subject: The Short Sale Process - 10 Steps to a Successful Short Sale [print this page] The Short Sale Process - 10 Steps to a Successful Short Sale
So homeowners figured out was that if the Banks were willing to do a Short Sale and go through a short sale process to sell the home for market value, the homeowner could find a straw buyer, a friend, a family member, a cousin and have that person purchase the home. Then the friend of family member could rent the home back to you, the homeowner, and you would pay the rent to them,which equaled what the lower mortgage payment would have been (which is half of what you were paying before). Then three, four years after the short sale process your friend or family member would add you to Title and everyone would live happily ever after. So in essence what you did was a creative loan modification where you cut your payments by half and cut the amount that you owed on the loan down to current market value. Simple enough, right?
Wrong. It didn't take the Banks too long to figure out what homeowners were doing, and the Banks responded by creating an Affidavit that the Buyer, the Seller, the Listing Agent and the Selling Agent all have to sign now. This Affidavit states that the Buyer and the Seller don't know each other, that there's no agreements outside of what's been disclosed in the Contract, and that the Seller will not remain in the property after the close of escrow.
At the end of the day, with this new Affidavit, it makes it very difficult to go through a short sale process and use the excuse that you didn't know you couldn't do this. Or worse yet, it makes it impossible to explain why you are back on title four years later without having had the arrangement you denied having by signing the Affidavit.
So, going back to the original question: Can I sell the home to my friend? The answer is yes. But the reality is should you? Probably not. The risk is too great and if the Bank were to find out that you sold it to your friend and family and stayed in the home, this will be looked at by the Bank and the Federal Government as mortgage fraud. You should Google "mortgage fraud penalties" and you'll quickly see why you don't want to mess with that.
Some of you will argue, "no problem, I'll just put the utilities and insurance under my friend's or relative's name", and how will the Bank find out then? The answer is, Banks have automated systems that can scan through 1000s of title records per second and can easily do this once every 5 years to catch and collect money from this kind of fraud. And I would bet this is already part of their business practice. Long story short, they can easily look for any ocurrences of the debtor's name that they forgave on the debt showing back up on Title, when it does, it will be jackpot for the Bank.
So again, should you do a short sale and sell the home to your friend or family member? Probably not. If you have a family member or friend that's willing to buy a house for you, my suggestion is for them to buy the house down the street, and as long as the address is different, then you've kind of taken the risk out of it, and you don't have that cloud hanging over your head.
A Short Sale is a great option if you guys are behind on your payments, or if you are upside down on your mortgage. Some of you may be ready to get started with a Short Sale, and if that is you, simply go to the website in the resource box below.
If you're not ready yet and know of someone who is upside down or behind on their payments that could benefit from this information, please pass along this article to them. This could be the very best gift that they get this year.
