Lenders are on to this type of tatic and will have all parties to a transaction (Seller, buyer, and agents) sign an Arms Length Transaction Clause when purchasing a short sale. Chances of being able to buy back your own short sale are slim to none.
Please call us and to discuss the specifics of your situation. We would be happy to answer any of your questions and explain the process to you.
Short Sale Department, LLC
All parties to a short sale must be at "arms length...Thus the buyer (and their agent) cannot in anyway know or be related to the seller (and their agent).
So your lender will not allow your scenario to occur.
If you were able to qualify to purchase your home at short sale, you wouldn't likely be qualified to sell short. Short sales in large part are built on the seller having a hardship. The fact that an owner may be underwater alone is not considered a hardship.
What you should investigate is a loan modification, it essentially the same thing you are considering. I've attached a link to the Making Home Affordable website so you can look into this option.
Practical? No. As noted, the purchase must be at arm's length. Further, on the one hand the seller has told the lender that he/she can't afford to make payments. It's possible/probable that the seller has missed several mortgage payments. It's very likely the seller would be unable to get financing for the repurchase, and nearly certain that the lender wouldn't approve the sale.
As others advise, if one wishes to keep living in a home but would like payments reduced, the most likely step is an attempted loan modification. Or, if there's equity in the home and the current mortgage rate is high, a refinance would work.
Hope that helps.
If the bank decides they will save more money by approving a short sale than by foreclosing, that is their choice. They are completely in charge, however, since they are basically doing the homeowner a favor. And the bank will NOT leg an owner buy their own property back in a short sale, in fact most of the time they will require everyone to sign an affidavit swearing that no one involved in the transaction are in any way shape or form related to one another and that this is an 'arms length' transaction. And if anyone lies on that affidavit they could be found liable (in civil court) for bank fraud.
And none of this has anything to do with criminal court, which is what most people are referring to when they ask if something is 'legal'.
Dan is absolutely correct, if you want to reduce your mortgage payment and stay in your home, you need to look into a loan modification. Government programs are wonderful, however they are not the only programms available, so if you do not qualify for HAMP or HAFA don't give up. Find out what other programs are available to modify the loan. You may even consider hiring someone, a lawyer or a modification specialist, to represent you as this can be a long and arduous process and confusing to the average person. And if you can't get a loan modification, then definitely work with an experienced and qualified realtor to do a short sale. But, whatever you do, do NOT try to purchase back your own property in a short sale..it will only make matters worse.