Lenders and government agencies prohibit rent backs in a short sale

I was sent an article in the Huffington Post from my Real Estate attorney I wanted to share with you in regards to a new strategy housing investors are advocating to keep homeowners who can no longer make their mortgage payments in their homes. Investors will purchase the property from the homeowner and then lease the property back to the previous owner at an affordable rent.




As the article states, it does seem like a winner for both the homeowners and the banks. The homeowner gets to stay in the property without the stress of making an unaffordable mortgage payment; meanwhile, the lender keeps a foreclosure off their books and avoids all the costs it takes to maintain the home until it is resold.



This does sound like a sensible solution however this is prohibited. The major financial institutions as well as the government programs such as Fannie Mae, Freddie Mac and the Federal Housing Administration all have this policy in place. Short sales are increasing at an alarming rate but the banks will refuse to allow these types of transactions unless the buyers sign legal documents promising they will not rent the property back to the previous owner.




These policies are put in place in order to reduce fraudulent transactions for instance; a homeowner might find someone to buy the property at a reduced price and together they could sell the home and split the profits. A homeowner and an investor may have good intentions but the banks do not know that. With all the legal issues attached to short sales and the constant changes in policies and guidelines, REALTORS, such as myself have taken extra precautions when handling a short sale transaction to protect ourselves from any legal ramifications. I may somewhat agree that this strategy would be helpful however; I do not blame the banks for taking their own precautions. Whether I agree or disagree really doesn't matter. If it is prohibited then there is no choice but to abide by the rules.




I have had many clients desperate to stay in their homes . No one wants to uproot their kids from their friends and school districts. I can appreciate that. I believe it is in our clients best interest if we can get them to think long-term. Values are going to continue to drop and we are going to be in a buyers market for quite some time. If we can short sale their property and help them enroll in a good credit recovery program they will be eligible to buy a home again in 18-24 months Vs 5-7 years in a foreclosure and be able to take advantage of this buyers market and get into a home and a location that may be even better than what they have now; in a home that is actually appreciating in value at a more affordable payment.



There is no doubt that the constant changes in the market place have been frustrating and at times it feels that we plug one hole just to have another one spring a leak and cause more damage. If we can focus more on what we can control instead of what we can not control this will enable us to roll up our sleeves, checking all negativity at the door and all opinions on how we think things should be and allow us be a guiding light for our clients.




(Quote) Accept the challenges so that you may feel the exhilaration of victory.

- George S. Patton




REALTORS, what is in your business plan this year? What are you doing to create a system that will allow you to build your short sale business? How often are you out there prospecting and how do you know if you are taking the listings that are going to be successful and not a waste of your time?




Call us today and let us show you a system that works to help you expand your business and effectively and efficiently close short sale transactions.



LOTUS REALTY GROUP



PROFESSIONAL SHORT SALE NEGOTIATORS




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