There are numerous reasons why a military member or veteran would have to sell their primary residence in todays depressed housing market. Orders to a new post or overseas, a new job, divorce or marriage, change in familial status, or a significant change in income can all lead to the requirement of selling a home. If you purchased a home using a VA loan any time prior to the current housing bust, you probably didn't anticipate selling your home for a six figure loss.
Most lenders have a VA Compromise Sale Program. If you owe more than your home is worth, you can request a VA Compromise Sale. If you are approved for a VA Compromise Sale, the VA will pay the remaining amount of your mortgage at the sale. There are several requirements which must be met for to approve a compromise sale;
- The borrower must demonstrate a financial hardship.
- The home must be sold for fair market value based on a VA appraisal.
- No second liens are permitted (the VA says exceptions can be made if the amount is insignificant.
- Closing costs must be typical for such a sale.
- The VA compromise sale must cost the government less than if the home went into foreclosure.
- The sale requires a VA appraisal.
- The borrower must provide a statement explaining why they must sell the property.
- In some states and for loans originating prior to December 31st, 1989, the VA requires a repayment of the remaining debt but in Arizona this should be waived prior to completion of a short sale.
Compromise sales are provide to help VA borrowers in distress and to reduce the number of foreclosures.
