Need advice on handling Wells Fargo VA loan
I've represented sellers in a few short sales, but have recently been asked to list a home with a VA loan and hope you can give me some advice. Here's the situation:
Owner has a VA loan through Wells Fargo. Since buying the home they have had a reduction in income and an increase in expenses after the birth of their 2 children (youngest is 2 months old). They want to sell their home through a short sale/compromise sale, and move in with family to save some money for 2-3 years. They have been scraping by and paying their mortgage within the grace period or a few days late. I called Wells Fargo and they tell me nothing can/should be done until we have an offer on the property, at which time I should contact them and start the process. Does this sound right to all of you? My other question for you guys is whether or not the owners being relatively current on their payments is going to hurt the request for a short sale/compromise sale. They have no interest in a loan modification and just want to get out of this house. Any advice you can provide would be much appreciated.
Replies to This Discussion
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Permalink Reply by Kevin - Greenville, SC on
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In order to be considered for a compromise sale, several factors must be considered:
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.http://www.benefits.va.gov/roanoke/RLC/forms/COMP-SALEProgramTraini...
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Permalink Reply by Christine Grace on
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Kevin, thank you for your post. Once a contract is in hand, I think they'll meet all those requirements. I'm just really not sure if their hardship will be considered serious enough if they are not delinquent in their payments? I hesitate to tell anyone to stop paying if they are able to, but want them to understand how the bank will view thier request.
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The hardship is often times subjective. VA Compromise Sales do not have a requirement that the Owner be late to qualify.
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