Can I buy my own house at a short sale?

Asked by Alias, 34287 Fri Feb 19, 2010

I want to buy my house thru a short sale. Can anyone advice me how can I do it? Thanks

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curious myself’s answer
curious myse…, , Blue Ridge, GA
Thu Nov 28, 2013
In a similar but somewhat different situation myself but have the same question. My circumstances are; I went through hardship a couple of years ago, came close to loosing my home on a couple of occasions, applied for a mod and was denied several times and finally filed chapter seven without reaffirming. Things have gotten somewhat better after borrowing money to get caught up and my interest rate dropped so we've actually been able to pay our mortgage on time with the exception of being about 5-10 days behind twice since then.

Fast forward to today. I have the opportunity to receive funding to offer to buy the home at it’s current value but no more than that. A recent appraisal shows the market value of my home is 60% less of the balance of the lien. I’m not obligated to repay the mortgage because I didn't reaffirm. Just staying in the home and paying only interest at a very low rate. I would love to stay in my home especially if I can make an offer myself to satisfy the lien. It’s this or walk away and buy something else which I’d rather not do.

Any thoughts or suggestions on this? I actually consulted an attorney, but I received a short answer of it never hurts to ask. I know the process would be more than just asking. I think I just paid the wrong attorney a consult fee.

Thanks in advance!
0 votes
Screwed By B…, , Perry Hall, MD
Sun Jan 23, 2011
haha defrauding the bank. Modification all big fat jokes.
Actual events as they occurred:
1. Lost my 50,000 17 yr job
2. 11 months later still unable to find a job (applied for 345, interviewed for 32)overqualified,under qualified, would not consider me for job making less as they figured I would leave after economy got better, who knows but that will take a long time. I professional interviewing, successful testing all went well, many times it was between me and another (so they said) always got the less expensive one, not that I was against working for less, but like I said, afraid I would leave and waste training $$'s.
3. 10 months later I called my mortgage co. just to tell them my October payment would be in on Nov 03,2009
as I had to wait for my husbands paycheck to add a 100. to what I had.
4. Nice mortgage company rep. said during the phone call mention in #3, "a new modification program is being offered to people having trouble making there payment due to loss of income as long as one person on the loan is still working.
5. She asked me my household income/debts.
6. She said we qualify to skip 2 payment (Oct and Nov) and lower our payments by 250.00 a month.
7. I accepted and since I had the cash on hand to cover Decembers new payment amount I paid the December payment right there on the phone November 03,2010.
8. Woo Hoo I even had a few dollars to get some groceries.
9, Received the paper work from the bank explaining the deal as the rep. described and filled the order of documents. I was advised to fax these documents that would verify the income /debt as noted in the conversation mentioned above.
10. Called the mortgage company verfified items faxed were received 3 days after sending
bank statements 60 days, paystubs for my husband 30 days, unemployment income verification for myself, hardship affidavit, income tax for 2 years. 23 page fax. Yes they were rec'd and modification would be signed, sealed in 30 days, per the rep who verified documents were recd.
11. I called mortgage company 40 days after sending in documents to be sure all was completed as discussed. Mortgage company said, no they are overwhelmed with modification request and could take up to 90 days to complete, Ok no signs anything was going anything but good except taking a bit longer.
12. Continued to make the modified payment amount and called at the 90 days to be sure all has been completed, although I had no reason to think otherwise. Rep advised they are still behind and the notes in the file says No documents recd from customer. Oh the fun begins, WHAT do you mean, I verified they were recd months ago, Oh yes they were but since it has taken this long to review your request we need updated documents.
13. I gathered updated paystubs, and bank statements, faxed and verified recd nothing else was any different as income tax yr had not chgd, and affidavit was singed previously. (faxed the entire file including updated documents as requested. We are now in March, rep advised keep making the modified payment amount until the modification is completed. OK
14. Got a call in May from Mortgage company who advised our modification was denied due to lack of documentation recd as requested. WHAT?
15. This rep mentioned in 14 above, said you have a few choices if you want to stay in your home, ha?
He said we are now 2 payments behine (the 2 they allowed us to skip in the beginning of the modification)
2700.00, the 6 months of 250.00 (difference in modification amount ) 1500.00 plus late fees for the 2 skipped months and each 6 month the 250 the payment was short by 250.00. 70x8-560.00, legal fees, filing fees, total of 6855.00 due not to stay in the home. WHAT?
16. My options offered in this phone call while I am still in tears and shock. Deed in lieu of foreclosure, 2 short sale, or pay them down payment of 3500. now, and each month pay 1800. (500.00 increase from the already hard to reach original payment amount.) Even though I knew no way in hell I can pay 1800 a month and I didnt have 3500.00 down payment I allowed him to go thru with me on the phone my debt/income he said oh well even if you do have the 3500.00 you dont qualify to pay 1800.00 a month, so your only options are deed in lieu, or short sale to avoid foreclosure. I told him I would have to speak to my husband and get back to him. Said all this while in shock, ready to be sick.
17. I talked to my husband that night and guess what? He blamed me for misunderstanding, not faxing in the documents, of course it had to be my mistakes, first night in 28 yrs I slept at my moms house.
18. same process over again until september when they advised sorry in foreclosure cant take your payment
19. house is up for short sale to avoid foreclosure. Now who committed fraud. They sold my mortgage 3 times since. They say ok to sell house for 107,000 although I owe 154,000 but can work with me to keep it.
1 vote
Your story is a very familiar one. Loan modifications were supposed to fix many issues, but very few were ever approved. Short sales have had similar processing issues taking months and several updated submissions for the lien holder and investor to review and approve.
If you are now committed to doing the short sale, make certain you are working with Agents/Brokers and Negotiators who are experienced and successful getting them approved. The horror story would be to go through all you already have only to have the bank foreclose in the middle of your short sale, and it has happened.
If you have it in you while this is ongoing, contact your state and federal representatives and tell your story to them.
Flag Thu Nov 28, 2013
wow!! your story sounds EXACTLY like mine except it has been 3 years that our so called modification has started and paperwork has been filed so many times I've lost count. short sale isn't fair to the homeowner and the reps I've spoken with agree. Why can't the lender offer the homeowner to stay in their property for the amount they are willing to settle for?? My home is worth over 100k but lender is willing to settle for 31k with a total stranger and I have lived here 15 yrs. My kids have been born and raised here. My lender told me modification was our answer when I became disabled and unable to work and THEY did this to us. I want to pay my loan but they won't let us!!!
Flag Tue Jul 23, 2013
Mack McCoy, Agent, Seattle, WA
Sun Feb 28, 2010
Well, gee. Do you have enough money to pay cash? Can you get a loan?

