Wells Fargo just approved this home in The Woodlands, Bluewater Bay, Niceville Florida, for a VA Compromise Sale. A VA Compromise Sale is similar to a short sale. The process is not always "smooth", and this one had a few issues, too. 
The Problem:
VA appraised the home for more than the contract price. The buyer would not increase his offer to meet the VA required net proceeds of 88.13% of the appraisal.
Since the buyer would not pay more for the property, could the seller make up the difference? Normally, the answer is "no". VA frowns upon the seller bringing funds to closing, since a VA Compromise Sale is supposed to be a hardship situation.
The Solution:
We were allowed to go forward by providing a "gift letter" supporting seller bringing funds to closing that were "gifted", not loaned, to meet the VA minimum net.
The good news for the seller was VA does not expect repayment unless they want to get a VA mortgage in the future, and the Wells Fargo HELOC waived any right to a deficiency through our negotiations. The seller never missed a mortgage payment, which will minimize credit impact. (Although VA is quoted as saying the borrower must be "behind", that is not always the case.)
If you have a VA loan on a home in Niceville, Florida, are "upside down" in your mortgage, and need to sell, consider a VA Compromise Sale. As always, consult with an attorney and an experienced Niceville FL short sale agent.
It's Wendy!
Wendy Rulnick, Broker, Rulnick Realty, Inc.
Call toll-free 1-877-487-9639 or 850-650-7883 ext 204
Email Wendy: itswendy@rulnickrealty.com
Read Wendy's Niceville FL Real Estate Blog
Wendy is a short sale and pre-foreclosure specialist and has been featured in "Kiplinger Personal Finance Magazine" and "Florida Realtor Magazine". Call Wendy Rulnick, Broker/Owner,to list and sell your home or condo on the Emerald Coast of Florida in Walton, Okaloosa and Santa Rosa County- Destin, Santa Rosa Beach, Fort Walton Beach, Niceville, Bluewater Bay, Navarre, Seagrove Beach, Watercolor, Sandestin, Seaside, Crestview, Rosemary Beach, Mary Esther, Shalimar, Eglin AFB, Hurlburt Field.
I wish I had it this smooth. Here is my situation. Ist lender took TARP money and will only give $6000 to 2nd lender. 2nd lender wants 10% of the loan. Buyer is willing to pay a chunk of that 10%, but if it goes on the HUD 1st lender will NOT approve and will keep the money. 2nd lender and 1st will NOT budge.
AAAAAAAAAAAAAAAHHHHHHHHHHHHHHHHHHHHHHHH
Ellie - I suggest you discuss this with your title agent and the borrower's attorney. Find out if there is any Maryland regulation that prevents the borrower from paying off the junior lien early, unrelated to the closing. Also, post your question on www.ShortSaleSuperstars.com.
Wendy - well the seller was certainly in good hands with this deal. I have never heard of this so it was also a good education.
Jeff
Congrats on yet another short sale closing Wendy. You are the Florida short sale machine:)
Again Wendy, helpful information for all of us involved in short sales! Good job on getting another to the closing table. Thanks.
Interesting Wendy. Sounds like you did a great job in making a difficult situation into a successful transaction. Nice work!
Thank you all, Gabe, Laura, Bill, Jeff and Ellie!!
Excellent job Wendy. This is new to me too. Thanks for the education.