A property secured by a Veteran’s Administration (VA) mortgage loan may be short sold. The VA refers to a short sale as a ‘compromise sale’. The program requires that “[t]he servicer must waive any amount on the loan not covered by the sum of the VA guaranty claim amount and the greater of the net value or sale proceeds” which in layman terms means that they have to provide the seller/borrower with a full release of liability. They can not pursue the borrower for the deficiency.
If this news about the VA short sale program (the compromise sale) was not enough to make an upside-down VA home mortgage seller happy then how about $1,500? That’s right – for a limited time only (actually through 2013) the VA pays the seller/borrower $1,500 upon closing the VA short sale.
The information in this article summarizes the Department of Veterans Affairs Circular 26-11-1 which is dated January 6, 2011 and is slated for rescission by January 1, 2014.