Hi everyone,
I need some advice about this situation my step father has presented to me... He told me his sister could not make the mortgage payments on her home so she wants to short sale it. My step father says he cannot purchase the home from her because they have the same last name so he is asking me to purchase the home from her, she will continue to live there and pay rent, and in 6 months he says he will buy it from me. I am not very knowledgable about this subject but it sounds sketchy to me. Please help!

 

RUN! Run far, run fast.....run now!

 

How much and what's it worth? What are the comp sales?

 

I dont know a whole lot about mortgage fraud, but look into the rules of the short sale. I think I remember seeing that family cannot purchase the home for a set period, I dont think it was as little as 6 months though. Even though you may not share the same last name, you are family.

It sounds fishy to me though. She cant pay the mortgage but she can pay you rent, and he is promising you that he will purchase it in 6 months. I wouldnt do it.

 

1. Buy house for dirt cheap
2. Flip house
3. Profit

 

Run da eff away...

Well I guess you really can't considering it's your family. I'd say you're not in a position where you want to take on that kind of responsibility or something...

If you want, maybe you can loan an amount of money you're comfortable giving to help her make her payments.

 

Run da eff away...

Well I guess you really can't considering it's your family. I'd say you're not in a position where you want to take on that kind of responsibility or something...

If you want, maybe you can loan an amount of money you're comfortable giving to help her make her payments.

 

^ Personally, I don't think $ is the issue. If it was, the father could just as easily lend the sister the $, especially if he's planning to buy the house in 6 months. Seems like a scam to get the property for less $ maybe because it's worth less now than what the purchase price was?

Plus, we don't even know if the lenders will agree to a short sale.

 

and the house is in a bad neighborhood.

 

You'd be screwed if the step father decides he doesn't want to or can't buy the house later on.

 

I thought of this after I signed off. You have waaaay too much potential to take it on the chin financially on this deal. And we are obligated by the code of ramblings to protect your boyfriends potential to be the one to put you in that position.

 

He says the value of the house has dropped to 135K. I am not sure if the bank has agreed to the short sale either. I do not think this would be a wise decision for me. I don't see how I would be able to purchase a home with no income in the first place (I am a college student w/ no job). He is wanting to give me the downpayment to purchase the home to save his sister from losing it. But I don't see how she would be able to pay rent if she couldn't pay her mortgage. I asked him why she couldn't refinance the home but he couldn't give me a clear answer.

 

invisible rep

 

ok, without any sort of income you wont have to worry about it anyway.

 

I didn't think so, but I was unsure. Thank you!

 

Sketchy is right. More like illegal. Most banks make you sign an affidavit stating that the transaction is arms length, which means not being sold to a relative and that the seller cannot remain in or rent back the home after closing.

 

You can't get a loan without a job anyway. You have to have decent credit, a job (for 2 years min. in the same field) and a down payment to get a loan these days.

 

you can't just buy the home like that. When it is a Short sale, the Bank will assign an Asset Manager (RE Agt) who will do a BPO (Opinion of value) and also send an Appraiser out to do an REO Appraisal. Between these 2 values, they will next out the home on the market. You can then make an offer on that. Typically, even if the Bank accepts the offer, the home may sit Pending for 8 months. Good luck with it.

 

Not quite. I got a loan 9 months after starting my job with no cosigner and no wife at the time. I was 4 points away on one score from tier one credit and had $5k in the bank, so that helped. But, I did also have a $400/mo car payment. I went for it and it worked.

Having a job is completely necessary though.

 

Problem solved, no income = no loan.

 

You're correct-- it's a terrible idea since the foregoing would be fraud on the lender.

Run away from this deal!

 

my bank wanted 1 year before viewing a job as income. One thing I have noticed is that requirements vary from bank to bank. When I first started looking I was preapproved by a larger local bank for x amount, but I never actually brought in the paperwork to get the letter. About a year later (and now into the financial collapse) I actually wanted to put an offer on a home, so I went to another local bank which had a better interest rate. I presented them the exact same info, and was a bit shocked to be told that I was approved for almost 100K less. Out of curiosity I filled out another online app at the first bank and they spit out the same number as before, again I didnt send in the w2s etc.....but this time they actually sent me a preapproval in the mail even though they never saw any of my financials

 

The only thing that has really changed is the details of the process. I very easily could have bought a home that was too much for my situation, and that is the reason the housing crisis happened. The key is I am smart enough to NOT do that.

Miss Phee, please save yourself a mountain of stress and politely decline his offer.

 

Just to be clear, a short sale is where the bank will agree to a lesser amount than whats due to move the house off of their books before foreclosure.

There are a LOT of steps in this process including your finance approval and the banks acceptance of the offer.

