Saturday, December 15, 2012

Bank of America Short Sale – Bankruptcy clarification, Part II

Bank of America Short Sale – bankruptcy clarification, Part II. I previously stated that Bank of America sent a note out about short sale approvals when the home owner is in bankruptcy. The gist of the release was that you need bankruptcy court approval. The good news is that in the majority of your short sales, you will not need bankruptcy court approval. Most home owners (and other debtors) file a Chapter 7 bankruptcy petition. In a chapter 7 in which the home owner is also seeking a short sale, the bankruptcy court approval will not be necessary. Here is why….the trustee will quickly release that the property has no equity – that is why it is a short sale!!! The trustee will “abandon” his or her interest in the property therefore and once it is abandoned, the debtor is free to short sell it. Another nice aspect of a bankruptcy short sale is that upon filing, the file goes to the servicer’s bankruptcy department and this is typically a higher level (quality) of personnel. There will not be as many instances of “well, we cannot find the papers”. They also have higher authority and they are typically “designated” on a file. Many agents run from a short sale when the debtor is in bankruptcy. In many instances, it is actually a blessing (for the above reasons). If the petition is a Chapter 13 or Chapter 11 (they are not exclusively for businesses), there will be a necessity to seek Court approval. I do invoke certain Chapter 11 & Chapter 13 methodologies that would not require bankruptcy court approval and they are related to securitization audits and Quiet Title actions. However, Court approval is not a lengthy or burdensome process. Agents should note that the bankruptcy court must also approve YOU in order for you to receive a commission. This is also not a difficult or lengthy proves, but it must be done. You will provide your resume/CV to the bankruptcy attorney. If you want your commission, you must do this!! Padraic Deighan J.D. Ph.D

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