VA Compromise Q & A
If you are a service member or Veteran in Southern California, you may be considering a VA Compromise sale if you have a VA loan. A compromise sale (or offer in compromise) is when the Veterans Administration approves the sale of your home when your mortgage payoff is greater than the sale price, and there is not enough to pay back your VA entitlement. You must have a hardship and need to sell.
Two questions always come up when I help with VA Compromise Sales:
1. How will a VA Compromise Sale affect my credit?
To get a direct answer, I called the Veterans Affairs Regional Office in San Diego (telephone 1- 800-827-1000 ), which covers the San Diego area of California. They told me VA Compromise sale is reflected as “settled for less” on credit reports. “Settled for less” is a common reporting for short sales, as well. The exact number of points that your credit will be affected depends on your complete credit picture. Remember, if you missed payments, that will also show up on your credit report.
2. Will I be able to get a VA loan again if I do a Compromise Sale?
Yes, you may still be able to get a VA home loan with your remaining entitlement. Specifically, the Veterans Administration says: 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 homeowner’s entitlement used to guaranty this loan will remain tied up until VA is reimbursed in full.
In fact, I have worked with a Veterans who re-paid his entitlement after a compromise sale, in order to get a VA loan again, because the rate and terms were more favorable. But remember, there are other types of mortgages that will be available to you, if you are unable to seek another VA loan. If you are a service member or Veteran in the Temecula or Murrieta area, and think you might need to do a VA Compromise Sale, short sale or use the HAP program, call me at 951-506-5744. I can help.