Nofolk is full of Active Duty and Retired military personal mainly from NAS Norfolk, Little Creek Amphibious Base and Norfolk Naval Air Base. What does the Veteran do when the house they own can not be sold for enough to pay off the existing mortgage? One would expect to have a "short sale" but that is not what they are called. For those Veterans, there is the VA Compromise Sale. Like in conventional "short sales" there is a process to go through. Don't check all the boxes and guess what, you get delayed. Below are the steps to help the Veteran through the process.
1. Closing costs must be "reasonable and customary".
2. May only sell the home for Fair Market Value.
3. The Vet must have a valid financial hardship such as loss of income, relocation, death of breadwinner, etc.
4. No or little second mortgage on the property. If so, you may have to ask the junior lienholder to release the lien and convert it to a personal note.
5. Contract is "contingent and/or subject to the approval of a VA compromise sale."
Steps to begin the procss:
1. Contact the lender to see if they are an approved VA Servicer Loss Mitigation lender otherwise contact the VA regional office servicing your loan directly.
2. Fill out a financial status report form provided by the 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. The 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. Find an experienced Short Sale Realtor® should 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 the VA Compromise sale for Norfolk veterans, contact your VA Regional Loan Center.
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