In real estate, a short sale occurs when a bank or mortgage lender agrees to discount a loan balance due to an economic hardship on the part of the mortgagor (i.e., the seller). Circumstances determine whether or not banks will discount a loan balance. These circumstances are usually related to the current real estate market climate and the individual borrower's financial situation. A short sale typically is executed to prevent a home foreclosure. Often a bank will choose to allow a short sale if they believe that it will result in a smaller financial loss than foreclosing.
An arms-length or short sale affidavit is a document created by a bank in an attempt to prevent sellers from selling to relatives or friends to act as a straw buyer. Sometimes sellers make such side agreements. Then, after the transaction closes, the pretend buyers quickly transfer title back to the seller. This practice, in affect, means the sellers have repurchased their home at maybe half the cost, which greatly benefits those sellers.
An Idaho Short Sale or Arms Length Affidavit is a legal document that outlines the details and agreements involved in a short sale transaction in the state of Idaho. It specifically addresses the relationship between the buyer and seller in a short sale transaction to ensure there is no conflict of interest or collusion. In a short sale, a homeowner who is unable to keep up with their mortgage payments agrees to sell their property for less than the outstanding balance on their loan. The lender, in turn, agrees to accept the sale proceeds as satisfaction of the debt. However, to prevent any fraudulent activities, the Short Sale or Arms Length Affidavit serves as a declaration that the transaction is being conducted at arm's length, meaning the buyer and seller have no personal or business relationship that may influence the terms of the sale. The Idaho Short Sale or Arms Length Affidavit typically includes the following aspects: 1. Identifying Information: This section includes the names, addresses, and contact information of the buyer(s) and seller(s) involved in the short sale transaction. 2. Property Information: Details about the property being sold, including the address, legal description, and any relevant legal documents such as the mortgage or deed of trust. 3. Affirmations and Declarations: The affidavit will contain statements affirming that the buyer and seller have no connection or relationship that may influence the sale price or terms. It may also state that the seller is not receiving any hidden incentives or financial benefits from the buyer, lender, or any other party involved in the transaction. 4. Responsibility and Consequences: The affidavit explicitly mentions that providing false information or engaging in any fraudulent activities may result in legal consequences, including but not limited to criminal charges and civil penalties. 5. Signatures and Notarization: Both the buyer and seller must sign the affidavit to acknowledge and confirm the accuracy of the information provided. A notary public is typically required to witness the signatures. Different types of Idaho Short Sale or Arms Length Affidavits may vary based on their format or the specific requirements of the lender or service involved in the short sale process. Some lenders may have their own template or specific language they require. It is crucial for buyers and sellers to consult with their lenders or real estate professionals to ensure compliance with all necessary documents and requirements. By using an Idaho Short Sale or Arms Length Affidavit, all parties involved in a short sale transaction can provide assurance of a fair and legitimate transaction. It helps protect the integrity of the process and prevents any potential conflicts of interest that could compromise the overall outcome.
