Arms Length Short Sales Transactions- There Are Exceptions To The Rules.

Most of the short sale banks have an arm transaction rule. Many of them require the agents, the title company officers, the buyer and the seller to execute an arms length transaction affidavit. 

If you are asked to sign this affidavit and you end up NOT having an arms length transaction than that is called fraud. 

To clear up the misinformation about arms lengths transactions, here goes- 

 

• Not all short sales have to be arms lengths transactions. 
• Each bank has their own rules about arms lengths transactions. 
• It is not against the law to sell a short sale that is NOT an arms length transaction if there is full disclosure to all parties. 
• Some buyer's lenders will not approve loans in NON arms length mortgage loan applications. 
• It is against the law to commit fraud. Fraud is when you lie about the transaction. 

 

We just got a bank who always uses the arms length transaction affidavit to waive that rule for our sellers! 

We had to promise to not disclose the name of the bank, but I will say, it was a very big one. 

You have to be very good at negotiating and have a very compelling reason for the transaction. 

How did we get an approval and successful closing on a grandmother buying the house for her son and grandchildren who owned the house? 

A local real estate agent called us. She knows we close our short sales. She does not know how to do short sale negotiations so she asked us to list her son's house. Then she told us that she wanted to buy the house for her son so that his family, her grandchildren, could remain in the home they knew and loved. She was going to be paying cash for the house. The house was only worth 350K when the mortgage owed was over 650K. She did not want to lie or do anything fraudulent and either did we. 

Nestor told her that there was a shot, but there was a very big chance that the answer would be no, especially knowing the bank that was involved. She said she still wanted us to try. 

What was the reason for this request? 

Her son went from making $150K per year to just about $50K. Her son owed over 650K on the house and obviously would be in danger of losing his house to foreclosure one day. Her son and his wife had several children but one of their children is blind. The parents had set up the entire house for the comfort of their blind son. He knew where everything was, he knew the back yard and he knew his school. Moving into a rental would have been traumatic and stressful for the blind son. The grandparents do not want to pay off a huge balance that is NOT market value but she was interested in paying the market value on the home. 

By being able to do this, the grandmother would be able to pay the home, the son and his family- her grandchildren would remain in their home with security and stability- then they could pay her back over time. 

We started the short sale process and when it got to the negotiator he just flat out rejected the file because he said it was NOT an arms length transaction and therefore he could not go further with the file. 

Nestor escalated the file to the executive officers. The first thing they said to us was if they do this for us, then others would also want to do this. But the reason for the approval request was for a blind child to be able to remain in his home. This was not a story of someone trying to flip the property or someone just wanting to game the system. Nestor through very good negotiation skills- moved the executives to approve this transaction. 

Then the bank came back with a counter offer a little higher than what grandmother had in cash. When she went to get a loan- she was turned down by the loan officer because on the buying end- guess what- it was not an arm length transaction. This bank would NOT budge. Putting all our heads together we came up with refinancing her house with Jeff Belonger and then using the refi money to pay off the short sale acceptance offer. Thanks to Jeff Belonger who is on Active Rain for being able to pull this off. 

We had a successful closing. The parents and the grandparents were SOOO happy. They new we were able to do the impossible. The children never knew what all was going on and the parents were so thankful that they did not need to traumatize them. Their lives go on in the same fashion as they had done before the sale. 

We are very thankful that this agent entrusted this heart wrenching short sale to us. We are very thankful that the executives had compassion for this family and exhibited that with their exception to their rule. We are so thankful that this short sale is another happy ending for another Wellington Florida short sale family. 

 

Foreclosure Is NOT An Option! Call Nestor and Katerina Gasset today at 561-753-0135 for a confidential interview regarding your options. 

Don't Delay! Don't Wait Until The Sheriff Is Knocking On Your Door! Pick up your phone and call us to see if you can avoid foreclosure.

 

   

 

 

To  view Welington Florida Homes For Sale  Click here. We know  Wellington Florida Real Estate and Wellington Florida Short Sales and will help you get your home Sold if you need to Sell your home and help you buy your home in Palm Beach County Florida: Call us today.

 

   

 

 

        

 

 

Copyright © By Katerina Gasset 2010 * All Rights Reserved* Arms Length Short Sales Transactions- These Are Exceptions To The Rules