VA Foreclosure

Is this a good Short Sale case? 2000 SFH, 3B, 2.5ba, 2C, unFn Bmt. From my research: Seller purchased for $139K with VA Loan=$142K in 09/00. Refinanced in 06/01 for $150K (Steep rise for a year). "Judgements & Lis Pendens" on Title (no details). Present Value=about $175K Loan Bal=$161K Seller is behind on payments BY $14000 and is in Foreclosure. VA added the payments to mortgage ($146K balance + $14K=$161K). They told him that he could sell the house himself and pay the balance or give the house back. What does it take to stop the foreclosure? How should I deal with VA? What's a good offer - 80% FMV? Thanks :-)