restoration. But read this first from VA:Can a veteran get used entitlement back to use again?If you have used all or part of your entitlement, you can get that entitlement back to purchase another home if the following conditions for "restoration" are met:o The property has been sold and the loan has been paid in full, oro A qualified veteran-transferee (buyer) must agree to assume the outstanding balance onthe loan and agree to "substitute" his or her entitlement for the same amount ofentitlement you originally used to get the loan. The buyer must also meet the occupancyand income and credit requirements of the law.o ONE TIME ONLY if you have repaid the prior VA loan in full, but have not disposed of theproperty securing that loan, the entitlement you used in connection with that loan may berestored.oAny loss suffered by VA as a result of guaranty of the loan (for example a claim paid to a lender if a loan goes to foreclosure) must be repaid in full before the entitlement used on the loan can be restored.Restoration of entitlement is not automatic. You must apply for it by completing and returning VA Form 26-1880, "Request for a Certificate of Eligibility" to the Eligibility Center. This form may be obtained from any VA office or at http://www.va.gov/vaforms/.