After years of not pursuing their rights and a hands off approach to the onslaught of short sales and foreclosures in Las Vegas, banks are taking a closer look at what really qualifies as a short sale these days. Now that traditional sales have overtaken short sales as the main way to sell a home, banks have devoted more resources to examining the short sale transaction very carefully.
With price appreciation, a homeowner will find it more and more difficult to complete a short sale than a couple of years ago. As the Nevada legislature has made it ever more difficult for a bank to foreclose due to the “Homeowner’s Bill of Rights” banks have looked for other ways to protect their investments. In the past, I have participated in short sales where the bank gave several thousand dollars in relocation money to the homeowner to assist with their relocation. In one instance, the homeowner was given $3,000 to relocate after the transaction. The only problem was, they never relocated, and used the money to rent the home back from the purchaser after the transaction closed. They essentially wiped out all their debt and lived in the house for $1,000 less a month than if they had to maintain their current mortgage. Would this land them in jail? Probably not. But the bank may sue the homeowner to recover their losses on the transaction.
PRACTICE POINTER: Homeowners need to make sure they are up front with the bank in their short sale transactions as banks show they are not averse to prosecuting homeowners for deceptive practices.