Thursday, February 9, 2012 / by Lynn Horner Baker
North Metro Atlanta In many cases, short selling your home and then renting or buying it back is considered mortgage fraud. Because loan modifications are so difficult many homeowners are considering selling their home and then renting it from the new owner.
Many homeowners look at this as the best way to get their loan balance reduced.
"I owe 400k, my house is worth 200k, and the bank won't reduce the amount I owe on a loan modification. I'll just sell the home to my friend, rent it from him, and then but it back in 2-3 years after I fix my credit", they think to themselves.
Click here to discover how other sellers successfully did a short sale and avoided foreclosure.
The Bankers are afraid that if this is allowed, then everyone will want to short sale their house and then rent it from the new owner. To discourage this, some banks are now forcing everyone involved to sign affidavits before they will approve the short sale.
The affidavit says something similar to the following: "There is no agreement, oral or written, between the seller and buyer which allows the sellers to remain in the property as tenants or to regain ownership of the property at any time after the property sells."
The bottom line is that the banks don't like short sale leasebacks. If they find out after closing, then you could face criminal prosecution. How exactly?
Well, have you read your entire 18 page mortgage from front to back? Have you read the entire short sale approval letter and all the other short sale documentation? A clause could be anywhere in the paperwork and cause you lots of issues down the road.
So, are short sale leasebacks illegal? I don't know for sure. I definitely would not do it if I had to sign an affidavit like the one above. If there is nothing like that, then talk to a competent attorney first.
But, even a good lawyer can't guarantee you won't face future legal and/or criminal problems. They can only give you their opinion. Many attorneys have different opinions on a legal subject.
The only person's opinion that matters is a judge who makes the decision on the case. If you are considering a short sale leaseback, then I would simply recommend short selling and renting another home until you can buy again.
It's just simpler and you will sleep better at night. Thinking about a short sale?
I can help you short sale your property and get back on your feet. Send me an e-mail at Lynn@HornerBakerPartners.com. I will contact you for a free consultation.
When we talk, I will explain how the process works in detail and answer any questions you may have. Or, if you prefer, you can call me at 770 579-4060
Discover how other sellers successfully completed a short sale and request a free consultation by clicking here.
Thinking about a loan modification? Our North Metro Atlanta loan modification kit has the instructions you will need to get a loan modification approved with your bank. Click here to request a copy.
Thanks for reading this, Lynn Horner Baker.
Lynn is a Real Estate Agent and owner of Horner Baker Partners. Cobb County & Marietta Short Sales Realtor:
Phone: 770 579-4060. Lynn@HornerBakerPartners.com.
We will guarantee to save you $10,000 on your home purchase or we will pay you the difference!*
View My homes for sale at www.AtlantaShortSaleSecrets.com.