Short Sale Double Closing

[Robert MacKinnon]

There are Five important points regarding Short Sale Double Closings (A to B; then B to C): 1) Necessity of Title Insurance for the A to B transaction; 2) Necessity of Disclosure to Short Sale Lender ("SSL"); 3) Necessity of Wet Funding (aka Transactional Funding); 4) "C" lender's consideration; 5) Title Company Concerns.

I deal with many investors across the country and the above issues are a major concern. There are a few bad apples that have caused an ugly stigma for this particular real estate practice. Done correctly, this will speed the recovery of our current crises. That is not only my opinion, but Alan Greenspan's today on CMBC. So let us take advantage of this opportunity, but do it right!

#1 speaks for itself and is mandatory per every title audit I have had in the last 12 months. Remember that these are two transactions.

#2 Most/All underwriters require disclosure to SSL. This can come in many forms. The best form displays disclosure conspicuously in original offer. It will not materially deter acceptance in most cases. NOTE ON APPRAISALS: A BPO is ordered by the lender and is based on other distressed comps (A to B); B to C is an arms length transaction and is based on other similar sales. This is not a hard concept. Certainly is not fraud.

#3 Get Wet or get in trouble. This is probably the most important concept of all. You must maintain separate closing status. (Note: shop price).

#4 Land Trust vs. Option Contract; FHA lenders like Land trusts, Fannie Mae will do no seasoning option contracts loans.

#5 Your title company may not close your transaction if you do not do the above. You must emphasis that you are playing by the guidelines as they have provided it. Make sure your title company knows how to explain this transaction.

Let me know what you think.

Robert MacKinnon