The VA Compromise Sale program has been around for some time without much notoriety, but it appears that is about to change. A VA Compromise Sale, often referred to as a VA short sale, is a short sale in which the VA participates. The program is gaining notoriety because we are seeing more service members upside down in their mortgages, and being forced to sell due to military orders or financial hardship.
The VA Compromise Sale program was originally created to assist all service members and veterans who were experiencing financial hardship. The program offers relief to those with hardships created by job loss, divorce, or government orders.
Recently, the normal rotation cycle of service members at Joint Base Lewis-McChord (every 3-4 years), is causing people who purchased at the top of the market to sell in anticipation of military relocation moves. If you are in this situation, the VA Compromise program was put in place to help.
In order to participate in the program, the veteran’s situation must meet the following criteria:
Seller must be in financial hardship
Seller must provide financial statements showing all income, assets, debts, other obligations, marital status and ages of dependents
Statement from the Seller: Stating why the property is being sold, how much can the seller pay at closing (if any) and how much relocation assistance employer is providing, if any?
Seller must first obtain a sales contract to be considered for the program
The requirements above may seem daunting, but they are in fact very reasonable. If you can demonstrate a hardship, because of your personal situation or because of orders, you will probably qualify. One other criteria not mentioned above is that the compromise sale must be less costly for the government than foreclosure…There is some motivation on the part of the VA to participate in a compromise, the alternative is foreclosure which is inevitably more expensive to all concerned.
The process to accomplish a VA Compromise sale is somewhat complicated, but the benefits are worth it. I strongly recommend that you get professional representation (a cost that your lender and the VA expect to pick up). Find a realtor with experience in short sales, and who has an affiliation with a professional negotiator (an agent who can’t demonstrate a relationship with a negotiator probably hasn’t completed many short sales). Finally, since a VA Compromise Sale is not the same as a typical short sale, make sure that your team knows the differences.
Attention home owner’s with a VA guaranteed loans! If you are considering a short sale, or if you are facing foreclosure, take the time to look into this program. It may not be a particularly pleasant process, but it beats the alternative, and a foreclosure on your record can have negative ramifications for years to come.
For more information about selling your home using the VA Compromise Program, please visit www.PhilSharpHomes.com.