As stated above, this sounds like they want to use you to buy out the house at the lower amount and possibly get a better rate.

Then you will in turn re-sale the house back for the lesser amount.

Unless you see some monetary gain on your end then this is a BAD idea as you are assuming all of the risk for no reward and if this fails you are the one that is stuck with a home.

 

Hmm, not sure if this is M&I or H&G. Since we have a few short sale topics in H&G, we'll go with that


There are so many things wrong with this situation I'm not sure where to start. Most have been covered, but one that jumped out at me was the no income, and that your step-father is going to "give you" the downpayment for the home. Unfortunately those days went bye-bye 5 years ago. If you're the buyer you'll need to prove you can make the down payment. They'll see your bank accounts and notice that you do not have the money. If your step father gives you the money, they are going to want to know where it came from, and you'll need to provide a paper trail for it. It it's over $10k, be prepared to have to pay taxes on it. Plus, if you need that much help to make the downpayment, they are want to going to see a long income trail to prove you can afford the mortgage. There are so many other things going on that it would take too long to type. Even if you could afford it I would run away... but no way you'll be able to come close to completing this transaction based on the situations at hand.

Also, as Heavy already said... there are TONS of steps involved in the short sale process. It will likely take up to a year just to get the bank to agree to list it as a short sale (the homeowner typically needs to be at least 3 months behind in payments... but usually more). I know a couple of people who are in bad spots and have not paid their mortgage in over a year (divorces, houses sitting empty) and the bank still has not started the short sale process. And once it is approved as a short sale, be prepared for it to take anywhere from 3 to 12 months (or more) for the sale transaction to be approved and executed.

So yeah, TONS of steps in the process... and nothing in the process will be able to be dictated by your step-father, the homeowner, or anyone except the bank(s)...


You'll need at least 6 consecutive months of income from the same job/company. If your credit score is not high enough, be prepared to have to come up with at least 20% down payment and likely even more proof of income (could be up to two years).

If you think getting a home loan has tightened up the last several years, good luck getting approved to purchase a short sale!! MUCH MUCH tougher process b/c the bank does not want the risk of getting screwed twice. As I said above, no way the bank even considers you as a buyer... so I don't think you have much to worry about...

 

if they are trying to get around the legal issues, then the father would simply lend the daughter money on the side to remedy the problem - logically speaking. if he was not willing to do this, then he probably is trying to pass on the daughter's liability to you. his idea of jumping through hoops with multiple closing costs and renter liability seems like a complicated solution. there are probably more issues that meet the eye.

avoid getting yourself in the mix if you can, IMO.

 

If it involves family of any sort - better to avoid the situation altogether. If it feels or smells fishy, it usually is.

 

I am telling him I can't do it. He's trying to work around the system by using me simply because I do not have the same last name. I am not in a position to buy a home and I know with any loan the bank requires some form of employment, which I cannot provide. And I don't think his sister is capable of paying the rent if she can't even pay the mortgage. I don't know why he won't just give her money to pay it while she gets back on her feet.

Thanks guys for your help!

 

Smart decision... So... is this thread open for whoring now?

 

When was that? I guess it varies from lender to lender, but most of the ones I work with say 2 years. Lending has really tightened up in the last few years, but those that should be able to get a loan can no problem.

Also, there is no standardized formula for short sales. It all depends on what bank your dealing with and even who your talking to on the phone. Some banks are terrible and others are better. You don't get the bank to agree to list a property as a short sale, although it's not a bad idea to let them know that is what's happening. All they want is the agreement, HUD statement and all the sellers financial and tax statements. If the planets align properly you can move forward. Statistically, 70% of short sales go through. I have been involved in transactions that have breezed through in a few months, and others that have taken over a year and never came to fruition. Overall they suck and I will not miss them once we're through all this mess.

 

Good questions to ask and a reasonable way to think it through. I'd also hold this family member at arms length from now on.

 

Hang tight - I know of a nicely upgraded house that'll be on the market near phee's parents within 6 months or so anyway.......

 

Good decision by you.

Your stepfather is trying to commit fraud, not just "work around the system."



x 2

I would be wary of any financial dealings with him, even at arm's length.

 

Blood is thicker than water... or something like that.

 

Glad to hear that. Probably a very, very smart decision

Whoring in H&G = ban. I'd advise against it...

 

Step father. And we keep him at Yao Ming arms length already.

 

 

Glad you guys decided not to proceed. The numbers he had in mind would kinda like this.
Old current mortgage = $300,000 or $1800/mo~
New mortgage after short sale = $175,000 or $1000/mo~
That's why she could better afford it. To bad it's fraud.

 

^This.

It's absolutely illegal fraud - and may even become a federal wire fraud offense if the lender is headquartered in a different state than you.

Run the fuck away.