I recently received a newsletter from a local mortgage lender/HM lender. Here is what he had to say:
The law will start being enforced as of 1/1/2011
"You are now required to disclose to all parties involved about both transactions to include your profit on the flip. The list of people that must be notified include, the lender that has accepted the short sale and the lender supplying the financing for your buyer....."
".....As part of the law, a "short sale flipper" is defined as a person who has a house under contract to sell before they actually own it, AND the second transaction closes with-in 14 days of the short sale transaction. I am not an attorney, but the law specifically uses the word "AND," so my understanding is that both are required for the disclosure to be necessary. The means, as a short sale flipper, you can either enter into the contract after you close on the short sale, or close with your buyer after 14 days and avoid the disclosures. Again, I am not an attorney, but this is how the law reads to me."
If I were doing short sales I would try to do anything to keep from disclosing my profit to seller's bank.
I am seeing several transactional lenders starting to offer funding for the 14 day period, also I've seen one HM lender announce that he is working on a short term financing solution.
Cheers,
John
