Expert: Dick Dennis - 11/4/2010

Question
I have a situation where my aged parents are going to lose their home.  The mortgage loan company has told my folks realtor that I would not be able to purchase the home as it is seen as a conflict of interest.  Their position is based upon the idea that my parents let the house go so that I could buy it and give them a better monthly payment.  Of course, this could not be further from the truth as they were paying a reduced payment up until the foreclosure notice.  Can you suggest a way in which I may be able to buy the home and keep them in it?  

Answer
The bank assumed you would buy your parents' house via a short sale transaction, Jim. Since the lender would lose money in allowing you to  buy the property, that is where the conflict of interest comes in. Anybody in the world is permitted to buy a house with a short sale, except immediate family members. Although, it wouldn't hurt for you to ask the lender if you would be able to buy the property, especially if you are talking all cash. Just maybe the Realtor was wrong.

An investor might be able to help.

The investor would make application to buy the property via short sale at discount. He would offer to buy it all cash. That is when the lender becomes flexible in what they require in cooperating with a short sale. They then know the buyer's transaction does not have to wait for a loan qualifcation. But it must be enough of a discount to allow the investor to make a profit for the use of his money.

Or, you can wait until the foreclosure sale takes place and then make a bid the lender would accept, most likely less than what is owed to them. THEN you would be permitted to buy the property. Anybody may buy a house at a foreclosure sale. You don't say in what state the property is located. The foreclosure process differs from state to state.

Your folks' Realtor should know how to handle this. If not, find one that is more knowledgeable or talk to a local knowledgeable real estate attorney and see if that person can help. I do wish you well.

Dick Dennis
dixiedee13@aol.com