VA Short Sale Process

A VA Short sale is called an:

"Offers in Compromise", "Compromise Claims" or "Compromise Sales".

The VA may accept a Compromise Sale if the cost to the VA is determined to be less than that of foreclosure.

The VA website says: "If the borrower is unable to sell the property for an amount that is greater than or equal to what he/she owes on the loan, including closing costs, VA may pay a "compromise claim" for the difference in order to allow the private sale to go through. The borrower can sell the property to a buyer who gets his/her own financing or to a buyer who wants to assume the loan. However, with a compromise assumption, the lender does have to agree to have the amount of its guaranty reduced by the amount of the claim payment. In order to be considered for a compromise sale, several factors must be considered."

VA Compromise Sale Factors:
1. You may only sell the home for fair market value.
2. The closing costs must be "reasonable and customary".
3. You must have a valid financial hardship such as loss of income, relocation, death of breadwinner, etc.
4. There should not be a second mortgage on your property, unless it is "insignificant". If so, you might ask the junior lienholder to release the lien and convert it to a personal note.
5. You should ensure your sales contract is "contingent and/or subject to the approval of a VA compromise sale."

If you have a VA loan, and need to do a "Short Sale" or "Compromise Sale", here is what you must do to begin the process:
1. Contact you lender to see if they are an approved VA Servicer Loss Mitigation lender and/or contact the VA regional office servicing your loan directly.
2. Fill out a financial status report form provided by your lender or the VA.
3. Complete a letter of request.
4. Complete a Compromise Agreement Sale Application. You can get this form from the VA or the approved lender.

Final Important Points:
1. Your lender does not have to agree to a Compromise Sale.
2. For VA loans originated on or before December 31, 1989, you might have to sign a promissory note at closing agreeing to repay VA for the deficiency remaining after the property is sold.
3. Keith Manson will guide you through the sales process, help you determine fair market value, and prepare your package for submission to your lender or the VA.

For more information, contact Keith Manson and your VA Regional Loan Center  

Keith Manson is a realtor with First Weber Realty. Based in the Muskego area, and equipped with the in's and out's of both the banks and real estate, Keith and his team have the know-how and resources to tell you where you are at, what options you have, and the best way out of Foreclosure.

For help with your foreclosure:
Contact Keith Manson Today!

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