Our Florida Realtors' magazine in March wrote an interesting article about short sale double closing transactions. Check out the article here: Short Sales - Flips that may Flop.
The article is written from the Realtor's point of view and not from an investor's as I did in my blog series last Fall on Short Sales and Double Closings - the Good, the Bad, and the Ugly. The article points out that these deals can have many many extra bumps in the road compared to a normal deal.
Many retail mortgages require the seller to have been in title for a minimum 90 days and up to a year. FHA temporarily lifted their 90 day seasoning requirement in February, but still prohibits loans to close if their has been a history of flipping.
As I stated repeatedly in my article, this Florida Realtors magazine article also states that if there is fraud in the deal that the short saling lender can unwind the whole transaction. Also keep in mind that as a Realtor, you cannot give the seller legal advice. And in a non-standard short sale transaction the seller is in even more of a questionable situation. Not only is the seller potentially getting their credit damaged because of the short sale or foreclosure, but also there is the potential for the short saling lender to come back on the deal if there was fraud, undisclosed money changing hands, or a non-arm's length transaction.
I spent last Fall writing my version of War & Peace on this subject, so I'm not going to do that here. Check out the Florida Realtors' magazine article and keep your short sale flip deals on the up and up.
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