Home › Forums › General › EHTrust/EHT Topics and Creative Real Estate Financing › short sale buy back?
August 25, 2009 at 5:48 pm #5795
I can’t locate information on what makes this illegal. I know it is out there. Anybody know where.
Seller wants an investor to purchase a home on a short sale then sell it back to him at the new price. I want to tell this person he is heading for a view through a barred window, but can’t find documentation.
Next, what if, (sorry Scott, I now you hate what ifs) an investor purchased the property and we put it into an EHT until the value exceeds the original loan, say 7-10 years from now, then let him buy it back. Would that be an option?
StuAugust 25, 2009 at 8:09 pm #30030
I am not an attorney of course but you may find your answer in the term, “arm’s length”.August 26, 2009 at 5:50 am #30031
Seller wants an investor to purchase a home on a short sale then sell it back to him at the new price.
I don’t think that is what we are doing. My understanding is that we ARE NOT reselling it to the original short sale seller.August 26, 2009 at 3:45 pm #30032
Is it legal or illegal for the previous owner to come in as the Lessee in a EHT transaction via short sale?August 26, 2009 at 3:55 pm #30033
Thanks, Dave, from what I understand, your are right, but, that is what this guy wants and I believe that it is not legal. I’ll try Homesaver’s thought and put “arms length” into the search.
Gary, that is the question. I would really like to know the exact answer.
StuAugust 26, 2009 at 4:19 pm #30034
Since it’s a lease and the previous seller is not on title and has no equitable interest in real estate, there is no sale, IN MY OPINION.August 26, 2009 at 9:09 pm #30035
Is it legal or illegal for the previous owner to come in as the Lessee in a EHT transaction via short sale?
My understanding and experience is that in most jurisdictions that it is ILLEGAL for someone to…
a. Bring a borrowers loan current, be deeded the property, and lease the property to the original borrower with a buy back option.
b. Have an Investor “Purchase” the property outright and lease the property to the previous borrower with a buy back option.
The Correct and Legal Solution is…
a. Have the owner place their property in an EHTrust.
b. They remain not only the SB but the RB too.
c. Leave all their remaining equity in place. In other words, they get to keep 100% of any equity between the FMV at time of inception of the Trust and the balance of their loans.
d. Bring in IB that contributes enough money to the trust to pay all the closing costs, contingency fund, funds needed to bring the loan current and an extra $1200. Why $1200? Because you also need to reduce the SB/RB’s payment by $100 per month for at least the first year.
By doing it this, if you need to EVICT the original owner/borrower, they cannot file a successful claim that you took advantage of them.
Although this is the more correct, in my opinion, and legal way to do Foreclosure Bailouts, I still wouldn’t do it and leave the owner/seller in the property. Instead, I would either recommend our new Short Sale program or walk.
Do the SS program and leave the previous owner in the property as a new RB with the right, not option to purchase the property at a future date. Thus, no options and no sale. Nothing but a straight rental with a possible buyer down the road.August 26, 2009 at 9:50 pm #30036
Since I am having some communication issues with the main office. Nothing bad, just the way it is. Can some one tell or give me the needed documents to get this rolling? I am sitting on several SS opportunities.
SAugust 26, 2009 at 9:55 pm #30037
email Dave Salcido directly. dave(at)landtrust.netAugust 27, 2009 at 5:45 pm #30038
I have a short sale buy back in Cornelius, NC, but I am not in the SS program, can I still be a ground partner for someone who is?
Seller is 9 months in arrears at $1890 with BOA. and can pay only $1550/moAugust 27, 2009 at 6:08 pm #30039
Scott, I have a short sale buy back in Cornelius, NC, but I am not in the SS program, can I still be a ground partner for someone who is? Seller is 9 months in arrears at $1890 with BOA. and can pay only $1550/mo
Absolutely. Bill, Dave or Me would be glad to work with you.September 6, 2009 at 10:07 pm #30040
in RE and especially in the (pre)foreclosure industry,
you cannot disclose enough. It’d be prudent to disclose
what you had for breakfast that morning and what
color underwear you’re wearing today… that’s how bad
So you go ahead and do a short sale and tell the short
selling lender the borrower is going to stay in the property
(as owner or lessee) and you have zero chance of getting
the pay off letter approved.
Now the alternative is to not disclose that and you’ll end up
breathing filtered air for quite some time with free food, sex
FACT: Everyone seller would like to stay in their home and
pay less (if anything)
get a principal reduction (or even wipe it out)
or lease the property back.
Now lets say you fast forward 10 years and your happy tenant
has lease the property back from you for that period of time
and property values have recovered and the market is healthy.
now that ‘tenant’ sees that YOU are sitting on $200,000 of
what he believes is ‘HIS’ equity.
Tell me guys: how is a judge and jury going to side?
do you want to be in front of them and tell them you’re
going to cash in on the equity?
THere is no justice in this. It sucks for the borrower but
BEST PRACTICE is to have them out no matter what.
There is the ‘Brown Case” that ruled this way but I don’t know
what district it was nor what year. Lou Brown told me way back
then (but it’s not him…;).
THere is however a program where upside down owners
who HAVE NOT DEFAULTED on their loans can get a short
sale of their home and a lender will refi for 90% of the
current market value. All disclosed, all clean. This is
a fee based service since there cannot be a spread
between the buy/sell because there is none…
But this probably don’t apply to any of your prospects.
If you haven’t done a deal and you ‘think’ that’s
all the borrowers are going to accept, guess what?
it’s YOU. yes it would be nice, but we’re not
All the best, get the borrower out, new owner in,
cash a fat check and move on.September 8, 2009 at 5:45 pm #30041
It’s called a short-refi into a 90% FHA loan which applies to primary residences. Works for properties that are overencumbered and current on the mortgage.
Seller may still get a 1099 for the deficiency right? Unless the that mortgage debt relief would cover that or the homeowners file for insolvency.
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