Home Selling in Midwest>Question Details

Doyle, Home Buyer in New Albany, IN

Parents buying my house through Short Sale. Good idea?

Asked by Doyle, New Albany, IN Mon Jun 16, 2008

I can't pay my mortage anymore and so I'm trying to sell my house as a short sale. I really love my house and hate to loose it so my parents, or possibly my ex-wife's parent's have agreed to make an offer of list price in attempts to buy the house from the bank. I'll continue to live in it and pay my parents (or ex-inlaws) a reduced payment while they pay the mortgage and have the house in their name. Is there anything wrong with this transaction?

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Yeah Doyle, this wouldn't be an arms length transaction since you have a relationship with your parents. I know that you asked this questions a few years ago, but these answers might help someone else. There are ways that you can sell your house to an investors and possibly make arrangements with your parents. This type of transaction would need an attorney involved.
0 votes Thank Flag Link Tue Jan 18, 2011
Hello Doyle,

Keith hit it.. Arms length, no friends or family - this is pretty obvious to banks if any name are the same as yours. I have seen a bank deny a Short Sale because a neighbor was going to buy and let homeowner rent back
0 votes Thank Flag Link Sun Nov 15, 2009
Part of the short sale agreement is usually that the sale must be 'at arm's length" meaning no relatives. If this is part of the agreement, and relatives do by it, and you live in it., you could be at risk of mortgage fraud.

Talk with a trusted source, like an attorney.
0 votes Thank Flag Link Tue Nov 3, 2009
Keith Sorem, Real Estate Pro in Glendale, CA
If you can't pay your mortgage but want to keep your house, your best option is to apply for bankruptcy. It sounds scary, and it's bad for your credit score, true, but it may be the best option in order to keep your house. I don't know which chapter to file, but you can contact a real estate attorney to work out the details. Also try contacting your lender and let them know your situation and they may be willing to work out some sort of repayment plan that lowers your montly payment. If you really want to go ahead with your plan, technically it's possible and legal as long as everything is disclosed to the lender at the time of origination. The lender must know that you intend to occupy the property and that you will be the one making the mortgage payments, in which case the lender will probably not make the loan. But it's worth a shot if that's what you really want to do. Just remember that having them buy the home without disclosing your occupancy and repayment intentions is considered fraudulent and will get you in a lot of trouble.
0 votes Thank Flag Link Tue Nov 3, 2009
The banks arent stupid and specifically look for this sort of thing and I wouldnt let it go through at all. They also typically make everyone involved sign paperwork saying that this isnt happening and if they found out after the fact, you could be in a lot of legal trouble.
0 votes Thank Flag Link Mon Jun 16, 2008
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