For Sellers With V.A. Loans. VA Short Sales
If the seller/homeowner 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”, a VA Short Sale, for the difference in order to allow a private sale to go through.
The seller/homeowner can sell the property to a buyer who gets his/her own financing or
to a buyer who wants to assume the loan, if assumable. However, with a VA Short Sale, 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 VA Short Sale, several factors 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 a financial hardship on the part of the seller.
On loans that originated on or before December 31, 1989, the seller must be willing to sign a promissory note. There must be no second liens or other liens (unless the amount is insignificant). In situations whereby
there are second liens or 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 first 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 and/or subject
to the approval of a VA compromise sale.