In Phoenix there seems to be alot of confusion for home owners with VA loans as to whether or not they can do a short sale. The answer is yes. I just recently assisted two homeowners, with VA loans, in the Greater Phoenix area, complete short sales. Those home owners have now avoided foreclosure and they should be able to buy a home again in two years if they rebuild their credit during those two years.
I believe part of the confusion lies in the VA guarantee; home owners think they have to pay that money back. In most cases the money does not have to be paid back; it is forgiven through the VA short sale process. However, a VA eligible borrower will not be able to use their VA eligibility to buy another home until any deficiency is paid back. But, there is nothing stopping that borrower from getting an FHA or conventional loan for the purchase of real estate after the two year period, providing the buyer has effectively rebuilt his or her credit.
A homeowner does need to prove a valid hardship, and a military transfer or deployment is a valid hardship if your home is worth less than what you owe on it and as a result, you cannot sell.
The best thing to do is simply give me a call and we will discuss your lending structure, hardship and home value, and then call your loan servicer to confirm required paperwork and eligibility for a short sale. You must ALWAYS be aware of ALL your options before committing to a strategy.