I just found out that the lender I am dealing with on a short sale has filed for Chap 11 Bk. I’m wondering if we can use that to our advantage or are we screwed? The lender is American HOme MOrtgage.
NOt sure I want to buy the house myself or sell to an end buyer but it is a MOLD home with lots of problems. Hardship looks good and so do the financials (negative). Offer 85k with repairs of 50k and ARV of 185k. So how do we handle this with the lender?
This will need to be answered properly by an attorney. Bankruptcy has enough restrictions involved when the regular Joe Blow files. When a multi million/billion dollar bank files I’m sure there are even more restrictions. They may not be able to do anything with their inventory until the bankruptcy is discharged. They may sell out to another bigger bank who may or may not allow properties on their books to be liquidated.
Have you been able to get in touch with any bank reps? Like the loss mit dept? They might be able to tell you if they are able to accept short sale offers or not. This could turn out to be a real head ache, so it might be best to move on to another foreclosure with a bank who’s doesn’t have bankruptcy issues.
Interesting. Ok the lender said that yes they are accepting short sales and they are taking packets 2 weeks prior to auction. So I was thinking the best thing to do was put in the offer and see what happens. As I understand, it’s going to ultimately be up to the court to decide anyhow. eeeeek It will be really upsetting if I cannot help this poor lady. She is having a serious hardship. So in this instance, if the lender cannot accept due to the court restrictions, does the homeowner receive a foreclosure on their credit.
That would depend on if the property is foreclosed on. Foreclosure is a legal activity, which means it has to go through the legal steps for it to end up on someones record. Have seen a couple of instances in the past year where the mortgage bank has filed bankruptcy and the homeowners mortgage note gets lost in the paperwork. This doesn’t happen very often, but it does happen. I know of one guy I spoke with recently who hasn’t heard hide nor hair about his mortgage note that he hasn’t made a payment on for going on two years now.
Yes, it’s up to the courts, but that doesn’t change the laws already in place covering bankruptcy. I know that when an individual files, all collection activities are required by law to stop until the courts (or trustee) tells the collectors they are allowed to resume collection activities. As long as there is no legal reason for the lender to stop transactions which would affect our short sale process then you should be good to go.
If the lender is currently still taking short sale offers then it’s business as usual.
AHM filed BK in early August 07. When a corporation files BK it just protects them from their creditors, but in many case operations continue under the supervision of the courts. Thus it may have little or no impact on your case. Hard to say exactly.
they are still operating for the most part as business as usual; however I would offer even less because they are truly in a situation where they are liquidating and the last thing they need to spend additional legal monies on is a home with MOLD, so be sure you document this condition as clearly and as bad as possible!