PSCing to a new base?
If you are an Eglin Air Force Base or Hurlburt Field airman and own your home, this could be a problem. You may very well be "upside down" in your mortgage. Meaning, the balance you owe is more than market value of your property. That is a common scenario on the Emerald Coast, in Crestview, Navarre, Fort Walton Beach, and Destin Florida.
When you are in this situation, you have five choices:
- Short Sale
- VA Compromise Sale
- Rent Out Your Property
- Pay the difference owed out of your own pocket
If your loan was guaranteed by the Veterans Administration (VA), and the other options won't work (obviously you don't want a foreclosure), you can do what is called a VA Compromise Sale. This program is similar to a short sale, but the VA guarantees the payment of a portion of your mortgage to your lender. The lender will handle the processing of your VA Compromise Sale and will use a VA appraiser to ascertain value of your property after they receive a contract. If you meet certain criteria, and your net proceeds are at least 85.05% of the appraised value, your sale may be approved.
The most frequent question I get about VA Compromise Sales is: "Will the VA come after me for the balance?"
The answer is "NO" unless there was "fraud, misrepresentation, or bad faith”.
Here is a quote from VA Home Loan Program:
"The VA guaranty, which protects the lender against loss, encourages the lender to make a loan with terms favorable to the veteran. But if you fail to make the payments you agreed to make, you may lose your home through foreclosure, and you and your family would probably lose all the time and money you had invested in it. If the lender does take a loss, VA must pay the guaranty to the lender, and the amount paid by VA must be repaid by you. If your loan closed on or after January 1,1990, you will owe the Government in the event of a default only if there was fraud, misrepresentation, or bad faith on your part."
The other good news about a VA Compromise Sale (also called Offer In Compromise, Comprise Offer) is that you CAN USE YOUR VA LOAN AGAIN.
Why? You probably have remaining "entitlement". That is how the VA calculates the amount of mortgage loan they will guarantee. (Here are examples from the VA on calculating entitlement after short sale. Leave it to a mortgage professional to figure it out for you.) To use a greater entitlement, you must pay back what you owe the VA. Crazy? Not really. Markets change, loan programs change and interest rates change. A VA mortgage may be the best option for you again in the future. At that time, you will have rebuilt your financial strength and may be able to pay back your entitlement. I've had veterans do it!
If you need to do a VA Compromise Sale in Crestview, Navarre, Fort Walton Beach or Destin, Florida, give me a call. I can help.
Wendy Rulnick, Broker, Rulnick Realty, Inc.
Call Wendy at 850-259-0422
Email Wendy: email@example.com