Answer: No, unless you were granted prior approval from your lender or servicer.
Absent such approval, repurchasing your own home, after you sold it through a short sale, is fraudulent and a criminal offense.
In such a scenario, the homeowner has committed Short Sale Fraud – Non Arm’s Length Transaction.
An arm’s-length transaction is a transaction between parties who are unrelated and unaffiliated by family, marriage, or commercial enterprise.
As part of a short sale, a homeowner’s lender requires that the parties attest to, and sign, an Affidavit of arm’s length transaction.
A homeowner engages in a non-arm’s length transaction when he seeks to reacquire his property after a short sale by enlisting a family member or affiliation to purchase the property and, after the closing, conveys the title back to the homeowner.
Typically, there is no record of the property listed for sale via the Multiple Listing Service (MLS) or the length of time of the MLS listing may be minutes or a few days in order to establish a listing identification number. The short sale listing may also state that no showings are available at the time of listing.
If you sign an arm’s-length affidavit for your short sale and then violate it by reacquiring your home after you sold it via a short sale, you could be held liable for mortgage fraud. According to the Federal Bureau of Investigation, mortgage fraud is a “material misstatement, misrepresentation or omission relating to the property or potential mortgage relied on by an underwriter or lender to fund, purchase or insure a loan.” Mortgage fraud is covered under the 2009 FERA (Fraud Enforcement and Recover Act) and Article 187 of New York Penal law.
Penalties for mortgage fraud can include a long term prison sentence, restitution, forfeiture, and a costly fine.
Need Legal Advice?
Wrongly believing that you can repurchase your home after a short sale can subject you to unanticipated civil and criminal consequences. To protect yourself and identify what’s best for you, it’s imperative that you seek legal advice prior to engaging in a short sale transaction. If you or a loved one have inquiries pertaining to a short sale, contact an experienced New York Foreclosure Defense attorney at the Law Offices of Bruce Richardson so that we can help you through the process. Contact our office today for an initial consultation.
Our office zealously fights on behalf of homeowners and guides them through all stages of the maze-like foreclosure process. For representation by an aggressive and knowledgeable New York Foreclosure Attorney, contact attorney Bruce Richardson for immediate assistance with saving your home.