In theory, this is fine, since the short sale was an arms length transaction between total strangers and buyer and seller never "colluded" to defraud the lender for the negative difference. However, if there is in the lender's mind, that there was cooperation been former buyer and seller, and it may not be an "arms length transaction". The best way to approach this is to consult with a real estate attorney. Have the current owner put the property into a Trust. Then, nominate you, the new buyer (who was the previous owner), the Beneficiary of the Trust, i.e: or the Manager. Have the current owner, switch his insurance policy, from his own name, to the name of the Trust, for "estate planning purposes". The Title Search, or the Insurance change is what will trigger the fraud investigation by the original lender. However, if the property is entered into a Trust, and insurance is switched to that Trust, before any sale takes place then the Deed remains owned by the Trust, when you take possession. I'm assuming you now have good enough credit to get financing. So you're not buying the property. Instead, you are buying real estate held inside a Trust. Once you take possession, your deed recording stays the same as it is, in the name of the Trust, not in your own name. So from a Deed perspective, it is still in the name of the Trust, not in your name. The seller then sells you all shares of the Trust and you buy all shares. He relinquishes ownership of the Trust upon you cashing him, out,since you are buying out all shares at the time of the closing. You are not buying the property. You are buying the Trust, which is essentially like an LLC that owns the real estate. You are buying all his shares and removing him as Owner of the Trust, and you are making yourself, the Beneficiary (pre-sale) now the owner, upon sale. This is best answered by a Lawyer but this is the general outline of how you'd move this along.