Short Sale Lease Back Program

You May be Able to Short Sale Your Home and Stay

Homeowners facing a foreclosure may now be able to lease back their home after a short sale.

A newly launched program provides another option for homeowners who can’t afford their mortgage payments or have been rejected for a loan modification.

The Short Sale Lease Back (SSLB) Program was inspired by changes to the federal Home Affordable Foreclosure Alternatives short sale program. Program founders designed it to help distressed homeowners find an alternative to foreclosure and more quickly return to the housing market as buyers.

A short sale occurs when a property is sold for less than is owed on it and the bank agrees to a discounted payoff. In recent years, banks and servicers have required that a short sale be an “arm’s-length” transaction, meaning the buyer and seller could not be related and could not have a prior agreement for the homeowner to stay in the property.

The U.S. Treasury Dept. in March 2011 issued a supplement, or amendment, to the HAFA guidelines to allow “servicers the discretion to approve sales to non-profit organizations with the stated purpose that the property will be rented or resold to the borrower, so long as all other HAFA program requirements are met.”

It further strengthened that option in a November 2012 supplement that smoothed the process for such a sale.

In December, two major lenders accepted a short sale with a lease-back on a Riverside home in the program. Lender CalVet approved the program’s first transaction, on a Hemet home that closed in August.

The SSLB Program was founded in June 2011.


  • Homeowners must work with a licensed agent who is trained and certified by the Short Sale Lease Back Program.
  • A qualified non-profit would purchase the home in a short sale.
  • The homeowner’s lenders must approve of the lease-back terms – the intent of the sale and tenancy cannot be hidden from the lienholders.
  • The seller would lease the home for a minimum of three years, allowing their credit to heal so that they could qualify for a mortgage and re-enter the housing market.
  • Homeowners must attend ongoing HUD and financial-literacy counseling and speak with legal and tax experts to ensure the program is the right fit.

Not all homeowners qualify for this program. Borrowers must have sufficient income to afford the monthly rent payments in addition to their other debt payments. And the home must meet the return-on-investment requirements for a buyer.

Homeowners who don’t qualify for this program can still proceed with a traditional short sale, which may include a relocation incentive from $2,500 to as high as $45,000, depending on their lender, loan amount and individual situation.

Either option is better than a financially devastating foreclosure, which can crush a consumer’s credit, hinder their ability to find a home to rent and perhaps even impact their jobs.

Banks prefer short sales over foreclosure and even loan modifications because they net 12 percent to 25 percent more money from them.

And banks are beginning to embrace the concept of a distressed homeowner leasing back a home after a short sale.


The Short Sale Lease Back Program is now interviewing applicants. To qualify, homeowners must:

  • Live in the property as their primary residence.
  • Have steady, verifiable income.
  • Have a valid hardship and be able to qualify for, and complete, a HAFA short sale.

Want to know if you qualify for this innovative program? Call (951)506-5744 for a FREE consultation. Or use the Contact Form.

Don’t wait – it may be too late. We are currently scheduled one week out for appointments.



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