This is the perfect reminder that when you are going to short sale a home or purchase a short sale you must abide by all of the rules. The economy is in enough trouble without people further trying to scam the system.
Just another story to read for those people planning on scamming their lender in a short sale. This is just one of several cases I've read about lately. This is why I refuse to list and help any homeowner navigate through a short sale if I detect they aren't 100% honest, or if they indicate that it's going to be a pain to get them to provide the information that will be needed to keep a short sale process on track and moving forward. Too many people are involved, and I don't want to waste peoples time if the seller thinks it's just a big game.
Yes, banks take Arms Length Agreements seriously. So if you think you're going to short sale your house to your parents or another relative, then rent it back from them with plans to buy it in the future, you are conspiring to commit a crime. Goodbye and good luck. Ask yourself, is the buyer connected to you in any way by blood or business? If yes, they are not eligible to purchase your short sale. Why do lenders like BOA ask for 5 digits of a potential buyers social security #? It's mainly so they can research and verify it's an Arms Length Transaction. I love the people that call me and say they want to short sale their house and they already have a buyer lined up, but they need an agent to help them.
Many people don't realize that these days lenders and FBI agents are actually going door to door to verify that buyers who checked the box on their mortgage application claiming he/she was buying a primary residence, are actually living in the property. I know of one case where FBI showed up at a house 2 months after a closing where buyer had claimed he was buying primary residence, and the tenant answered the door. They asked if he was the owner, and he said no, he was renting and had been there for 2 months. They put that buyer on their list to file mortgage fraud charges against, which they did.
What are you in for? Well, we bought this house for $600,000.00, then the bottom fell out of the market. We heard about how all these people were getting rich flipping houses, so we decided to short sale our house for $300,000.00 to my cousin, then we were going to buy it back from him for $400,000.00. It sounded perfect, we would reduce our mortgage by $200,000.00 and he would make around $100,000.00 for his trouble. We didn't understand what an Arms Length Agreement was. It's the banks fault.
Short Sales are Debt Settlements that Need to be Taken Seriously.
Jeff Pearl / Lic in VA
Remax Distinctive - Reston VA
Homes / Land / Farms / Historic
Equal Housing Opportunity Provider