Replies to This Discussion

Permalink Reply by Steele V. Propp on March 3, 2011 at 5:22am

What I have seen is that lenders are pretty picky about an arm's length transaction.  You can run it by the lender and see what kind of reaction you get but their fear is this is just a ploy to get the borrower out of the loan and still stay in the property.  Not sure what you could do to convince them otherwise.

 

But you could try...

 

Steele

Permalink Reply by Kari A. Battaglia on March 3, 2011 at 5:33am

I my experience with BOA it depends on the circumstances and what relation relative is to the sellers. Disclose, disclose, disclose.  You must be up front with lender if you want to proceed with this type of short sale.  Personally I would not proceed with this.

Permalink Reply by Rick Trono on March 3, 2011 at 6:09am

Keep in mind in a short sale that the lender will state
that " the borrower shall not benefit from the sale of the home."

I would not put my license at risk...


Rick Trono

Permalink Reply by Michael Schneider on March 4, 2011 at 4:55pm

I think the issue on this is that it is too close to "fraudulent conveyance".

Not necessarily that it is fraudulent conveyance, but just more of a "red flag" event.  So, it is just not worth the trouble of dealing with the regulator when they ask for documentation, justification and explanation.

I tried to sell a house short to a relative, once, when I first started with short sales.  Disclosed the deal, explained the circumstances, etc.  I had a very reasonable discussion with a BofA loss mitigation manager, who agreed that this was not fraudulent conveyance, but explained the "not worth it" point-of-view.

I basically agree on this.  If I were the bank, I think I would not authorize the transaction either.  Just not worth the trouble.

Permalink Reply by Mary H. Morrill on March 8, 2011 at 10:18am

I think they are getting tighter about this, not looser.  I just had a denial because the Bank "thought" the sellers and the buying agent were related.....same common Hispanic last name.  The entire group signed (and had notarized) an arms-length affadavit, but that was not good enough for the Bank.  One of the members of the Escalation Team at the Bank told me yesterday that the Bank does an extensive search for possible relatives in these transactions these days.  The words she used were "creepy searches."  Just FYI.

Permalink Reply by Sheila Vardakis on September 28, 2012 at 7:39am

does anybody have a BOA arms length form they can send?

Permalink Reply by TOP END Properties on October 22, 2012 at 2:02pm

3. The Parties acknowledge and agree that the Subject Property must be sold through an “Arm’s-Length” Transaction.  “Arm’s length” means two unrelated parties characterized by a selling price and other terms and conditions that would prevail in a typical real estate sales transaction. No party to this contract is a family member, related by blood or marriage, business associate or shares a business interest with the mortgagor (Sellers).