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POA for relatives to buy new house in cash before short sale old house

Discussion in 'Short Sale Outpost' started by distressed_in_florida, May 25, 2011.

  1. distressed_in_florida

    distressed_in_florida LoanSafe Member

    Hi everyone,
    Here's our story:
    We stopped mortgage payments in October 2010. Applied for the loan mod through BOA in December. Seemed to be declined because we're both unemployed and our income ratio is too high to qualify. We haven't received notice that we're declined, we just kind of know it.

    We would like to short sale our old house in the fall of 2011 and have my husband's parents buy our new house with cash before the short sale process. DH would have a POA for his parents and I would execute the transaction (I'm a licensed real estate agent in the state of Florida for 6 months now).

    After a couple of years, we would like to know if his parents can sell us the new house back to us as a gift transaction. Is our plan legal and right?

    Let me know if you need any other info to help give advice.

    Thank you!
  2. distressed_in_florida

    distressed_in_florida LoanSafe Member

    Let me take that back: I won't be handling the transaction, another real estate agent will. So it won't be an arm's length transaction.
  3. Francie

    Francie LoanSafe Member

    The "ALT" (Arm's length, etc) is the first thing that crossed my mind when reading. I think the idea of buying a new home, especially in FL, before the old one goes is a good idea. In a word, homesteading.

    If everything goes perfectly, this can work though it is questionable. That's the problem: read the first phrase (containing the "perfectly" word) again. If it unravels, there can be problems. Any superficial investigation can reveal the ruse. The names are likely the same; the POA then becomes discoverable. In a word - fraud. Compound that if the short sale doesn't work, there is a deficiency, a foreclosure happens, maybe even a BK - that's a REAL problem.

    Is the current house in BOTH names? If only one, have the other buy the new home with the parents as co-signers. Better be sure about all this as co-signers go down the drain with the owner. If both names are on the house, then same with new though even if one is on it FL law creates Tenancy by the Entireties ownership by operation of law. Another possibility is to have the parents buy the thing themselves then sell it to you later. That's no problem at all that I can see unless other family issues take place.

    If you occupy the new house, then rent out the old one to provide income while getting rid of it.
  4. distressed_in_florida

    distressed_in_florida LoanSafe Member

    Well, right now the only plan is to get a POA for his parents to buy them a property. His parents live in Germany, that's why we need the POA. We would then be "renting" the new house from them while our old house goes to short sale. We have thought about renting our old house out, but we want to stay in it as long as possible before we "rent." But it would be nice to rent it out for extra income. Can we still do that even though it would be in short sale? I thought you had to be the primary resident.
  5. Francie

    Francie LoanSafe Member

    German people buy houses here all the time. I may have misunderstood WHO needs the POA. Are you saying you and your husband need it to buy for his parents? That could make sense, though I don't know the usual mechanism for it for German people who don't have relatives here: the realtor? If you can leave yourselves out of it, so much the better though I do tend to be overcautious at times, avoiding surprises. Honestly, I don't see a problem in their buying and your "renting" from them (an external transaction that's no one's business and out of the realm of your house and lender). I also don't see any problem with them selling it to you when all the dust settles from your current house issues. If they pay cash or finance it in Germany (what I understand most Germans do) and the loan is not recorded here even the doc stamps won't cost much for the second transfer.
  6. distressed_in_florida

    distressed_in_florida LoanSafe Member

    questions about poa form

    • can the notary be a witness to sign?
    • can the property address be left blank on the form until it comes time to use it? or will we have to have a new poa for each offer we put in on a specific property?
    • what is the affidavit for attorney-in-fact used for?
    If anyone can help me answer these questions, I'd greatly appreciate it!

    Thank you!
  7. Cat Damiano

    Cat Damiano Mortgage Wars

    distressed,


    Just an FYI for your knowledge as a new real estate agent, your scenario posted above would have actually been considered a Non-Arms Length Transaction. It is easy to confuse the two as the wording would suggest the opposite. Most real estate transactions are Arm's Length Transaction which is a transaction in which the buyers and sellers of a product act independently and have no relationship to each other.

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