In short sale, you can't sell it to your relative or friends

In 90 percent of the short sales I do, this is the first question I get asked. 100 percent of the time the answer is no. I have never heard of a bank that will allow a non arms length transaction for a short sale.
If you can no longer afford the property consider a short sale to a non-related person.
There are a lot of good answers here but I think we all agree there is no way to do this if you disclose what is happening, and no way to do this without disclosing that fact that is on the up and up :-)

Add friends and even acquaintenance to list of negating an arm's length transaction. And many lenders are now having sellers sign an affidavit that they will not have any kind of possession of the property after the short sales. Side arrangements with the new buyer are a "no no".

No rent backs, either.

Always a good idea to have the lender approval and any conditions reviewed by an attorney versed in your state's foreclosure laws. Make sure you fully understand any obligations you may have in the future.

Best wishes on this difficult situation.

Steele

Unfortunately no.

Anna

Short sales were created to help homeowners who are facing a serious hardship like loss of employnment, death of the bread winner of the family and serious medical condition. It was not created to save people who made bed investments. One of the major requirements to be approved for a short sale is a HARDSHIP.
If have a hardship then you can get help.
On Your Team
Irena Popilevsky

It sounds like you can afford the house. I suggest just to keep paying for it. Forget about trying to cheat the system.

First issue I see is that you did not mention that you cant pay the mortgage any more. If you are trying to short sale it to yourself just so you can now have only market value into the property, that is just unethical.

It needs to be an arms length and that shouldnt work without violating laws.



Sean Dawes

As stated, it must be an arm's length transaction 99.9% of the time. If you were to hide the fact that you are related (married) you could be moving into fraud. If you disclose it (as you should) the lender will probaby turn you down immediately.

Be careful. If it feels like you are "getting around the rules" you are probably breaking them.

Hi Micky,

It would be really awesome if we could take all of our losses from unfortunate real estate investments and get rid of them by selling the house back to ourselves or a friend, cousin, etc. at the current market value and get a forgiveness of debt on the original loan all at the same time! And, this is a crazy economy so I'm not going to say that's not going to be a possibliity in the future either. But, I've seen a million short sales and trustee sale auctions and normally, the first rule of thumb is that the buyer cannot be related to the owner in any way shape or form. And like the past answer stated, it must be an "arms length transaction".

Think about it, if the banks allowed you to buy your wifes property then what is the point of a short sale in the first place. They might as well just write down the loan amount from the get go. And since most of the country is underwater in upside down houses, can you imagine the floodgates this would open?

Investments in real estate (or anything for that matter) go both ways. If your home gains value, would you ever think to give that profit or even some of it back to the bank because they were so nice to loan you the cash in the first place? Doubt it! But for some strange reason, when the tables are turned we expect the bank to forgive our debts. I just think it's a bitsy witsy one sided.

Banks are poeple too believe it or not and their businesses run on the same profit/loss principles we all live by. They need to make money or they will fail, as we have seen so frequently in the last few years. Let's give them a break and quit asking for so much and just live with whatever decisions we have made, good or bad.

In all short sales I've been involved in, and it's been the bulk of my business for a couple of years now, they mandate and verify and arms length transaction: meaning...no relative buyers. I echo the talking to an attorney suggestion and caution you seriously: disclose, disclose, disclose...this sort of thing is nothing to play around with, so in other words, it wouldn't be wise to try and out smart the lender.

Kim

Disclaimer: I am a licensed real estate broker and property/casualty insurance agent in the State of Ohio, providing information and sharing experiences acquired over 15 years in the industries. I do not profess to be qualified to give advice in any other field, though will share opinions and information obtained during my course of work. It is always highly recommended that consumers seek counsel from a specialist in each area in which there is a question or concern.

Are you also on the deed & mortgage on the property in NY? It is not that simple - more information is needed. My suggestions is to talk to an attorney.

Andy Yakubovsky
Century 21 Prevete
516-826-2000