A new scam is making the rounds, preying on homeowners who are behind on payments, or eligible for a short sale.
The promise in this scam hinges on a technicality regarding the “Arm’s Length” rule for short sales.
In most cases, the seller and buyer must not have a prior relationship with the intent to resell or rent the property back to the seller after the short sale goes through. The affidavit is designed to prevent mortgage fraud. While this “Arm’s Length affidavit has its critics, it is currently enforceable and upheld by the Federal Housing Finance agency. It stipulates:
- how long a property may be held by the buyer before either reselling it or renting it (between 30 and 90 days)
- disclosure of the relationship between the buyer and seller (family or business partner, for example)
- no contracts or agreements between buyer and seller that are not disclosed to the bank
- no extra money paid or received by any party involved in the sale other than those disclosed on the settlement statement.
There is one exception — and of course this is where some parties are taking advantage of the situation. In certain situations, nonprofits may buy the property, then lease or sell it back to the original homeowner if all HAFA guidelines are met.
In effect, a nonprofit can approach the homeowner is lead them to believe that they’ll be able to buy the house back at a discounted price.
Unfortunately, the reality is that this happy ending only occurs in 2 – 5% of all cases where the exemption is granted. Most of the time, the nonprofit ends up selling the property to another buyer and the original homeowner ends up moving out anyway.
Buyer beware! When someone promises something a little too good to be true, make sure you check it out with a trusted real estate professional.
If someone mentions the Arm’s Length rule and how you can bypass it, always remember these two rules:
- Beware of promises. If someone promises that you’ll be able to stay in your home or purchase it at a discount after a short sale, get the facts.
- Never pay a fee upfront.
Would you like more information? Give me a call. Short sales are becoming a lot more common than foreclosures in 2013, and that’s a great thing! If those mortgage payments are just too high and you’re ready to get relief from your “underwater” home, Markette Properties can help you sift through all the options. There’s never a fee for getting questions answered about selling your house in San Antonio.
We can buy your house fast in Texas! Markette Properties presents an unique, simple approach for selling your home! We are real estate investors. We buy houses in Texas just like yours! We are dedicated to the highest professional real estate standards for all of our clients.
Do you want to sell your house fast in Texas for top dollar with the least hassle? Give us a call! (210) 853-2788 or click the button below.
Photo credit Flickr CC: InqueGeek