OfflineI have researched a company called AHP (American Home Protection) LLC. What they do is buy homes at short sale and then rent them back to the original owner with a 5 year option to purchase. They fully disclose this to the bank.
I'm thinking of doing this; I understand it may be somewhat risky, but the reason is this is for my best friend; she's like a sister to me. I've known her since I was 4. I would really like to be able to help her, especially since before coming to me, she filed for bankruptcy to save her home. THEN after the bankruptcy was all worked out and the payback schedule, she went to her lender (Litton) and tried to do a loan modification. They advised her to stop making her payments. OUCH!! I WISH she had come to me first, because once you file bankruptcy, if you stop paying you are set up for eminent foreclosure. If only she wouldn't have listened to them and contacted me first! *sigh*
Anyhow, the way I found I is she casually said she was going to rent a new place and just walk away before it forecloses.
My question is, if they short sell, as this is their primary residence, will the bank require them to hold a note for the amount short saled? I'm totally new to short sales; I've offered on some and got nowhere with them, so went other directions in REI; but I am not afraid to try new things, so I'm going to do my best with your help, the success academy, my short sale negotiator and a title company.
I just don't want them to have to pay back anything that's short; its so wrong that they told her to stop making her payments full well knowing she'd already filed bankruptcy. Banks make me SO angry! 
anyone?
Back in December '10, an investor I briefly got to know told me about an experience another investor had with this, as it made it to the local tv news. But somehow, the bank or somebody or whatever didn't like the investor renting the house or leasing it back to the buyer after he short saled it or bought it from the bank or whatever. I've heard of others doing this, and having success. Maybe there's a right or wrong way to do it, esp. in arizona where it's an at arms length state. Maybe Bill (Trustpoint) or Michael M. could elaborate on this further since they know more about shortsales than the rest of us?
You much watch the legality of this process. When banks agree to a short sale, they will often times have the new buyer sign an affidavit agreeing to certain conditions. One of those conditions is not allowing the original owner to rent, lease or buy the property. The thinking goes that if they allowed this, every homeowner in America would default on their home to get a better deal. Restrictive clauses like this tread a fine line but the banks have a valid point; but I haven't seen a court case in this matter.
Always Looking to Acquire Houses | Always Looking to Amaze Investors
Tammy,
from the Insider's Edge guide, it states:
'As of 2007, an IRS tax law change from HR Bill 3468 states that losing a primary residence to foreclosure will not result in any tax income notices from a departing mortgage as in the past. Lenders cannot send a 1099 for their losses when they do not get enough for the home when they sell it during the foreclosure process'.
When a homeowner sells a property for less than what is owed, the bank has to 'approve' the sale, thus agreeing to a shortsale, i.e. taking the loss and forgiving the remaining debt.
hope this helps clarify...
Valerie
Valerie
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That it's pretty much up to the bank, and what they want the new buyer to agree to. I mean, I understand either everything in real estate is either negotiable or some things aren't. I heard that the investor somehow got in trouble for doing it. If I find out the video or story, I'll post it on here. That's what I was thinking, though. Thanks, Bill!
Tammy you live in CA. DRE is cracking down on this process big time. Investors are going to jail for exactly what you want to do. You can try it, but make sure you disclose, disclose, disclose. You don't want anyone coming back a year later and slapping you and your friend with a fraud charge. I just went to our annual Keller Williams risk management seminar and our attorney was all over us for making sure we disclose. He talked about how agents are held to a higher standard because of the license, but that the DRE and banks are going after investors big time in CA, especially strategic defaulters. Good luck.
Kimmy, this property is actually in WI. But, this company called American Home Protection, LLC does this all the time and they do disclose that it will be rented back to the homeowner and they've had massive success. If they can do it, I'm thinking there must be a way for me to do it to, but I want to make sure to CMA!
Thanks for the IRS rulings and the short sale info. I know I have heard of some short sales resulting in a note for the amount short; but I didn't know if this was only for 2nd homes and/or investments, or if it carried forward to primary residences as well.