Yes? Great! You can do it! Oh, wait. Except, that you can't sell it short if you have . . . never mind.
1 vote
Shave and a haircut.......2 bits!!!
Flag Tue Mar 15, 2016
Libbywalls, Home Buyer, North Port, FL
Thu Aug 13, 2015
You can't do that. A Short Sale has to be an arm's length transaction.
0 votes
Hrh Carpenter…, Home Buyer, Charles Town, WV
Thu Jan 22, 2015
Short sale means cash payment to be paid in a short period of time, usually no more that a year.
0 votes
HUH short sale is you selling your house for less then it worth.. And hoping the bank approves it
Flag Fri Aug 5, 2016
Flag Thu Aug 13, 2015
Randy and Vi…, Agent, Punta Gorda, FL
Tue Jun 10, 2014
No you can not buy your own short sale, and a short sale needs to be an arms-length transaction, which means you or your family, or friends can purchase it from you.
0 votes
So if someone buys the house can i buy it back from them?
Flag Fri Mar 18, 2016
Cathy Sloan, Agent, Jacksonville, FL
Sun Jul 31, 2011
Post script to my answer below.

My clients and I signed one of these Affidavits last week. Pretty sure this practice is still in effect.
Web Reference:
0 votes
Cathy Sloan, Agent, Jacksonville, FL
Sun Jul 31, 2011

I am not sure your interpretation is correct.

In addition to Mack McCoy's remark regarding cash or loan. If you have adequate cash to purchase, then you have the ability to continue paying mortgage payments until your cash runs out. If you don't qualify for a modification, you more than likely will not qualify for any mortgage.

I recall there is a Short Sale affidavit that the Buyer's, Sellers, and Real estate agents , must sign that they are unrelated in any way by Family, Marriage or Commercial Enterprise.

The current owner will not remain in the property after closing as a tenant or have Title transferred to them after closing.

There are several other paragraphs in the affidavit not applicable to this question.

