SELLER REQUIREMENTS:

1. Once it is apparent that the seller needs to consider the VA Compromise Sale Program, the seller should contact his/her lender, provided they are a VA approved Servicer Loss Mitigation lender. Your lender needs to be on the list below:

2. A financial statement is completed and signed by all parties. The seller may obtain this from the lender if the lender has been approved to process the compromise sale on behalf of VA.

3. The seller should complete a letter of request.

4. A Compromise Agreement Sale Application should be completed. If the lender will be processing the compromise sale, an application package must be obtained directly from that lender.

5. On loans that originated on or before December 31, 1989, the seller should be prepared to sign a promissory note at closing agreeing to repay VA for the difference between the sales proceeds and the total debt. This indebtedness may be waived in order to process the transaction and avoid a foreclosure sale.
 

 

REALTOR AND/OR SELLER REQUIREMENTS:

Upon receipt of an acceptable offer the realtor and/or the seller should contact VA or the sellers lender (if applicable) and advise them that they are in the process of submitting a compromise package. This package should contain the following information:

1. Sales contract signed by all parties with a contingency which reads: This offer is contingent upon approval of a VA compromise sale.

2. Good faith estimate projecting closing costs. This document is usually prepared by the real estate agent to facilitate processing.

3. Letter to the lender and VA requesting consideration of a compromise sale.

4. Financial data and supporting documentation.

5. Compromise Agreement Sale Application.

 

OTHER REQUIREMENTS TO PROCESS A VA COMPROMISE SALE

A current VA appraisal must be obtained.

If the buyer is obtaining a VA loan, the buyers VA appraisal can be used provided the buyer will agree to the same. Otherwise, the sellers lender will have to contact VA for an appraisal assignment. Once an appraiser has been assigned, the lender will order the appraisal directly from the appraiser.

Title is reviewed. As stated earlier, in situations whereby there are second liens or other liens, the seller can request that the lienholder consider releasing the lien and converting the loan to a personal loan.

A compromise assumption will not be processed without first receiving a statement from the holder that they are willing to have their guaranty amount reduced by the amount of the claim payment.

If it appears a compromise assumption is feasible, the buyer must qualify.

 

WHAT HAPPENS WHEN A COMPROMISE SALE IS APPROVED?

A copy of the approval letter from the lender or VA is submitted to the closing attorney prior to closing.

The closing attorney and/or his staff will review the approval letter which will include the shortage amount that VA will pay upon completion of the compromise sale.

Approval of any additional amounts need to be submitted to VA or to the lender well in advance of the closing date.

At the closing table, net proceeds are paid directly to the obligors lender who then files a claim with VA for the difference between the proceeds and the total indebtedness.

VA CANNOT pay a compromise claim beyond what the loan was guaranteed for.

Homeowner BEWARE!

Entitlement - Should VA agree to pay the difference between the sales proceeds and the total debt to complete the compromise sale process, the portion of the homeowners entitlement used to guaranty this loan will remain tied up until VA is reimbursed in full.