Posted by Ed Copp (OH) on March 23, 2000 at 16:26:16:
It looks to me like you want to purchase an existing V.A. loan for less than the amount owed, if I understand your question correctly. The answer is somewnere between slim and none. The V.A. insures loans (for the full amount owed) and the loan is usually originated by the V.A. but not kept by the V.A. The loans are sold at a slight discount to lending institutions (and continue to be insured by the V.A.), so the lender has no reason to consider taking less money for the loan because it is insured 100% by the V.A. (part of the U.S. Government and we all know how much money they have). Slim to none would be the chances…ED
Posted by GregNorman on March 23, 2000 at 14:34:21:
I’ve got some folks I’ve been talking with. ARV = 155k. Needs about 8k worth of work (but looks a lot worse than that). They have a VA loan with about $123k left on it. We are looking to do a short sale at $105k.
What are the possibilities of getting something like that through the VA?
I don’t even know who to contact (VA or loan company) about the short sale.
What’s the best way to get the ball rolling in the right direction?
I’m not sure what ARV means. After Repairs Value? The VA and Servicer will base their decision to entertain a compromised sale on the premise’s as-is, fair market value. If it’s value is $145,000 and the mortgage payoff is $123,000 you’re SOL due to the presence of equity. The mortgage balance plus cost of sale must be greater than it’s FMV for compromised sale consideration. And the Sales Contract must include several lines of specific language regarding disbursments, escrow balances, insurance premiums, etc.
It is a complex process, but under certain circumstances well worth the effort.
Greg,
I agree it’s not likely. I recently had one where I actually got a hold of someone at the VA and the lender. My analysis showed the property ARV was right at the reinstatement amount. However, the guy at the VA wasn’t sure the collateral would cover the note, especially after I got done explaining the necessary repairs. I was told they would consider a short sale, but not without seeing a purchase agreement first. I only had an option and the numbers weren’t really worth it, so we bailed. So, either I was talking to someone who doesn’t know what they’re talking about, or it is possible under the right circumstances. However, I think with the spread you’re looking at, that would be a tough sell. Keep us posted - I’m curious. Thanks…