If you’re in the military and you own a home and you just received your PCS (permanent change of station) letter then chances are that you will have to sell this home. If you have enough equity then there isn’t a problem: you put the home on the market and you sell it.

If there is no or negative equity, then you have a valid hardship and you should explore a short sale.
Alternatively, you may have trouble keeping up with mortgage payments.

You will be able to do a short sale if the loan you have on the property are regular loans. If you have a VA loan, then the sale short sale is referred to as “offer in compromise”, “compromise claim” or “compromise sale”

According to the VA web site: “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. The borrower can sell the property to a buyer who gets his/her own financing or to a buyer who wants to assume the loan. However, with a compromise assumption, the lender does have to agree to have the amount of its guaranty reduced by the amount of the claim payment.”

In order to be considered for a Compromise Sale, several factors must be considered as well as there are several steps to complete:
• The property must be sold at market value
• 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 part of the seller
• There must be no second liens or other liens on the property
• Fill out a financial status report form
• Complete a letter of request and a Compromise Agreement Sale Application
• The sales contract should be contingent and/or subject to the approval of a VA compromise sale
• Your lender should be contacted to see if they are an approved VA Service Loss Mitigation lender and/or contact the VA regional office servicing the loan directly.

As always, consult with a cpa and/or attorney and get a knowledgeable realtor.

Some notes:
• One thing to keep in mind is that FHA and VA loans are considered recourse loans from the point of view of the federal government.
• See this document if you can’t or have trouble making payments: What can I do if I have trouble making my payments.
• For additional information, contact the local VA Regional Loan Center.

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