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Short Sale Arm’s Length Transaction
Knowing what a short sale arm’s length transaction implies is extremely important. The basic premise is that the seller(s) and buyer(s) are unrelated and unaffiliated by family, marriage, or commercial enterprise. Also, that the agents involved are not hiding any information and that everything is disclosed. Other things the arms length affidavit may address is that there are no long term lease backs or later plans to sell back the property to the seller.
The servicer wants to avoid undisclosed agreements that benefit the seller since they are taking a loss. These agreements often need to be notarized and the intent is that the servicer is trying to prevent mortgage fraud.
The servicer does internal audits on file during the short sale review. If they see a buyer with the same last name or relation to the borrower/sellers when they do their audit they will deny the short sale.
Most servicers or investors have arms length rules in place. Reverse mortgage short sales are the one niche short sale where borrowers can sell to family or friends.
If you need short sale help or have questions, please fill out the form below or call 1-800-692-9960 and a specialist will be in touch with you shortly.