Can you use transactional funding on an REO?

Yes, often. Many REO addenda ban assignment, so investors double close instead, and Axelrad funds MLS, REO and government contracts that forbid assignment.

Can you double close a short sale?

Often not on the same day. Fannie Mae's short sale rules, for example, require a deed restriction barring resale for 30 days, then limiting the resale price until 90 days after closing.

Why do banks ban assignment on REO contracts?

Seller addenda commonly prohibit assignment so the bank knows who it is selling to. Read your addendum for the exact terms.

Will an REO listing agent accept a transactional lender's proof of funds?

Often, yes. Axelrad issues property-specific proof-of-funds letters for deals we fund, usually within minutes to hours, the same day.

Can my end buyer use FHA financing on an REO double close?

Usually not on a same-day resale, because FHA rules generally make a property ineligible when resold within 90 days of the seller's acquisition.

Transactional Funding for REO and Short Sale Deals

REOs (real estate owned) are properties a bank or other lender took back, usually through foreclosure. Short sales are sales where the lender agrees to accept less than the loan balance. Both are popular with investors, and both come with lender rules you need to read before you plan your exit.

Why do REO deals often need a double close?

Bank and government sellers usually sign their own addendum on top of the purchase contract, and those addenda often prohibit assigning the contract. If you cannot assign, the remaining wholesale exit is to buy the property and resell it: a double close.

In a double close, A is the bank or government seller, B is you and C is your end buyer. Transactional funding pays for the A-B purchase, and your end buyer's money repays it at the B-C closing. Because nothing is assigned, a double close is the structure investors use when assignment is banned. Read the addendum anyway: some include other restrictions on resale timing or on who can close, and some may be read to restrict a quick resale too. If the language is unclear, ask a real estate attorney.

Does Axelrad fund REO and government contracts?

Yes. Axelrad's transactional funding works on MLS, REO and government contracts that forbid assignments. We fund 100% of the A-B purchase price, with pricing starting at 1 point, no credit pull and no upfront fees. REO listing agents often want proof of funds with the offer; Axelrad issues proof-of-funds letters for deals we are part of, and they come back the same day, usually within minutes to hours.

What about short sales?

Short sales are a different situation, because the seller's lender has to approve the sale and often sets conditions on it. Fannie Mae's short sale requirements, for example, call for:

A short sale affidavit, signed by all parties at closing, confirming an arm's-length transaction.
A deed restriction that bars the buyer from reselling for 30 days after the short sale closing, then bars resale above 120% of the short sale price until 90 days after closing.

Under rules like these, a same-day double close is generally not possible, because you cannot resell the property that day. Other investors and servicers set their own rules, so read the approval letter and every document you are asked to sign. Signing an affidavit you cannot honor is a serious problem.

How do REO and short sale deals compare?

Question	REO	Short sale (Fannie Mae example)
Who is the seller?	The bank or government agency that owns the property	The owner, with the lender's approval
Assignment allowed?	Often banned by the seller's addendum	Depends on the lender's approval terms
Same-day double close?	Often workable; read the addendum	Generally not, due to the 30-day resale bar
Affidavit?	Varies by seller	Arm's-length affidavit signed by all parties
Key document to read	The seller's addendum	The approval letter and deed restriction

Does the end buyer's financing matter?

Yes. Under 24 CFR 203.37a, a property resold within 90 days of the seller's acquisition is generally not eligible for FHA-insured financing. Because you acquire the property at the A-B closing, an end buyer using FHA financing is usually not a fit for a same-day REO double close. Cash buyers and other financing types are more common C-buyers on these deals.

How do you set up an REO double close?

Read the REO or government addendum for assignment and resale terms.
Get a proof-of-funds letter for your offer if the listing agent needs one.
Sign the A-B contract and the B-C contract with your end buyer.
Collect the end buyer's proof of funds or lender details.
Confirm the title company can close both legs and handle the seller's closing requirements.
Send both contracts to your transactional lender; the lender wires the A-B purchase, and the B-C closing repays it.

The double-closing preparation checklist covers the full document list.

Seller addenda, lender approvals and state rules vary. This is general information, not legal advice. Have a real estate attorney review any affidavit or addendum before you sign.

Key takeaways

REO and government addenda often ban assignment, which makes a double close the usual wholesale exit.
Axelrad funds MLS, REO and government contracts that forbid assignment, with 100% of the A-B price.
Short sales are different: Fannie Mae's rules bar resale for 30 days and limit the price until 90 days.
FHA-financed end buyers are usually not a fit for a same-day double close.
Read every addendum, approval letter and affidavit before you plan the exit.

Talk to Axelrad

Have an REO under contract that you cannot assign? Send both contracts through Axelrad's application, and see transactional funding for how the funding works.

Can You Use Transactional Funding for REOs and Short Sales? What Banks Allow