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.
A Minnesota Short Sale or Arms Length Affidavit is a legal document used during the process of a short sale transaction in Minnesota real estate. It is typically required by the mortgage lender to ensure that all parties involved in the transaction are acting in good faith and are not engaging in fraudulent activities. The purpose of a Minnesota Short Sale or Arms Length Affidavit is to verify that the buyer and seller are not related or associated with each other, and that they have no previous agreements or understandings outside the sale transaction. This affidavit is intended to prevent any potential conflicts of interest that may arise during the short sale process. Different types of Minnesota Short Sale or Arms Length Affidavit may include: 1. Buyer's Affidavit: This affidavit is signed by the buyer in the short sale transaction, affirming that they have no relationship or association with the seller, and that the purchase agreement is entered into genuinely and independently. 2. Seller's Affidavit: This affidavit is signed by the seller, declaring that they have no personal connection or agreements with the buyer, and that they are not receiving any undisclosed benefits or incentives from the buyer or any other party involved in the transaction. 3. Agent's Affidavit: This affidavit is signed by the real estate agent representing either the buyer or the seller, confirming that they are not related or associated with the opposing party, and that they are acting solely in the best interests of their respective client. 4. Loan Service's Affidavit: This affidavit may be required from the mortgage lender or loan service, attesting that they have reviewed the short sale transaction and have determined that it meets their specific guidelines and requirements. It is essential to accurately complete the Minnesota Short Sale or Arms Length Affidavit, as any false or misleading information provided could result in severe legal consequences. It is advisable to consult with a qualified real estate attorney or professional experienced in short sale transactions to ensure compliance with all necessary forms and documentation required by the lender and state regulations.
