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.
What is an Oklahoma Short Sale or Arms Length Affidavit? An Oklahoma Short Sale or Arms Length Affidavit is a legal document required during the process of a short sale, which is the sale of a property for less than the mortgage balance owed by the owner. This affidavit aims to confirm that the buyer and seller involved in the transaction are acting at arm's length and that there are no hidden agreements or conflicts of interest. In Oklahoma, short sales are governed by state laws and regulations, and the use of an Arms Length Affidavit is an essential component to ensure the transaction is legitimate and transparent. It is often required by lenders, real estate agents, and other relevant parties involved in the short sale process. Key elements of an Oklahoma Short Sale or Arms Length Affidavit typically include: 1. Acknowledgment of Relationship: The affidavit requires the buyer and seller to affirm that they are not related, either by blood, marriage, or business association. 2. No Hidden Agreements: Both parties need to state that there are no concealed agreements or side deals associated with the transaction, ensuring that the sale is conducted at arm's length and follows fair market value. 3. Fair Purchase Price: The affidavit may require the buyer to confirm that they are purchasing the property at fair market value and not at a price significantly below its actual worth. 4. Verification of Market Exposure: The seller might be asked to verify that the property was adequately marketed and exposed to potential buyers on the open market to ensure fairness in the transaction. 5. Accuracy of Information: The affidavit generally includes a provision for both parties to affirm the accuracy and truthfulness of the information provided throughout the short sale process. Different Types of Oklahoma Short Sale or Arms Length Affidavit: While there may not be different types of Oklahoma Short Sale or Arms Length Affidavits, variations can occur based on the specific requirements of lenders, loan services, or government programs involved. For example, the U.S. Department of Housing and Urban Development (HUD) may have its own affidavit guidelines for short sales involving Federal Housing Administration (FHA)-insured loans. It is crucial for both buyers and sellers to consult with their lenders or legal professionals to ensure compliance with all necessary documentation. In summary, an Oklahoma Short Sale or Arms Length Affidavit is a vital document in the short sale process, ensuring that the buyer and seller act independently and without any hidden agreements. By providing transparency and validating fair market value, this affidavit provides a level of confidence to lenders and other parties involved in the transaction.
