VA Short Sale – ‘Compromise Sale Program’

The Department of Veterans Affairs Short Sale is called a ‘Compromise Sale’.  Below are the requirements for the VA Compromise Sale Program.

If the borrower is unable to sell his/her property for an amount greater than or equal to the current outstanding loan balance plus closing costs, VA may pay the difference to allow the sale to take place. Compromise sales are approved if the sales contract meets several criteria and results in a cost savings compared to a foreclosure.
 
Below are a few factors that must be considered:

• The property must be sold for fair market value.
• The closing costs must be reasonable and customary.
• The compromise sale must be less costly for the government than foreclosure.
• There must be financial hardship on the part of the seller.
• There must be no other liens, second mortgages, or judgments, unless the amount is insignificant. In situations with other liens, the seller can request that the lien holder consider releasing the lien and converting the loan to a personal loan.
• The seller must obtain a sales contract in order to be considered for the program. To protect the seller’s interest, the seller should make the sales contract contingent to the approval of VA.

Once it is determined that a homeowner may qualify for a VA compromise sale, you should contact the veterans lender and/or the VA. A majority of lenders have Loss Mitigation Departments that are authorized by VA to process VA compromise sales.

VA Servicer Loss Mitigation Program