Being underwater not good enough reason for short sale


Q: Hi. I have a severely underwater condo as my principal residence. I can make the payments, but would like to short sell it to my sister. Then I would like to buy it back from her for cash. Will Senate Bill 321 allow me to do that, and would I need a lawyer to help me or could I use a Realtor? Thank you for any info you have on this.

— Marie E., Las Vegas

A: Your question makes for a good follow-up to my July 13 column about several new laws passed by the recently concluded Nevada Legislature that may help homeowners in situations similar to yours.

As you suggest, one of those new laws is SB 321, the “Homeowners Bill of Rights” that takes effect Oct. 1. Key portions of this law could help some Nevadans stay in their home after a short sale, which occurs when a lender agrees to sell a home for less than the amount owed on the mortgage.

Under current state law, buyers and sellers involved in a short sale have to confirm they have no agreement to let the sellers stay in their home as renters, or to eventually buy back the house.

As recently as this year, some Nevadans have been charged with such a crime for misrepresenting this relationship.

Once SB 321 takes effect on Oct. 1, Nevada law will no longer prohibit such transactions.

Nor can Nevada law be interpreted to require what is called an “arm’s length” agreement. This new law may help distressed homeowners seeking to sell their homes as part of a short sale to stay in their homes.

Whether or not this new law applies to you may be another story.

Given the situation you describe, you may want to consult a good Realtor and a reputable attorney to find out what your options are.

For example, you say you can afford to make your mortgage payments and can even pay cash to buy back your house after the short sale you’re seeking. If that’s the case, your lender may determine that you don’t meet the hardship criteria needed to be considered for a short sale.

Unfortunately, I am not aware of any law or program that entitles anyone to a short sale just because they’re currently underwater in their home.

Also, it’s important to note that in a typical short sale where homeowners are unable to afford their current mortgage — like the thousands that have been completed here in recent years by local Realtors — you don’t need to spend extra money to hire an attorney.

I think it’s smart to start by consulting a good local Realtor with experience handling such transactions. They can generally handle a short sale for you from start to finish, and save you money in the process.

For more information about this short sale issue, check out the new website for consumers launched by the Greater Las Vegas Association of Realtors at www.HomeLasVegas.com.

And for more on new state laws designed to help homeowners, see this news from the Nevada Association of Realtors at www.nvar.org.

Send your real estate questions to me at ask@glvar.org and I’ll do my best to answer them in this space.

Dave Tina is the 2013 president of the Greater Las Vegas Association of Realtors and has worked in the real estate industry for more than 35 years. GLVAR has more than 11,000 members. Email questions to ask@glvar.org. For more information, visit www.lasvegasrealtor.com.

 

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