My relatives are loosing their home, can I buy It to help them out ???? If I had a dollar for everytime that this questions is asked, I probably would be retiring by now.  Before I answer this question, let me explain a couple of things about buying a property.  When you buy a property the transaction is considered a ARM-LENGHT TRANSACTION or a NON-ARMS LENGHT TRANSACTION. But what does all that mam-bu jumbo really means!! …..Well this is what Fannie Mae guidelines tell us: 

An Arm-Length Transaction is a transaction in which the parties involved  are entirely independent of each other and have no reason for collusion.  In other words, the parties involve are not related.  

 Non-Arms Length Transaction is the opposite. If a direct relationship exists between any of the parties to the transaction including, but not limited to, borrower, lender, broker, appraiser or builder, the transaction is considered Non-Arms Length.  Now, a Non-Arms Length Transactions are permitted subject to compliance with the following: 

• The borrower’s minimum investment requirement is satisfied using his or her own funds;
• A landlord sells a home utilizing a Lease with Option to Purchase Agreement;
• A transaction between individuals with an Established Relationship, defined as follows:
• Immediate Family:
  •  Parents
  •  Siblings
  •  Children
  •  Spouse
  •  Grandparents
  •  Aunts
  •  Uncles
  •  Domestic Partner;
  •  Fiancee or Fiance

 A Non-Arms length Transaction is intended NOT to bail out a family member or current owner from an existing delinquent mortgage. Borrowers who wish to purchase or refinance property, currently or recently owned by an individual with whom an Established Relationship exists, are subject to compliance with the following requirement: 

•  Purchase: Title Commitment may not evidence foreclosure proceedings or Notice of Default. 
• Refinance: If borrower has been on title less than six months from the date of  application, payoff demand from the purchase transaction must reflect the mortgage was current at the time the borrower purchased the property.
• In purchase transactions where the seller is a Corporation, Partnership or any other business entity, satisfactory verification must ensure the borrower is not an owner of the business entity selling the subject property

So now that  you know the above information, you can make an educated decision. You CAN buy a relative house but if he or she is delinquent on their mortgage,  it will be challenging to convince a lender that you are NOT trying to safe the home for your relative. I hoped the above information helped answer this question.

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