I'm not really sure how it works between the bank and VA after closing. I know there is a limit to how much the VA is liable for. I imagine after closing, the bank would have went to the VA for whatever recoverable portion was allowable. I would also imagine that if there was a portion that was unrecoverable from the VA, the bank would have tried to keep me on the hook for that in the short sale terms, i.e., "poriton of debt other than $xxx is forgiven" (or maybe not?) Regardless, if you have the terms of the short-sale that say the remaining balance will be forgiven between you and the bank...it doesn't really matter what happens between the bank and VA after closing.