Keeping you informed about Las Vegas NV. Real Estate & Mortgage industry

Can you risk jail by doing a short sale? The answer is   YES!   BEWARE MY FRIENDS, F.B.I. and BANKS are going after short sales ARM LENGH TRANSACTIONS! Do not play with the fire!
I had few friends and clients that asked me, in the past few days, about arm length transaction in a short sale, what they are, and how they can be affected. What is an Arm’s Length Transaction? By definition is a transaction in which the buyers and sellers of a product (Real Estate in our case) act independently and have no relationship to each other. The concept of an arm's length transaction is to ensure that both parties in the deal are acting in their own self-interest and are not subject to any pressure or duress from the other party.
So what that exactly means for buyers, sellers and brokers as well, involved in at short sale transaction? It means that HUD/FHA/VA, Fannie Mae, Freddie Mac & FDIC do not want to see anyone obviously taking advantage of their financial disadvantage. Lenders and investors will not tolerate a “Bail-Out” situation that allows the distressed homeowner to benefit from their loss. People do not sell to Uncle Joe or your best friend in order to stay in the house or buy it back at a later time! YOU ARE LOOKING FOR TROUBLES!
BANKS ARE MAKING YOU SIGN THE  "ARMS LENGTH TRANSACTION" AFFIDAVIT, and are now carefully auditing short-sale transactions going forward and are also looking at previous closed short-sale settlements that may have been considered non-arm's length transactions. The specific language could be included in the short-sale approval letter itself or may be a totally separate agreement all together (such as in the form of an Affidavit) and can read something to the following effect: “Whereas, all parties relevant to this transaction are hereby indicating to XYZ Mortgage Corporation that no party to this contract is a family member or business associate or shares a business interest with the mortgagor(s) or mortgagee. It is further stipulated there are no “hidden terms” or “special understandings” between the seller(s), buyer(s) or their agent(s) in order to entice, induce or otherwise defraud the seller’s mortgagee in this transaction. This purchase contract is not assignable. If the purchaser intends on performing a simultaneous closing (aka flip) such a transaction can take place only if the re-conveyance is of equal or lesser value as to the current sales price indicated in this transaction. The Buyer(s) & Seller(s) nor their Agent(s) listed below have any agreements (written or implied) that will allow the Seller(s) to remain in their property as renters or to regain ownership of said property after the successful execution of this short sale transaction.”
		The above verbiage is pretty self explanatory and if these stipulations are non-issues for your particular deal than you should be fine. However (if you have to think twice about this) you need to be very careful and think twice before you sign such a document and go on with the sale! I do not want to sound like the devil, but......... is it worth to take the chance? In simple words.... Sell, Move out and go on with your life!
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