Underwater Veterans Can Find Relief in a Compromise Loan

The VA does an amazing job of keeping veterans in their homes.


Nearly three-quarters of the VA borrowers who defaulted in fiscal year 2009 avoided foreclosure thanks to the agency’s policies and procedures.

But the Department of Veterans Affairs also operates a unique program that helps veterans who are trying to sell their homes in a difficult real estate market.

Home values have fallen drastically in some parts of the country, leaving some service members with a significant chasm between what they can sell their home for and what they still owe on their mortgage loan.

The VA’s Compromise Sale program helps veterans who have seen their home values collapse recoup and rebound. Through this program, service members can receive a “compromise claim” from the VA that essentially covers that gap between the sale price and their outstanding loan balance.

There’s an array of conditions that need to be met for service members interested in a compromise sale. Among them:

 Sellers must document financial hardship

 No second liens can exist

 There must be a purchase agreement in place before a compromise application is filed

 The pending sale must be a better deal financially for the government than a foreclosure

Homeowners will need to furnish a current appraisal. They’ll also need to prepare for a reduced entitlement, at least until the VA is reimbursed for the sale.

Veterans can learn more about the Compromise Sale program by contacting the VA at 1-800-933-5499. The agency’s regional loan center in Houston also maintains a helpful page on Compromise Sales.

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