If you're a veteran on Oʻahu who owes more on your mortgage than your home would sell for today, the phrase you need to know is Compromise Sale. It's the VA's official version of a short sale — a program built specifically so service members and veterans can exit a home they can no longer afford without going through foreclosure.
I've walked many Hawaiʻi homeowners through this process, and the most common reaction is: "Why didn't anyone tell me this existed?" So let's fix that.
The short version
In a Compromise Sale, you sell your home at today's fair market value — even though that's less than your loan balance — and the VA pays your lender a claim to help cover the difference. The lender agrees to accept the sale as settlement, and in approved cases typically agrees not to pursue you for the shortfall.
You sell, the debt gets resolved, and the foreclosure never happens. That's the whole idea.
Who qualifies
Two things generally need to be true:
- The home is worth less than you owe. Your payoff amount is higher than what the home would realistically sell for.
- You have a documented financial hardship. PCS orders, job loss or reduced income, divorce, medical bills, the death of a co-borrower — the kinds of life events that change what you can afford.
Here's the part most people miss: you don't necessarily have to be behind on payments. Many homeowners qualify while still current, based on hardship and being underwater. The earlier you start, the more options you have.
What it costs you: $0
As the seller in an approved short sale, you pay nothing. The customary real estate commissions, transfer taxes, recordation fees, and most closing costs are paid out of the sale proceeds with lender approval — not out of your pocket. The negotiation specialists we partner with work on a pay-for-performance model, paid by the lender side only when your sale closes.
How the process works
- 1. A free, confidential conversation. We look at your loan, your home's realistic value, and your hardship — and tell you honestly whether this makes sense.
- 2. The file opens. We help you assemble a simple hardship package (letter, pay stubs, bank statements, tax returns) and open the case with your lender.
- 3. The home is listed at fair market value. A realistic price attracts a qualified buyer — the foundation of an approvable sale.
- 4. Offer goes to the lender and the VA. The offer is packaged with your hardship file and submitted for review.
- 5. Approval and closing. In approved cases the lender typically waives the deficiency, and you close and move forward.
In a strong case the whole thing can close in roughly two to three months; complex files take longer. You can see the step-by-step breakdown on our how it works page.
What about your VA loan benefit?
This is the question veterans care about most, and it deserves a straight answer. The entitlement used on the loan generally stays charged until the VA is repaid its loss — but many veterans keep enough remaining entitlement to qualify for another VA loan in time, and resolving the balance can restore the rest. Compare that to a foreclosure, which makes everything about buying again much harder. I wrote a full guide on credit recovery and using your VA loan again.
The first step
Every situation is different — your lender, your loan, and your circumstances all matter, and no outcome is guaranteed. But the pattern I see over and over is this: the veterans who reach out early get options; the ones who wait get a foreclosure timeline. A confidential conversation costs nothing and commits you to nothing.