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What’s The Huge Deal With Arms-length Transactions Within The Short Sale World?

Monday, May 14th, 2012

Hey, I am Jesse Moore and that is Dennis Pearce and we are with Pickett Street Properties. We are one of Seattle’s leading short sale teams. Right now we are going to speak about arms-length transactions and what that means within the short sale process. Arms-length within the authorized sense actually talks about not having relation to on this case a seller. The banks are going to take a dim view on someone who is making an attempt to sell to family. It is a method for the financial institution that’s approving a short sale to make sure there’s less chance of fraud.

I can think of some examples. A husband and spouse divorce, the wife retains the home and the husband isn’t on the mortgage. The wife is in a state of affairs where she needs to sell the house and the ex-husband tries to buy the house. This is unlikely to happen. They want to make sure that the whole lot is completed properly and so they don’t want the properties in collusion. The explanation it’s a requirement by the financial institution is to verify there is no short sale fraud going on.

What it’s good to know in case you are contemplating a short sale or in case you are within the short sale process is you cannot list the property with a family member. Some arms-length definitions even include plutonic relationships that means friends and enterprise relationships as well. We’re primarily talking about blood relatives. Be mindful you will probably be required to sign an arms-length affidavit. You do not want to sign it having it state that it is an arms-length after which have it not be. That is considered mortgage fraud and I consider the FBI tracks it.

When you’ve got any questions on short sales or the short sale process, please give us a call. Again we are Pickett Street Properites, one of Seattle’s leading short sale groups and we’re right here to assist you. Thanks and have a fantastic day.

For more information on short sales and how to avoid foreclosure, or you can also and get started today.

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