Hey all,
We have a shortsale that we've been working on for a while and we actually already had an approval on it. unfortunalty the buyer's lender was a little off base, took to long, and then declined her loan. While this was happening the seller decided they would wait no longer and filed for BK.
At this poine we have an expired approval from BofA and a filed bankruptcy and a now approved buyer. BofA will not issue a new approval untill the BK courts release the property from the BK, and the BK court wont release the property untill they have an approval letter from the bank.
If any one has been in this situation or has any ideas it would be greatly appreciated.
Thank you
**********************************
like buttons
Replies
I deal with them frequently. Sellers simply have their BK attorney file motion with BK court to release property from BK estate to allow a sale. If the sale is a benefit to a creditor there is usually no challenge. Include a copy of the contract, the HUD-1, and current CMA or appraisal. Takes about two weeks for the court to respond. Working one with BofA now. Once I submitted the BK Court Order to BofA, it took about 10 days for me to receive a fresh counter proposal and it is in process now and scheduled to be released from the BK department this coming week.
Very straight forward to deal with if your seller's bankruptcy attorney is reasonable: as others stated, if this is Chapter 13, you get a motion to release from the bankruptcy court, it usually takes about 30 days. If it's chapter 7, you don't need permission from the court because the sale of the asset will only satisfy the specific creditor - basically, as long as the bank wants the homeowner to sell, the homeowner is allowed to sell.
I have just had a situation though where the bankruptcy attorney has said that he will not do anything to help us with the short sale and that he couldn't care less what happens to the property since they will "surrender" it to the bank. This is the word they hide behind in order to make foreclosure sound benign so that sellers believe that bankruptcy takes care of everything... We had an approved short sale and the seller would have walked away owing nothing, not even taxes, and the attorney has convinced him to file bankruptcy to protect him from taxes and then to let foreclosure happen instead of closing on the short sale, the whole time telling the seller that the only reason I am telling him to do the short sale is because I am a greedy realtor who only wants a commission... and this after 7 months of work trying to save this guy's credit. Luckily these attorneys are rare (first time for me even though I have dealt with many bankruptcy cases).
Good luck.
The banks will default to the Bankruptcy Departments in this instance and the BK Department will default to their local legal counsel. What you will need to do is find out who the local legal counsel is and then have the Seller's attorney contact the bank's counsel and explain to them that the court will require a short sale approval letter including a approved: Buyer, Purchase Price, and Sale Date before they can approve the short sale and release the property. The banks do a very poor job of managing situations such as these and do not seem to understand that the courts can not approve these sales without an approval letter from the bank(s) including the items referenced above. Their legal counsel will have to advise them to move forward with the short sale processing and approval which will then allow you to obtain the court approval.
You might want to have the Buyer sign an addendum making the offer subject to the courts appproval as this will be another concern for the bank, that is if they issue the approval letter and the court declines the sale they would then be on the hook without this. Please feel free to email me directly if you have any additional questions.
Jason Opland
Better Homes and Gardens
jasonopland@msn.com
http://columbusrealestatenews.featuredblog.com
Hi Nessa,
I had listed a BoA short sale and then the sellers decided to file for bankruptcy. BoA pulled the short sale saying it could not work on it while in Bankruptcy. After Bakruptcy was released, we went back to BoA to request a Short Sale. We are now working on a Co op Short Sale with them and sellers are able to qualify for HAFA and BoA Relocation Assistance--sellers are happy with amount being offered. So far transaction is going well.
Thanks
Hello Nessa,
I have experience dealing with this situation. Send a copy of your authorizaton to the bankruptcy attorney and have them state that they have no objections to BOA working with you to resolve the short sale. Forward the same to BOA legal department. BOA will work with you on the approval.
Did your client file a Ch 7 or 13? This is important to know because if they filed a CH 13, you would need approval by the Bankruptcy court to sell the property. It is not as difficult as it sounds, basically once the approval is issued you have the bankruptcy attorney file a motion to allow sale of debtor property and usually (depending on the jusrisdiction) can take about 15 days to receive a order granting the sale.
If you need anything or I can be of additional help. Feel free to contact me directly. Best of luck!
Carmine R Biello Jr.
I am dealing with BOA bankruptcy dept. now, they will not move the loan out of the bankruptcy dept. without a Court release and/or date of discharge document from the Court the bankruptcy was processed. As long as the loan is in the Bankruptcy Dept. you cannot go anywhere with the SS.
You can try to have the seller's attorney speak directly with BOFA, or try the Twitter team. Fascinating. Let us know how it goes.