It also states each signatory understands that a misrepresentation may subject the responsible party to civil or criminal liability which survives the date of closing.

I'm pretty sure the bank won't let a seller short sell to themselves.
Web Reference:
0 votes
Shani, Home Owner, California
Sat Apr 2, 2011
Yes you can! Well, according the new Treasury rules... If you do not qualify for the modification, the mortgage company must offer the short sale to you, the owner.

"According to the Treasury rules, a participating loan servicer must offer the short-sale program to a borrower who does not qualify for, or did not succeed at, a loan-modification under the administration's home affordable mortgage program."

Read the entire article from March, 2010 below.
0 votes
Kevin Olson,…, Agent, Colorado Springs, CO
Sun Mar 20, 2011
I would definitely consult an attorney on this one. It's illegal and there is no way any of us can advise on it. In consulting an attorney one on one you might be able to get some insight as to what options may be best for you at this point.
0 votes
John Allen H…, Home Owner, Chesapeake, VA
Sat Mar 19, 2011
It seems that it would be in the banks best interest to work out a short sale with the homeowner who honestly wants to keep their house, just the same as doing it for someone else coming in and buying it for less after they go through the expense of foreclosing. The people on here who are judging are just showing their ignorance of what is going on here. We were one of the lucky few who were able to save our house but the process practically requires someone to quit their job just so they can stay on the phone full time trying to deal with these banks. We refinanced our mortgage for $50, 000 more than we paid because of added interest accumulated over 2 years while Countrywide kept losing our paperwork. It's so odd that now that we're refinanced and have been current for a year that they answer the phone every time, and haven't lost our file once! People should be careful what they judge, until you walk a mile in someones shoes.
0 votes
Mott Marvin…, Agent, Sunny Isles Beach, FL
Thu Sep 16, 2010
Hi Alias AKA Buy It Back.....

Your question is a good one and I have previously answered it. After some deep thought and medication- I mean MEDITATION..... I agree to not only give you advice on how to, but give you a step by step guide on how YOU or a friend or family member can help you achieve your goals. I know of and/or heard of many folk that have successfully done what you want to do. Nobody got caught and everybody got the house back and is living da good life.

Remember- its only illegal IF you get caught. Really, its no biggy- they say it could be considered bank fraud, mortgage fraud, wire fraud, etc.

I do not advocate that criminal activity is ok, nor acceptable. I am NOT a lawyer nor do I play one on TV-
0 votes
Caroline Choi, Agent, Los Angeles, CA
Thu Sep 16, 2010
Hi Home Buyer, sorry to be the bearer of bad news, but not going to fly. A short sale needs to be an arms-length transaction, which means you -- nor family, or friends -- can purchase it from you. They will get a signed, notarized document stating you understand this, and if they later find out something shady went done, BELIEVE that you will hear from them, so I completely advise against it.

I would pursue other options: have you pursued a loan mod? Or does your state offer any homeowner assistance? Here in California, we have a CalHFA program which offers mortgage payment assistance and principal balance reduction to borrowers who qualify. I would see if your state offers something similar.

Best of luck!

Caroline Choi
Broker Associate/Realtor
0 votes
Pebble Singha, Agent, Woodland Hills, CA
Wed Mar 24, 2010
Hello Home Buyer,
I understand that you want to keep your home. having said that No you cannot buy your own home thru a short sale. It is called Defrauding a Lender. It will not be an "ARMS LENGTH TRANSACTION".
To have the short sale done you have asked the bank to see your hardship and agree to take a loss on the money you owe to them.

What you should have done is tried Remodification. Please also check my website and see if you qualify for the HAMP program.

Wish you luck, looks like you really want to keep the home. Its kind of late but you can try.

Pebble Singha
Certified Distressed Property Expert and Realtor
Web Reference:
0 votes
Katem, , Arizona
Sun Feb 28, 2010
If it was possible most people would do this im sure. To the rest of you so called critics dont judge this person, the home buyers are the victims the banks are the only criminals! Fraud, bad advice, Illegal lending these are the laws that are broken! the average homeowner just got seriously taken advantage of and got the advise and permission from "profesionals". The banks ,lenders, and realators who gave this spectacular life changing dirty advise who most of these comments are from are out of jobs now. Better find a new careeer fast before you do time for your crime!
0 votes
Mott Marvin…, Agent, Sunny Isles Beach, FL
Sat Feb 20, 2010
You can probably do it- but it is against the law. Banks have many ways to discover and investigate this type of activity. I'm sure its been done before- it is easy to get caught. Do you plan on buying
0 votes
Margaret Ama…, Agent, Sarasota, FL
Sat Feb 20, 2010
Dear Alias,

I think you really know the answer to this question yourself and that is it would be outright FRAUD.
Basically it would be asking all the taxpayers to pick up your tab. All the taxpayers meaning your parents, friends, neighbors and so on.

