My wife and I found a great house for sale in San Diego, but it is a short sale and things aren't looking so good at this point.
The sellers are a recently divorced couple: Mrs. Seller is still living in the house (with tenants to make ends meet); Mr. Seller has moved out-of-state. Six weeks ago, we (well, our agent) sent the listing agent our offer, which was forwarded to the lenders (there are two lenders).
Now, we learned that Mr. Seller filed for bankruptcy a few days ago, with the hearing a month from now.
How will this affect the SS? Is it a lost cause at this point? Thanks for any insight you may have.
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@Joseph. Yes, indeed, been there too. Again, by Federal law it is their right to be protected from their creditors. Best to view BK as an alternative to a short sale, if the seller so chooses. And wish them all the best.
BK laws were just not designed with a 25% drop is home value in mind.
In my experience, short sales and BK do not mix. No matter what people say about "you just need a letter from the trustee stating that the asset is abandoned from the estate". I just hear someone saying: "You just need a letter from Barack Obama stating that he approves the short sale".
Yup, guess that would do it. Been there, thanks, don't wish to be there again. I think I'll go work on another deal.
This is simply a flaw in the BK laws. One of the co-borrowers/owners can declare BK thereby protecting themselves, to the detriment of the other. It is their right to do so.
I don't like BK deals for another reason: There is nothing holding the seller to the deal. They can and will walk away and there is nothing you can do to stop them.
Very simple: Seller gets a trustee letter from court allowing the sale. Difficulty: Divorced couple issue may mean that the spouse is unwilling to cooperate. We had one like this and the other spouse had to take him to court and a judge ordered the sale. The funny thing is, when closing came, SHE was the one who became uncooperative. It took a lot of sweet talking and several bottles of Bourbon to close the deal.
Who is the Servicer? Type of Loan?
The bankruptcy court has to deal with the house now. I would say MOST lenders won't deal with the short sale until after discharge, however each lender is different. I've seen bankruptcy hold up a short sale for 3-6 months. It's not a lost cause, but how long are you willing to wait?