Replies to This Discussion

Permalink Reply by Kevin - Greenville, SC on April 23, 2012 at 7:00am

It's still 11.87% as located in the Notices.

Permalink Reply by Bill Garrett on April 23, 2012 at 7:06am

Thanks for the quick response. 

Permalink Reply by Kevin - Greenville, SC on April 23, 2012 at 6:21pm

(e)(1) A holder may approve a compromise sale of the property securing the loan without the prior approval of the Secretary provided that:

(i) The holder has determined the loan is insoluble;

(ii) The credit to the indebtedness (consisting of the net proceeds from the compromise sale and any waiver of indebtedness by the holder) must equal or exceed the net value of the property securing the loan; and

(iii) The current owner of the property securing the loan will not receive any proceeds from the sale of the property.

(2) A holder may request advance approval from the Secretary for a compromise sale notwithstanding that all of the conditions specified in paragraph (e)(1) of this section cannot be met if the holder believes such compromise sale would be in the best interests of the veteran and the Secretary.

(f)(1) A holder may accept a deed voluntarily tendered by the current owner of the property securing the loan in lieu of conducting a foreclosure without the prior approval of the Secretary provided that:

(i) The holder has determined the loan is insoluble;

(ii) The holder has computed the net value of the property securing the loan pursuant to paragraph (c) of this section;

(iii) The holder has considered a compromise sale pursuant to paragraph (e) of this section and determined such compromise sale is not practical; and,

(iv) The holder has determined the current owner of the property can convey clear and marketable title to the property that would meet the standard stated in paragraph (d)(5) of §36.4323.

(2) A holder may request advance approval from the Secretary for a deed-in-lieu of foreclosure notwithstanding that all of the conditions specified in paragraph (f)(1) of this section cannot be met if the holder believes such deed-in-lieu would be in the best interests of the veteran and the Secretary.

(Authority: 38 U.S.C. 3703(c), 3732)

[73 FR 6310, Feb. 1, 2008. Redesignated at 75 FR 33705, June 15, 2010, as amended at 75 FR 65238, Oct. 22, 2010]

Permalink Reply by Kevin - Greenville, SC on April 23, 2012 at 6:21pm

The VA Bid Process - Servicer Calculations

by Terry Ross 
Director of Regulatory Compliance Barrett Burke Wilson Castle Daffin & Frappier, LLP - USFN Member (TX)

Understanding the Department of Veterans Affairs (VA) bid process is simple if you worked for the VA and helped write a program for servicers to use to calculate a correct bid. 

 

VA is required by law to determine the net value of a property securing a loan that is about to be terminated. By regulation (Title 38, Code of Federal Regulations (CFR), part 36, section 36.4319(b)), a loan holder must provide a copy of the notice of sale at least thirty days prior to the scheduled liquidation sale, and the notice must be accompanied with a statement of the account indebtedness, as well as a copy of the liquidation appraisal request. VA then calculates the property’s net value by reducing the appraised fair market value by a percentage estimate for acquisition (management and resale costs that would be incurred should VA acquire the property).

 

The net value is compared to the loan indebtedness and VA’s maximum guaranty liability to decide whether to specify a minimum amount for credit to the loan account. When VA specifies an amount and the holder acquires the property at sale, the property may be conveyed to VA for the indicated amount. If VA does not specify an amount, the holder cannot convey the property (this is typically called a VA no-bid).

 

To understand the bid process, one first has to understand that VA deducts a percentage from the appraised value of the property.  This is called the Net Value Percentage (NVP).  The NVP is currently at 11.87 percent, and VA reviews the percentage amount annually to ensure correctness.  To review the criteria VA uses to arrive at the percentage, go to Title 38 CFR 36.4301 and then to Net Value.