But let's say that by some miracle you actually were able to accomplish this through a company name or an Alias. The lender asks the seller and all people involved in a short sale including the agent to sign a statement that confirms that there is no blood relationship between the seller and buyer and that the sale is an armslength transaction. Besides, there is a myriad of documents you must submit to do a short sale in hopes to have the deficiency forgiven.

Aside from the obvious moral issue here, in today's internet age that would be a stupid crime. The world knows more about you than you could imagine.
0 votes
Jason Stevens, , Englewood, FL
Sat Feb 20, 2010
Alias - I totally agree with Mark. You have asked real estate professionals how to commit fraud against your lender. I know there are lots of people that aren't too happy with banks in general but no agent I know is going to give you advice on an illegal activity. I wouldn't be surprised if your question isn't removed by the folks at Trulia.

Jason Stevens, REALTOR®, GRI, ABR
Graduate Realtor Institute
Accredited Buyers Representative
Real Estate Broker Associate
REOTrans Platinum Certified
Kevin Flynn Realty, Inc.
Cell - 941-662-0379
Home Office - 941-698-0973
Home Fax - 941-698-0973
0 votes
Grace Morioka, Agent, San Jose, CA
Sat Feb 20, 2010
Hello Alias:

Short answer..."no." Once a homeowner requests a short sale for their home, it is not possible for that same person (who just requested a huge concession from the bank) to then purchase the same home.

If you are forced to sell your home short (and you must be "forced" through circumstance to do so), you will not be able to purchase any homes for about two to three years.

Grace Morioka, SRES
Area Pro Realty
0 votes
Adrian Hunti…, Agent, SAN FRANCISCO, CA
Sat Feb 20, 2010
In order to qualify for a Short Sale you need to prove hardship. If your current loan can be modified, and after the modification your Mortgage payment is 31%, or less of your current gross income, you will not qualify for a short sale. If you stop making your mortgage payment and can afford the payment, then a bank will most likely foreclose on you. The American taxpayers have to eat the loss. If the banks allowed you to buy your home back for less, then all of us would do the same.
0 votes
Debra (Debbi…, Agent, Livingston, NJ
Fri Feb 19, 2010
If you have assets allowing you to purchase another home - in this case, your own home - I cant imagine the bank not expecting those assets to be put towards the amount you already owe them!

Since you have to be approved by the bank for the short sale by showing a hardship.........I'd like to see the expression on thier faces when they see the potential buyer for the home is you!

I mean..what you're saying to the bank is........let me sell for less than I owe, please Mr. Banker take this loss & write it off............and then let me turn around and grab the house back at a lower price.

Have you tried a loan modification?

Since, in a short sale , the seller is still the owner and the one actually selling the would be an interesting contract showing the seller and the buyer as the same person. Do you really think you can buy the house from yourself??
Also..your credit will be adversely affected by doing a short's doubtful you'd be approved for a mortgage, either.
And, as I said at the beginning of this response....if you have any assets to put towards a new should be putting them towards the debt you already owe. The bank will certainly see it that way, too.
0 votes
Dan Tabit, Agent, Issaquah, WA
Fri Feb 19, 2010
To qualify to complete a short sale, there generally needs to be a hardship involved. If you are currently experiencing a hardship, it is doubtful that you qualify for a new mortgage. So to answer your question, I don't think you can buy your own house as a short sale.
What you may qualify to do is obtain a loan modification. In some cases banks have reduced the rate, added past payments onto your principle bringing past due amounts current, or in some extreme cases even written off some of the principle balance, and restructuring the remainder of your loan at a reduced rate.
I would suggest you look into the Making Homes Affordable Plan online, and then call your lender. There are some companies who offer, for a fee, to negotiate your modification for you. Be very cautious and do not pay anyone for this service up front. In many States it requires a lending license or an attorney to perform this service, so again be very careful if you do no choose to pursue this option on your own.
0 votes
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