Can a homeowner in foreclosure quit claim deed property for money

Question

Can a homeowner in foreclosure accept money and quit claim deed their property? And then can that new homeowner try to do a short sale with the bank and be the buyer and essentially the seller?

Account Closed · Answer

Your Question: "Can a homeowner in foreclosure accept money and quit claim deed their property?" Answer: Yes, but it isn't smart for the buyer. Your Question: "And then can that new homeowner try to do a short sale with the bank"Answer: No. The owner of a house in foreclosure is very unlikely to do a short sale and be allowed to benefit from it.Best Answer: If you want to buy a house in foreclosure on a short sale, you have to be an "arm's length" buyer who can close before the foreclosure sale date.

Best Way: In my humble opinion, you bring the arrears current and buy the house from the owner subject to the existing loan or by using owner finance.

Ron S. · Answer

No. I mean, anyone can do just about anything but will it work? Not even a question here. no.

Wayne Brooks · Answer

@Juan Chavez No.  The Borrower has to still be the owner/seller in a short sale transaction. If the deed is transferred to someone else, the lender will have to foreclose. Heirs/borrowers with an HECM have little incentive though to go through a short sale.

Account Closed · Answer

Since it is in foreclosure, if you transfer the property the way you have suggested, it is a violation of the Due on Sale Clause and they will call the loan due with a foreclosure. They may deem it a fraudulent transfer. It's unlikely you can get them to change federal policy before the sale date. They will ignore your attempt. They don't have time and they certainly aren't going to risk their jobs and careers and possible prosecution testing your legal theory to see if it works for you.

What's in it for them?

Ron S. · Answer

You will cut a lot of research and work out by concentrating on the relevant, which is FHA and only FHA. All of the rest of the GSE's only do forward mortgages.

Wayne Brooks · Answer

@Juan Chavez Federal regulations are not always written so laymen, or even attorneys, can properly interpret them in a vacuum. I assure you, someone receiving a QCD is not someone they consider “authorized to dispose of the property”.  I know that RM’s are new to you....they are not new to me. I have told you what can, or can not, be done with a RM. Use it, or not, however you like.

Account Closed · Answer

You seem like a nice guy . . .  and young. You probably don't remember 2008 - 2010. Ask your attorney to explain the S.A.F.E. Act and make sure it doesn't apply. Also, Reverse Mortgages are due when the Borrower dies or is no longer living in the property. Then the wife, or heir or estate takes over if they wish. You did not say you were the wife, an heir or trustee of the estate and a quit claim deed doesn't make you one of those.

Justin Hammond · Answer

@Juan Chavez, what would be the point of doing this? To me it seems like your risk would be far less if you just helped them with the short sale and became the end buyer instead of paying them up front for the same odds (or less) of making a deal with the bank. What advantages would you have by doing it this way?

Juan Chavez · Answer

@Ron S.

Thanks Ron, I am going through the necessary steps. Currently I am working with the sellers attorney. I will definitely update as I go along.

I hear your thoughts and I'm sure you can respect, what is most important is validating the short sale rules from Freddie Mac, Fannie Mae, HUD (FHA) (HMCA), or VA. Each have different rules. I was hoping someone maybe has case law or federal statue and a reputable website with the answer they post. That is all..

Ron S. · Answer

I've answered the question you asked on the first post. My answer is based on over 25 years of doing these types of transactions. As experienced people continue to add input and insight into your first post, you continue to change the question from your original post and question.

This seems to be one you'll have to find out on your own as many people, with decades of experience doing these transactions, have provided you with valuable insight. If you choose to disregard it, it's incumbent upon you to validate your own theories, instead of relying on others to do it for you.

Can a homeowner in foreclosure quit claim deed property for money

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