Has anyone had any success with a tenant purchasing the home from the landlord in a short sale?  I realize that all parties have to sign an Arms Length Transaction form but does full disclosure get us around this? If the tenant is purchasing at full appraised value will the big banks have a problem with this? Our loan is with Wells Fargo.


This tenant has been in the home for about a year and would like to purchase the home. Is the final decision left to the investor or would my negotiator be able to tell me? I don't want to waste anyone's time if this is not going to work.

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I have one just like yours closing on Tuesday.  Bankof America 1st and 2nd, tenant in the property for 1.5 years, seller living out of state due to job transfer.  HAFA approved, HAFA incentive paid to seller even though he's living out of state.  MOST important, Disclose from day 1, "The Buyer is the Current Tenant".  Treat it like any other short sale and it should go smoothly.


Best of luck,

Thom Colby


Newport Beach and Palm Desert CA

Good to know, Thom. Congrats on the closing.

It seems that more and more lenders are making HAFA work. I am closing three in December - all HAFA short sales.


Hi Thom,

I have a short sale with Bank of America and we have only 1th mortgage. It is conventional loan and I found out that our PMI is with RMIC. BOA told me they can override RMIC and I was pleased to hear that.

HAFFA was a possibilty for my client but we were scared that BPO might be set too high with HAFFA and that we only have limited time before we sell due to time limitation. 

How has been your exeperience with HAFFA lately with BOA?

We have posted home on the market and we are getting many hits so it seems we will be getting an offer soon.

Can we still try to prequalify for HAFFA after we get an offer via regular short sale route?

Any advice will be greatly appreciated.

Natalie Arndt cell 505 615-0158. Feel free to call also.

Hi Rita,

I had a Wells Fargo short sale with tenant in place who wanted to purchase the home. Wells Fargo wanted the right to make the decision as to wether or not the transaction was an Arms Length transaction - so I just let them know that the buyer was in fact the current tenant. I had listed at current market value in MLS and the tenant offered full list price with concessions...but tenant lost her job prior to WF approval and I had to substitute another buyer. To avoid any chance of "fraud" I would ask my negotiator if a tenant could purchase my SS listing - and get that approval in writing. If the tenant is prepared to pay current market value you might find the lender will allow the tenant's purchase.

Thanks Penny. Good advice. Right now I am in Equator, no negotiator. I will wait to see if the buyer is qualified to purchase and then pursue it with the lender.

Hi Rita,

Equator provides comment boxes - one of these boxes may be suited for inserting the disclosure that "buyer is current tenant". You can print out your Equator worksheets for proof that you disclosed the known fact, if it ever gets questioned.  Good luck to you.

As Thom said, it can be done and it's not outside the realm of possibility. You may however have to go to the mat for it.

Mine was no big deal at all ....  I just put in the comments section of the offer in Equator "Buyer is the Current Tenant" - and I put it on every counter in Equator.  I had the seller wrie a one line statement that said "the Buyer is the Current Tenant".  When I spoke with the negotiator @ LRC, I reaffirmed the Buyer was the Current Tenant. Everyone signed the standard "Arm's Length" Statement, it has already funded and we're recording tomorrow.  We already have the final "Approval-to-Close" from BofA.  It was never an issue.

This should go smoothly as Thom says.  Disclose it everywhere..starting at paperwork, then into Equator comments, then on every single correspondence, then on closing HUD.  FMV is the key and non-related...Good luck!



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