I recently received an e-mail from Bank of America short sale support regarding short sales and bankruptcy.  From what I understood in the e-mail, Bank of America is allowed to work on a short sale while the seller is in a BK (See below and please tell me if you interpret this differently). I have received a third party authorization from the seller's BK Attorney and have submitted that to Bank of America.  In addition, I sent the short sale listing packet/initiated the file in Equator.  The file is just sitting there.  When I call in, I am told that nothing can happen on the file without the file being removed from BK.  I have had this happen in the past with BK files when we didn't have the motion to sell/abandon but I was of the understanding that this would change with this notice?  The seller's attorney has made the request for the motion to sell with the trustee, but this can take about 30 days.  I would love to get the appraisal completed, and initial paperwork reviewed by B of A in this timeframe (if we have the time, why not use it productively while we wait for the approval from the Trustee).  Does anyone have experience in getting this lender to review files while the seller is in active BK - without a motion to sell/abandon? I am just looking to get the process started - I understand we cannot complete without this. Any help would be much appreciated!

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From Bank of America Short Sale Agent Update E-mail: 

Bank of America can review a short sale offer while the loan is in an active bankruptcy. To complete a short sale and issue the approval letter, the bankruptcy documents must be filed and approved by the court. Any final agreement will require bankruptcy court approval.

When a loan is in bankruptcy, there is an Automatic Stay, also known as a "hold," of any collection activity placed on any and/or all debts to which the debtor is a party. Before the short sale specialist can discuss the short sale, Bank of America must have written authorization from the Homeowner(s') Bankruptcy attorney on the law firm's letterhead to discuss loss mitigation options with the borrower. This is in addition to the Bank of America Third-Party Authorization Form needed from the borrower to speak to the bankruptcy attorney and the listing agent.

If Homeowner(s) is/are currently in a bankruptcy proceeding, or have previously obtained a discharge of this debt under applicable bankruptcy law, all communication and notices are for information purposes only and is not an attempt to collect the debt, a demand for payment, or an attempt to impose personal liability for that debt. The Homeowner(s) is/are not obligated to discuss their home loan with Bank of America or enter into a short sale agreement or other loan-assistance program. Customers should consult with their bankruptcy attorney or other advisor about their legal rights and options.

For a short sale to be processed to completion for a loan in bankruptcy, Bank of America must receive one of the following releases issued by the bankruptcy court:

• Granted Motion to Sell*
• Granted Motion for  Relief from Automatic Stay with noted short sale negotiation*
• Dismissal
• Discharge with Abandonment, Closing Order, Final Decree, Trustee No Asset Review

*A granted Motion differs from a requested Motion.