Possible Short Sales Scenario? Armslength, Seller eval?
Looking for the BP community's feedback on a couple topics in the short sale process, specifically related to a property I'm working through.
Here is a little context to the situation. Seller is my father (please continue reading). Property was refinanced in 2007. Property is the seller's second home which has been mostly vacant for the past 7 years. The mortgage payment has not been missed in those 7 years. Property condition is not move-in ready. Needs a pretty decent rehab ($50K) to get back to market value.
- Intent vs. legality of arms length disclosure
- My understanding is that the intent of the disclosure is to avoid mortgage fraud by allowing a related party to purchase the home at a deep discount then reselling or renting the property back to the original seller.
- The affidavit is not only a disclosure of information but prohibits the buyer to be of relation to the seller.
- The intent of my purchase will not include the seller being involved in the property going forward at all (fix n' flip or rental to an unrelated tenant)
- How does the affidavit apply to an LLC buyer?
- Seller hardship and financial status validation
- Through my research on the Short Sale process I understand a seller will need to submit a package to the bank that will be used to understand the seller's ability to continue paying the mortgage as well as the properties value and position in the market. (W2's, taxes, paystubs, financial statements)
- Seller has ability to continue paying the mortgage. I'm assuming the seller would need to show history of inability to pay the mortgage (2-3 months) before submitting a package for short sale to the bank?
- What type of debit to income ratios or other personal financial metrics do banks use to evaluate a seller's hardship position?
- Using the 70% rule, the remaining mortgage on this property is about 20% higher than the formula would drive. I'm not looking for a 50% rule price for the bank to accept.
Just trying to understand if there are both legal and ethical means to move this deal from good to great. I'm leaning to probably not, but I'm curious on your feedback.
Thank you