VA short sale process and guidelines

If you have a mortgage through the Department of Veterans Affairs and cannot afford to make your payments, you may request a VA short sale to avoid foreclosure and exit your mortgage.

VA short saleIf you have a mortgage through the Department of Veterans Affairs (VA) and you cannot afford to make your  payments, you may request a VA short sale. This allows you to avoid foreclosure and exit your mortgage.

A short sale is selling your home for less than you owe on it because the market value has dropped. With a VA short sale, the mortgage balance is waived. To qualify for this short sale, also called a compromise sale, your home can't have second liens and you must prove financial hardship.

Do you owe more than your home is worth? Click here to find out.

If you believe you qualify for a compromise sale, contact your lender to start the process. If for some reason you can't contact the lender, contact the VA directly. A representative will perform a preliminary inquiry and walk you through the process.

If your lender approves a VA short sale, the sale must meet these guidelines:

  • The property must be sold at fair market value.
  • The closing costs should not exceed what is reasonable.
  • The cost of the short sale must be less than the VA would spend to foreclose on the property.

At this point, you send a formal applicaiton and a letter requesting consideration for a VA short sale. It may be several weeks before you get a response to your request because many lenders are swamped with short sale requests.

The next step is to hire a real estate agent experienced with short sales. The VA can recommend a real estate agent. You can also click here to find a local agent who can list your sale. Once you find an agent, he or she will help you negotiate the terms of your sale. You should make sure that you both sign a clause that protects you from paying a commission if the VA refuses your short sale offers.

A VA short sale may be the best way for you to avoid a VA foreclosure. A pre-foreclosure sale is less damaging to your credit than a foreclosure.

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