Bankruptcy and BOA
I consider myself pretty knowledgeable on short sales but I'm somewhat of a newby when it comes to bankruptcy. However, after the last 1.5 months I'm starting to think that isn't the case. I am negotiating three deals now that involve bankruptcy and have a buyer on one deal.
The one that is throwing the biggest kink at me right now is one where we got a short sale approval but then lost the buyer before it could close...I had a quick backup offer but was against a foreclosure date so my seller...without telling me went out and started the bankruptcy process so they wouldn't foreclose on the home. I told him that they were going to delay the foreclosure but he didn't believe me and still filed the papers.He has no intention or need to actually go through bankruptcy.
However, here is the weird catch...he isn't finishing filling them out and is not going to move forward with the bankruptcy. Now though, after several weeks and getting assigned a new negotiator I'm told today that our negotiator is a bankruptcy specialist and we'll have to have the final court approval letter to BOA even if she gives me the short sale approval letter. She said without court approval BOA will not allow us to close.
I'm trying to let them know that the seller doesn't plan on moving forward with bankruptcy...has anyone had an experience like this? How big of a deal is it that I'm not in the bankruptcy department at BOA even though the seller isn't going to move forward with it.
Personally, I'm hoping it just keeps moving forward and she issues me a standard approval letter. I had it approved once...and shouldn't have a problem again...unless my seller's actions gets in the way. I'd love to hear your stories and advice as this is a newer topic to me.
Replies to This Discussion
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Permalink Reply by Shannon M Thomas on
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If your seller filed the bankruptcy papers then you have to follow the process of the courts. Which means you have to have a release from the courts to sale. That means if you can get ahold of the boa attorney which your sellers attorney should know then you can get in touch and make sure they don't stop it as they did on mine. I then had to find out the above information and settle it with them that our intentions were good. Hope this helps but seriously even if your seller doesn't intend to go through with it the fact is he did file and it makes it a different deal but doable.
Good luck!
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Permalink Reply by Thom Colby CA Brkr 888-391-5245 on
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Sam - It's sort of like placing a letter in the US Postal Service mailbox - once it's in, you can't get it out. Your seller filed BK, whether he goes through with it or not doesn't matter. As Shannon said your seller needs the BK Court to issue a release otherwise it stays in the "black BK hole" - it literally could be a couple of years before it moves forward.
I have two files with BofA just like yours. Both sellers filed the initial BK papers and will take no further action. I've had both of these files for more than 2 years and they are going nowhere.
There will come a point in time when BofA will no longer speak with you without the release - remember they are a debt collector and cannot speak with anyone except the borrower's attorney prior to the BK Release issued by the court.
Best of Luck,
Thom ColbyBroker
Newport Beach and Palm Desert CA
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I know all transactions are different but with mine I was able to pull it out to close. The seller has to be on board for this and then all the other debtors have to be notified by the court that the house is going to be released to short sale. You really need to get a hold of the bank attorney also because all will stop speaking with you and he will keep stalling the process. As Thom said above you will feel like you are in a black hole. Just keep moving forward and you will come to the conclusion. I feel for you.
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Permalink Reply by Doug McVinua on
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Having been down this road also I would concur, you will need a release from the court. In my case the sellers attorney was able to get the property released from the BK after the creditor meeting was held.
It would seem you may need to communicate with the attorney that filed the BK, of course with seller permission so the BK attorney will speak to you.
At BOA the file was moved to a BK area and handled there, not much different than normal in process just with a little more legal tossed in for fun. BOA is not likely to mess with the Federal BK Court so you are going to need that worked out.
It seems to me you are dealing with a seller problem, filing, not planning to go though, how to get the property released etc.
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Permalink Reply by Samuel Hilbert on
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Thanks for the advice so far. It looks like most of the answers here are true from my conversation with BOA this morning...my seller needs to provide dismissal documents from the bankruptcy court saying that he is not moving forward with the bankruptcy.
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Sam,
This will be interesting - he can't tell the BK judge; "Oh, nevermind, I didn't mean to file BK" - this is FEDERAL not local or State. I expect there to be a very pointed conversation about why he filed and what his intentions were....
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That's why I've put him in charge of this. He's done some other interesting things before ever contacting me too so it is a little frustrating to say the least. One thing for sure...between this and now three other files of mine...I'm taking an accidental crash course in BK.
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Wouldn't it be interesting to listen to that judge! Doesn't the action of filing also prevent filing of BK for some time period in the future as well? Where are those attorneys when we need them? Fire, Aim Ready seller?
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