If I short sale on a VA home loan and the VA covers the rest of the payoff will it effect my credit?
I can not sell my house for my asking price the market is just to slow now if I short sale my house I will probably have a better chance of unloading it
The house is currently under a VA Home Loan which guarantees the lender if I fault they will recover 36,000 k in loses on top of whatever they sell it at a sheriffs sell
Now I know a short sell dings your credit like a foreclosure however my question is if I short sell and the VA covers the rest of the pay off amount (which they will and do I called and asked) will I still take a short sell credit hit because the lender is getting the full paid off amount?
Trust me I have asked the lender and the VA and my real estate agent and I have yet to get a defiant answer
Quick Property Sale
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December 18th, 2009 at 12:49 am
If you sell your house under the VA loan guarantee program that does not releave you of the responsibility for the loan, you will still be responsible for the loan until the entire balance has been paid off by the new owner. The sell would actual be an assumption of your loan, but you are still responsible for the loan, I have sold at least three homes this way over the years which were bought under the VA guarantee program, and have never heard from them. I guess if I ever bought another home, which I dont plan to at this stage of life, I would see if the assumptor of the loan ever defaulted on the loan. Now it has been a few years since I sold my last home (the laws might have changed somewhat), I did hear I think that the VA now has to approve of the new buyer of the home, think I read that somewhere, this was not always the case. The houses I sold in the past was a simple matter, the new owner paid me, and signed the assumption papers and assumed my loan balance, never went thru a realtor and did not have to pay no commission for the sale, only the escrow agent I think about one hundred dollars or so for processing the paperwork.
December 21st, 2009 at 8:57 am
First of all, you can not do a short sale unless the mortgage holder agrees to it. The VA home loan only covers you if you were to ‘”default” and go into foreclosure. Then the VA would cover some of the loss. If you wish to sell your property, but the net proceeds from the sale won’t pay off your loan and you can’t afford to pay the shortage, the VA may allow you to sell your home without paying the entire amount due. You’ll need to complete a Financial Analysis Form and send the VA a letter requesting a short sale.
They (the VA) would also start taking deductions of any VA comp you are receiving if you are getting disability benefits if they have to actually pay anything to the mortgage company.
Your best bet is to get another veteran to buy the house, is your VA mortgage assumable (some Realtors forget to have that included in the deed.)
The effect of a short sale on a seller’s credit report is identical to that of a foreclosure. The ding on credit will show up as a foreclosure in redemption status, which will result in a loss of 200 to 300 points. This means a short sale with a previous FICO of 720 will see it fall from 520 to 420.
Hope this answer is of help to you
LEGAL DISCLAIMER: The answer provided here is intended for informational purposes only. It is not intended nor presumed to be legal counsel or professional legal advice