Tisza Major-Posner

Hi Auroraborealis,

To accurately answer your question I would have to say that depends... It depends upon your relationship to the transaction. If you are the homeowner who is using the Short Sale as a remedy then it probably won't be allowed by the lender you are requesting permission to do the short sale from as they usually stipulate in writing that the current owner of the home can't receive any proceeds from the sale as one of the conditions for allowing the sale to take place.

If you are just a friend of the agent and they want to give you money to help you out but you are not a party to the transaction in any form then they might be able to give you money if they want to (just like anyone else can do if they choose to), but they might not be able to do this through escrow and might have to do it via a private transaction between you and them.

If you are worried about the legalities of the situation my advice would be to contact a lawyer who is familiar with Real Estate law to make sure that your friend and their broker would be crossing all of their "t's" and dotting all of their "i's".

I hope that helped. If you have any other questions, please feel free to ask and I will try to answer or I will find you someone who can. Take care and have a great day!

Tisza Major-Posner, Realtor DRE#01784679, IVPG Realty (909)837-8922 - Tue Jun 16 2009, 00:23

Hi Goodrenter,

In response to your question, the answer is "yes, they can". Until the bank or someone else takes ownership of the property the current homeowners remain in charge and they can do with the home what they like. So they can indeed choose to rent the home and collect that rent as payment for its use.

Also, you have a contract with them which obligates you to "Pay Rent Or Quit", and because you have this agreement in place you are expected to abide by it whether they continue to abide by the agreement they have with their lender or not. You don't want your landlords bad financial situation to tarnish your good reputation and if you discontinue paying your rent, your landlord would be completely within their rights to file a Notice of Eviction against you.

I would agree that looking for another place to live might be a wise thing to do. Even though you could conceivably be allowed to remain in the home and continue to rent it (assuming you have a valid lease in place) for the remaining duration of your lease agreement, you might not want to put yourself and your family in such an uncertain and stressful situation.

Good luck with your situation, I am sorry to hear that you are in such a trying time. If there is any way that I can assist you please do not hesitate to give me a call or drop me a line at Tisza(at)HomesByTisza.com.

Take care and have a great day!

Tisza Major-Posner, Realtor DRE #01794679, IVPG Realty, (909) 837-8922 - Sat Jun 13 2009, 00:38

Hi!

While I appreciate your sentiment, there is a problem with the plan. If you are going to use FHA financing you will need to be an occupying owner of the home as FHA can't be used for investment property. And, if you don't live in it yourself it would be considered investment property unless you were going to be a non-occupying co-borrower then you wouldn't have to live in the home but the other co-borrower would.

Another thing to consider is the fact that the lender who is being asked to permit the Short Sale may not allow the sale to go through if the current homeowner is going to become the tenant. Remember that a Short Sale is really a financial favor that the lender whose money is being lost is allowing because it is a less costly solution for them than pursuing the Foreclosure would be. But, if the lender believes that the homeowner asking for permission to use the Short Sale remedy is going to unduly benefit from allowing the sale to take place (like being able to get out from under the debt without paying it back but being allowed to keep the home) the lender may be less inclined to allow the Short Sale to take place.

So you might not be able, as well-intentioned as the plan appears to be, to be allowed to put it in to action without committing fraud.

Hope that helps.

Take care and have a great day!

Tisza Major-Posner, Realtor DRE #01784679) IVPG Realty (909) 837-8922 - Thu Jun 11 2009, 21:43

Hi!

Unfortunately, homes that are being offered as "Rent To Own" are not listed with the Multiple Listing Service or MLS. These properties are usually found in newspapers and on things like Craig's List.

But before you go looking to find one of these homes you should know a little bit more about how a Rent To Own works and why it might not be your best option, especially right now. Also, because these transactions usually happen between two private parties and may not have a Real Estate Agent involved you have no way of finding out if you are entering into a contract to purchase a home which might not be able to be sold because it is facing or already is actively in foreclose.

A Rent To Own contract specifies the price you will pay for the home at the end of the term of the contract but, here's the thing... the price is set and fixed now not at that time. So, if you agree to pay $100,000 for the home now but the contract runs for 1 year and at the end of the contract the property is only worth $75,000 you would have locked in the higher price and not been able to switch to the lower, more market appropriate one.

Also, you will be paying an additional amount added to your rent which will eventually go toward your down payment, but only if you ultimately do buy the property. If you decide at the end of the Rent To Own contract term that you don't want to purchase the home the extra money you paid to the landlord/seller would be lost.

What you are really getting with a Rent To Own or Lease With The Option To Buy (usually referred to as a Lease Option) is the right of first refusal when the property goes to sale. In a market where the prices for homes are climbing this can be a good thing because by locking down the price today you could be getting a better deal tomorrow. Also, you are able to sell your option to purchase to someone else, again, a good thing in an "up" market because you might be able to sell it at a profit. But in a "down" market its not so swift.

You might be better served by speaking with a reputable lender now (and if you need a referral to someone I would be happy to send you some names, you don't have to use any of them but they are all good folks :-) to see what your current financial picture is. You might find that you could purchase now without having to go the Rent To Own or Lease Option route.

If you find out that you are not able to look at buying a home now, then you would again, be better served by working on the areas in your financial life which are preventing you from reaching your homeownership goal and also saving money toward the downpayment and other costs associated with a home purchase.

Folks that earnestly apply themselves toward solving their credit challenges, legitimately cleaning up their past credit history, getting their debts under control and saving money for their future purchase are ultimately much better off than those that try to rush the process and "just get into anything". Better credit and firmer financial footing can mean ultimately lower costs for purchase because you can take advantage of the best interest rates and once you buy a home you should be able to keep it until you choose to sell it.

I hope that helps somewhat. If you have any additional questions or would like more information, please don't hesitate to either drop me a line (Tisza (at) HomesByTisza.com) or give me a call and I will be happy to see how I can help (and if I can't I will try to get you to someone who can :-).

Take care and have a great day!

Tisza Major-Posner, Realtor DRE#01784679, IVPG Realty (909) 837-8922 - Thu Jun 11 2009, 17:41

Hi Claudia,

Your situation is difficult but not impossible and I would be happy to talk to you to see what we can find to meet your needs. My office is located in Upland. Please feel free to give me a call or drop me a line(Tisza (at) HomesByTisza.com) with a good time to speak with you so that I can get a better idea of your needs and how I can help.

I look forward to hearing from you soon. Take care and have a great day!

Tisza Major-Posner, Realtor DRE#01784679, IVPG Realty (909) 837-8922 - Wed Jun 10 2009, 16:38