Under limited circumstances, the M&M Contractor is authorized to adjust HUD’s Contract sales price to the VA appraisal value only if the VA appraisal will net HUD an amount equal to or greater than the 2nd Best Offer HUD received as a bid. The examples below help illustrate the three circumstances under which HUD will permit Contract sales price adjustments for VA-financed purchases.
|If Accepted Bid/1st Best Offer from Buyer financing purchase with a VA mortgage for||and VA’s Appraisal values property at||but, 2nd Best Offer/Bid Received is||The M&M Contractor|
|$100,000.00||$95,000.00||Zero (i.e., none exists)||
In all three of these circumstances, if the potential VA purchaser elects to cancel the sale, the Earnest Money Deposit will be returned.
Additional information regarding the VA Amendatory/Escape Clause is located in Chapter 9,1.d in the VA Manual available at https://www.benefits.va.gov/warms/pam26_7.asp
38 CFR 4303(k)(4)