If I find a buyer for my short sale house, can I rent it back from him?

Girl and dad seeking options for mortgage payments they cannot affordIf I find a buyer for my short sale house, can I rent it back from him?

That is a question that we are often asked with regards to short sales.  The answer is a definite “no”.  We will explain.

When doing a short sale in Kalamazoo or SW Michigan, there are many conditions that a lender will place on the seller in order for the short sale to be approved. These conditions may include sale price, net to the lender, net to junior lien holders, maximum commissions allowed, close-by date and perhaps other conditions as well.

One of the biggest conditions placed on short sale homeowners is that the seller will not benefit from the short sale beyond the lender’s agreement to release the lien and to have the debt amount be “paid in full”. (In many cases, the Veenstra Team short sale negotiators are also able to get the lender to agree that the payoff is also “paid in full” for less than what is owed.)

That’s all the short sale homeowner can receive.

A short sale selller is NOT allowed to receive any of the following:

  • Cash.  If there’s any cash left over, it goes to the lender. Getting cash at closing (unless it’s FHA of course) is not allowed.
  • The ability to stay in the house after the closing. Lease or no lease, it doesn’t matter. Staying in the house after closing is a benefit that is not allowed.  At most short sale closings, the seller signs an affidavit stating they are receiving no benefit from the sale. If they stay in the house and sign this affidavit, they are committing loan fraud.
  • Having an option to buy the house back at a future date. This is a HUGE no-no.

The Veenstra Team is ready to walk you through the steps of a successful short sale.  We help distressed sellers in Kalamazoo, Grand Rapids, Holland,  Grand Haven, Muskegon and many other SW MI cities.  Give us a call at 269-350-5514.