If you're a homeowner who is losing your home to foreclosure, you've probably explored every potential option of how to actually keep and/or stay in your home. One of these options you may have considered would be to have a close friend or family member buy the house from you and then you'll just make the payments until you can qualify to buy the house back. Sounds like a nice option, right? Well, it might sound like it's "the solution" but it's also considered fraud under most lender's short sale terms.
Most short sale transactions have language that states that the transaction is "arm's length" and forbids the buyer from having any stake in the purchase other than to own the property. If a buyer makes an agreement to hold the property for a certain time period and then to resell the property to the original owner, then this violates the "arm's length" verbage in the short sale contract between all parties and the bank.
You may wonder why the bank even cares who buys the property or their intentions in the future if the bank is willing to accept a lower price than is owed on the note in a short sale transaction. The process of using a third party to purchase the property at a reduced price than what is owed (short sale), then turning around and selling the property back to the original owner at the reduced price is often times called a "straw-man transaction". According to the http://legal-dictionary.thefreedictionary.com/Straw+person straw man n. 1) a person to whom title to property or a business interest is transferred for the sole purpose of concealing the true owner and/or the business machinations of the parties. Thus, the straw man has no real interest or participation but is merely a passive stand-in for a real participant who secretly controls activities. Sometimes a straw man is involved when the actual owner is not permitted to act, such as a person with a criminal record holding a liquor license. So the bank cares tremendously about these "straw man" deals because they are structured to cover up who is actually taking title to the property and simultaneously allows a homeowner to eliminate upwards of hundreds of thousands of dollars of debt which the bank has to write-off.
So, regardless how tempting it might sound, if you participate in this type of transaction, you might find yourself spending your nights in jail instead of your home.