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 http://www.homesavers.pro

Clarification of a Bankruptcy – Short Sale Issue Part I

Clarification of a bankruptcy – short sale issue. I read today a release from bank of America that attempted to clarify some bankruptcy issues as they relate to short sale approvals. Essentially what was stated is correct some of the time but not always…in fact a majority of the time, negotiators will NOT have to get short sale approval from the bankruptcy court. The Bank of America release may be found in the agent resource center, but here is the release: 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. Homeowner(s) should consult with their Bankruptcy Counsel about how these programs could affect their mortgage and their bankruptcy case. 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. Note: If Homeowner(s) receive(s) a discharge under a Chapter 7 a bankruptcy proceeding: discharge releases the Homeowner(s) from personal liability for certain specified types of debts. The Homeowner(s) is/are no longer legally required to pay any debts that are discharged. The discharge is a permanent order prohibiting the creditors of the Homeowner(s) from taking any form of collection action on discharged debts, including legal action and communications with the Homeowner(s), such as telephone calls, letters, and personal contacts. Although a Homeowner is not personally liable for discharged debts, a valid lien (i.e., a charge upon specific property to secure payment of a debt) that has not been avoided (i.e., made unenforceable) in the bankruptcy case will remain after the bankruptcy case. Therefore, a secured creditor may enforce the lien to recover the property secured by the lien. There are three types of bankruptcy filing, Chapter 7, 11 and 13 (as far as individuals are concerned). The above is sound advice in MOST, but not all Chapter 11 & 13 petitions but it is inapplicable to many Chapter 7 and some Chapter 11 and 14 petitions. Padraic Deighan J.D. Ph.D http://www.homesavers.pro

Quiet Title: Separating fact from Fiction

I am in Zurich Switzerland on a Venture Capital project with Credit Suisse. Some investment bankers asked me about short sales in the USA. They have a misperception about Quiet Title and it caused me to reflect a little and it became apparent to me that there are a lot of misperceptions about them here too. A lot of the misperceptions focus on false promises offered by pirates that promise the world and deliver a small sliver of it. So, I wanted to distinguish some fact from fiction. First, the foundation of a Quiet Title action is the securitization audit. It is an essential element of a successful Quiet Title action. Many/most of the companies offer what I refer to as “superficial” audits that really have little substantive value. An analogy is the DNA testing that is offered to the public. Most are superficial scans that are merely identifying your heritage and then making assumptions about your health based upon risk factors known to people of that region. They are not specific to you as an individual. A securitization audit is NOT a forensic audit. Totally different animal. I describe them as follows: a securitization audit is to the mortgage or deed of trust as a forensic audit is to the loan or note. In Quiet Title actions, it is helpful, but not imperative, to have a forensic audit as well. The reason will be outlined below. Quiet Title, if successful, strips away the mortgage or deed of trust. It removes the “lien” from the property. I describe the scenario as receiving a property “free, but not clear”. This is a significant distinction. Pirates in this space advertise that you can get a property “free and clear”. Not so!! You can remove the secured interest, but the underlying debt is still lowed!! I will describe strategies in future blogs because I receive a lot of questions from real estate professionals about this. I the past three weeks, a judge in Florida and another in New Jersey have asked me about this…it is new for the judicial system too!! Paddy Deighan J.D. Ph.D http//www.homesavers.pro