Replies to This Discussion

Permalink Reply by Jorge Newbery on April 4, 2011 at 11:06am

Trish - Chase will only approve if it's in their Recovery department, which is their charged off loans which are typically severely delinquent and secured by low value(sub- 30K) homes. If this is a regular Chase short sale, then Chase requires the affadavit which disallows leases or options back to the seller. What is the sale price of the home in question?

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Permalink Reply by Trish Friberg on April 4, 2011 at 2:43pm

The sales price is $280,000 approved by Chase......we are all good to go except the lease back part of the arms length.  Would this not be considered discriminating?  They let some lease back but not others? 

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Permalink Reply by Kimberley Kelly on April 5, 2011 at 1:58am

I agree.  Read the arms length doc.  I tell Sellers they cannot do it..it MUST be arms length..period.  To do a Short Sale, they must plan on moving on.

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Permalink Reply by Trina Gonzales on April 6, 2011 at 12:13am

Disclose. Disclose. Disclose.  There are lawyers taking continuing education courses on "How to sue Real Estate brokers for negligence and knowingly defrauding a lender."  It may work out for the seller in the short term but trust me, if you know of a material fact and don't disclose and seek legal counsel when you're operating outside of your scope as a realtor, somewhere down the line, you may get yourself and your broker in trouble.  It's not worth it to you.  Be careful!

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Permalink Reply by Roberta Baldwin on June 5, 2011 at 2:27am

I have a case where the tenants have asked to purchase the single family house they've been living in for three years. They are carrying the entire load of the mortgage and taxes right now and say they either need to purchase or leave. The owner can't carry it himself at all, so if they leave, we'll need to list it as an empty, abandoned property. Any thoughts about whether this passes or fails a standard Arms Length Affidavit? The two banks involved would be a local savings bank and, for the approx. $100,000 line of credit, Citi.

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Permalink Reply by Kimberley Kelly on June 5, 2011 at 3:19am

I don't know about laws particularly, as they are state by state, BUT, when I have a Short Sale Seller that wants to lease back, I REALLY discourage it.  The Lenders can make it harder for approval and who needs that, plus, I always suspect that they are keeping some kind of mysterious ledger somewhere in their ether world and putting stars and checks by suspicious looking files..I'm just sayin..

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Permalink Reply by Thom Colby CA Brkr 888-391-5245 on June 5, 2011 at 4:30am

Bob, most short sale lenders require signature of all parties in the transaction on an "Affidavit of Arm's Length Transaction".  Basically the bank is stating that they will only consider the short sale if the soon-to-be former owner can reap no benefit from the sale which would likely include; cash back, a repurchase, a lease-back, etc.  Although I doubt very much any state has a "Law" about this practice, the lender who is taking any loss can place whatever restrictions they want on their approval.  Similarly, there will likely be a restriction on resale to anyone for "X" days aftter closing - typically 30, 60, or 90 days.

 

 

@Roberta - in your situation, as the agent I would write a letter for submittal to the lender to be included with the short sale package explaining the situation and the tenants desire to buy the property.  Be very careful about representing both sides of the transaction - the lender may not like it unless the commission is reduced to only one side.....

 

You will likely have a couple of additional challenges;

1) If the tenants are paying the entire cost of carrying the property, then there is no hardship as it relates to the property .  That will be interesting to explain. 

2) Is the owner paying the mortgage or using that rental income elsewhere?

3) Was the property purchased as a owner-occupied residence - if so, did the owners ever live in it, or did they always use it as a rental?

4) What did the borrowers/owners state in their original loan application for #3 above?

 

Lenders are reviewing short-seller's original "wet signature" loan applications during the short sale review process so sellers need to be honest with themselves and you as they go through the process.

 

Best of luck,

Thom Colby

Broker / Negotiator

Newport Beach CA

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Permalink Reply by Melvin Vy on February 22, 2013 at 5:20pm

Hi Bob,

We've been doing it in the last 4 years in east coast.  If any one in here interesting to learn more about our short sale lease back program, please email me at [email protected].

Agent program is available.

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