hello to all!. i have been reading and reading and trying soo hard to put together my first real estate investment transaction. i used started learning about land trusts and the benifits of them. i know based on what banks tell me is that when the title holder preforms a short sale it would be illegal for them to purchase the home back at fair market value. i even herard it is illegal for them to even rent it out! after reading alittle bit about land trusts i came up with his hypothesis… can a homeowner who is upside down on the mortgage put property into land trust w/ help of a 3rd party, stay in the home and qualify for a mortgage for fair market value to keep the same property that would have been a short sale??? Am i going crazy or is my information just all mixed up. thanks to all with feedback!
Hi,
That is true as Federal guidelines say a property owner in foreclosure can not benefit from the short sale of a property in Foreclosure! A benefit would be a new rent payment of that home for less than was owed as a mortgage payment, a benefit would be not having to pack and spend money on moving expenses, and a benefit would be not having to put up fair market deposits which include utilities!
And yes, the law say’s a former owner who agreed to a short sale on there home can not buy there home back!
There are unscrupulous companies doing exactly this to unknowing home owners who will not realize they can’t buy there home back for years, and who are unaware they have created mortgage fraud by benefiting from the short sale!
Is it a arms length transaction if I offer to let you stay in your home and pay significantly less of a payment and make it so you don’t have to pay moving cost’s and expenpenses? Jeeze, it kind of sounds like I just offered you a bribe to agree to sell to me (Investor) and I illegally benefited you (Indirectly paid you) to agree to make a sale to me rather than at arms length to an investor who knows the law and requires you to move upon the closing of a short sale!
Well number one thing is a land trust does not have a job, a credit report or a social security number and without being removed from the trust or being an all cash deal the underlying mortgage applicant is going to be exposed!
It is outright mortgage fraud to provide a promise of benefits or sell the short sale property back to the original owner!
Yes, there are people in the US doing exactly this and yes, most of them will eventually be arrested and prosecuted!
GR
Seriously, whatever you do, don’t put the homeowner back into the property. Yeah I know they’d like to and in a way, your emotions want you to help them out. Unfortunately, you’re just asking for trouble. Right from square one when the seller asks, “Can I rent it back off of you?” the right answer is emphatically “no”.
However, one of the key benefits of a land trust is that many investors are getting the “no sale for 30 days” type of clause from the bank. In such situations, you can always sell the controlling land trust without selling the property. This assumes that you warrantied the deed into your land trust previously.
Whatever you do, don’t sell creatively or rent to a homeowner. There are a lot of scenarios where you can end up legally liable for this.
Which Federal Guideline says the property owner in foreclosure cannot profit? HAFA allows home owners to receive $3,000 at closing. I can send you an approval letter from Chase where the home owner is profiting from a non- HAFA, traditional short sale. Can you point to the Federal Law? I’d like to learn more about this. I appreciate it in advance.
Thanks.
woow. thank you guys for taking the time to respond. my research has confirmed what you guys are saying about the short sale process and the original homeowner cannot move back into the property. now the situation that stands out to me and which is unclear to me is this: I heard this strategy where a homeowner has the ability to place the title of property into a land trust, use the investor as the trustee, then have the investor purchase the property thru shortsale, allowing the original homeowner to stay in the property giving them time to fix credit and obtain a new mortgage in a year or two. is this true??? thanks guys again for responding. i love the knowledge!!!
read Gold River’s post again, no you can’t do that legally,are people doing things like this,yes,could they go to jail, yes
what your describing is just someone doing the same thing but changing some words around,it won’t fly
a short sale is designed to let someone sell a house they owe more on than its worth, with the bank taking the hit,it is not designed to reduce the amount someone owes on a property, there are government programs that might help in that area, but not a short sale
Hi,
Short Sale King your refering to the Cash for Keys program where a home owner in default is paid cash for moving cost's and is required to remove all trash and leave the property broom clean!
This is paid by the original lender in escrow not the buyer! This is perfectly legal under Federal laws because it helps prevent vandalism and ensures the old owner will be out of the property by close of escrow!
GR