There are several programs out there to [try] and help homeowners to stay in their homes or, be able to move on. Several years ago the military has started the HAP (Homeowners Assistance Program) since it was recognized very earlyon in the real estate crisis, that military members would unintentionally get caught up in it.
Another tool, maybe not as well known is a VA compromise sale. It’s been around for about a couple of years. If the borrower is unable to sell the property for an amount that is greater than or equal to what he/she owes on the loan, including closing costs, VA may pay a “compromise claim” for the difference in order to allow the private sale to go through.
Certain requirements must be met such as:
- The property must be sold for fair market value.
- The closing costs must be reasonable and customary.
- The compromise sale must be less costly for the Government than foreclosure.
- There must be a financial hardship on the part of the seller.
- On loans that originated on or before December 31, 1989, the lender must be willing to write off any debt above the max guaranty.
- There must be no second liens or other liens (unless the amount is insignificant). In
situations whereby there are second liens or other liens, the seller can request that the
lien holder consider releasing the lien and converting the loan to a personal loan.
- The seller must first obtain a sales contract in order to be considered for the program.
- To protect the seller’s interest, the seller should make the sales contract contingent and/or
subject to the approval of a VA compromise sale
Getting a shortsale done in a reasonable time frame and with as little stress as possible is still hard to do, but at least there are options.
Consult your local realtor to find out more about the market value of your home. In Colorado Springs contact me: 719-321-0800