Ron Ballard, the California Short Sale Lawyer has a must- read post on the impossible requirements banks are imposing on sellers, buyers and agents.
Most lenders routinely require that the seller, listing agent and often the buyer and their agent sign some kind of certification, representation, or declaration/affidavit that the short transaction is being conducted at “fair market value” (FMV) or “market value” or “based on market value.” Often the certification takes the form of a sworn affidavit or a declaration under penalty of perjury.
The certification requires that the parties to the transaction sign a docuument that they know to be false. Likewise, the banks also know that the document cannot be true. What I mean here is that a short sale transaction is NOT an arms length transaction between a willing buyer and a willing seller. All short sale transactions are made under duress to the seller. Otherwise, there would be no sale. I have seen information that short sales here in Nevada typically close at a discount of about 26% of FMV.
Ballard thinks that when buyers knowingly sign a false document we, as investors are becoming a target if it should become politically expedient.
Market value and arms-length transaction certifications are a looming time bomb of ever increasing liability and risk that ordinary people are taking on which the banks and GSE’s can detonate at an economically and politically expedient time to seek recovery for their losses from short sale buyers, sellers and their real estate agents.
Is that a risk that you are willing to take?
Read more below.