Foreclosure in 19143>Question Details

Deez7668, Other/Just Looking in 19143

Helping relative pay their underwater mortgage to avoid foreclosure. How can I get the bank to let me purchase home at current market value?

Asked by Deez7668, 19143 Sun Aug 22, 2010

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If, in order to buy the home , a short sale is necessary, you may have a problem. Most bank make everyone sign an addendum who is participating in a short sale representing that it is an "arms length" transaction. Clearly, if you are buying it from the relative, it is not. some banks might not ask for this, but that is rare. I am seeing it on almost every short. Your relatives best bet may just be to do a short sale on the open market and sell it that way. Certainly, they can try loan mods, but I only know one home where it was successful. Hope that helps.
1 vote Thank Flag Link Mon Aug 23, 2010
Hello Deez,

Ian is correct. Arms Length Transactions are a requirement of the short sale process which is purchasing for less than what is owed on the mortgage. Parties cannot be related.
0 votes Thank Flag Link Mon Aug 23, 2010
Hello Deez,

trying to buy a relative out of foreclosure is known as a foreclosure bailout and if a lender finds out that you are a relative they will deny the loan. They will look at last names and prior address for a connecton to sniff out a foreclosure bailout. Their thought process is this: you are buying the home but the person (who couldn't nake the payments before) is going to make the payments and they see that as a recipe for disaster.

Try the link below to see if a loan modification is an option. If not talk to the bank that holds your mortgage about a modification and adding a co-borrower. That may work better than tryig to buy through short sale

Good Luck,

Alan Openshaw NMLS # 143960
Cornerstone Lending Inc
Pa 18966
0 votes Thank Flag Link Mon Aug 23, 2010
Your relative should first check to see if they can qualify for a refinance or a loan modification. Check the web site below. Then if those options don't work, then they can try listing the home as a short sale. They will have to submit a lot of financials to the bank. You could then put in an offer to purchase the home. It gets a little sticky since you are a relative. The bank does not want to be taken advantage of. Depending on how close you are related & what bank you are dealing with. I suggest you talk to a real estate agent specializing with short sales. Foreclosure laws vary from state to state as well. I am in Michigan
0 votes Thank Flag Link Sun Aug 22, 2010
Short sales (which is what this is essentially) can vary from bank to bank. The first thing I would do is talk to a HUD approved foreclosure counselor (, then talk to the bank. This could go more smoothly if you talk to a real estate agent who understands short sales.

0 votes Thank Flag Link Sun Aug 22, 2010
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