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is there any law that states a bank cant short sale a property to a family member?

A friend's home is in jeopardy of foreclosure and he is trying to divorce his wife who lives in the home. Their daughter wants to purchase the home through short sale but Bank of America told her it cant be short sale to a family member. Is that just a company policy or a law and is there a way around it?

Public Comments

1. Yes you CAN please contact a Advacate to put STAY
2. It's possible the daughter doesn't have good enough credit for the loan amount she'd still owe the bank, or it's possible the bank just has a policy against short sales to family members in order to reduce their risk on the unpaid balance. As for how to get around it, I'd think that they'd need to take a good look at their actual loan documents and see what they say about the bank's right of approval . . . .
3. It's not illegal, but you're not going to find a lender willing to do it. The first suspicion is that the bank is being defrauded.
4. It's called, "Good Business Practices." The bank is trying not to be taken advantage of by a scheming family (my words, not theirs). There is no law as far as I know; and no way around it as long as the bank knows that a family member wants to purchase the home.
5. The lender makes the rules. And can break them. Keep trying. Good luck. Someone should have told your friend that in alot of cases, short sales not only take forever, and tons of patience, but are not a sure thing, and some never close because the lender won't come to/accept terms. I always tell my clients (Realtor in Co.) "don't give notice to your landlord" and " If you are a control freak, this process will drive you insane"
6. There is NO LAW that a bank HAS to do any short sale. No, not a law, but bank policy may preclude it. It smacks of collusion and coercion and defrauding of bank. A bank doesn't HAVE to agree to a short sale, and can do so on their own terms. AFter all you're asking the bank to give up its secured interest in a property and to accept LESS than what is owed. They might reasonably think the family member would help out relatives rather than trying to take advantage of bank. If daughter has stellar credit and short sale isn't too short, bank might go for it. . .try upping the offer, including daughter's hubby (different name). But short sales are difficult enough without adding this wrinkle to it.
7. no wonder BoA is in trouble. There's a willing buyer and they won't sell to that person... Why doesn't she just sell the house under normal conditions (no short sale)?
8. Doesn't matter. You can't FORCE the lender to agree to a short sale.
9. No there is no law that prevents the bank from blocking the short sale. They have to agree to take the discount. They regularly make sure that a trust buyer isn't the seller, that a company as a buyer isn't owned by the seller, and that a family member isn't the purchaser, because the seller might sell to the daughter and then the daughter might sell back to the seller and in the process the bank eats a loss without the seller also taking a loss. Unfortunately, there is no way to force the bank to do the short sale. The best bet is to pursue a loan modification, which your friend can do on his own or by using a mitigation company like Mortgage Mitigatgors (http://www.mortgagemitigators.com) or by selling to a third party, which involves getting a buyer and submitting the short sale to the bank. For instruction on how to get the offer approved, get The Complete Short Sale System at http://www.theshortsalegoods.com.