When you file a chapter 13 bankruptcy in order to postpone the foreclosure sale, do you also have to send a copy of that paper work to the lender who you are trying to short sale with? Or, is it good enough to just fax a copy of the paper work to the office that is handling the short sale paper work? If you do fax a copy to the lender, do you think that they will be more willing to work out a short sale? Thanks in advance for all your help!
Unless you are an attorney representing the homeowner you have no part in the bankruptcy. All debt collectors are notified by the courts when a bankruptcy is filed. Should your negotiations be successful the attorney who is handling the bankruptcy for the homeowner can discharge the property from the proceedings.
If the bankruptcy is a chapter 13 there will be a payment plan worked out by the courts between the homeowner and all debt collectors. So it is possible that the lender will NOT accept a short sale in this situation. If the homeowner files a chapter 7 then there will be no payment plans. With a chapter 7 the lenders will generally be more willing to work with you.
Yes I am aware that I dont have any part in the bankruptcy, however in a random conversation I told my borrower that in past instances I have seen people file a bankruptcy to give them enough to time to complete the short sale. She said she is willing to do that, I dont like to lose control of my deals, so that is why I was asking would I have fax anything to the loss mitigator that I am dealing with personally, so I wont lose that control. Thanks for the help so far!
Once bankruptcy is filed you do lose control. Faxing anything pertaining to the bankruptcy to the lender will be pretty pointless. No matter what you send them they will not change their course until they are notified through the approved channels. The only thing I can think of that would make a difference is on a personal level with the loss mitigation representative you are dealing with. If they see what you send them is legit and they believe you that they will be getting the notification in due course then they MAY be more willing to accept the short sale pending a release letter from the bankruptcy attorney. I’m not a betting man, but I would put my money on them waiting for the official notice of bankruptcy.
Are you saying that you dont use bankruptcy as a stall tactic to get your ss done? The borrower is going to file paperwork herself and not use an attorney.
No I don’t. The only time I suggest bankruptcy is when we have exhausted all other means. I never advise a homeowner to file bankruptcy for the sole purpose of postponing an auction. So far (knock on wood) I have been able to convince the lenders to hold off on the sale just by asking.
I sometimes have to go up a level of management, once two levels, to get the sale held off but I get it done. I ask them, “In the grand scheme of things is an extra week really going to cause that much hardship to the bank? After all, the law is on your (the lenders) side and you can send the property back to auction at a moments notice. All of your legal requirements for foreclosure are already met, which is done in order for the sale date to be set the first time anyway. So If I can’t perform in a weeks time (or however long I need) send it back to auction. At least give me a chance…one chance, that’s all I’m asking.”
watch, now I just cursed myself ^ :biggrin
Thanks! Very informative I just kind of figured that the banks wouldn’t go for something like that. It does make perfect sense! Let me ask you, do you have them put it in writing?
If I can most definitely. If I do get it in writing I make sure I go to the original scheduled auction date. I have had situations where even though they agreed to postpone the auction, they did not, for whatever reason, pull it and the property went to auction anyway. This has happened a few times.
When I have the letter from the bank with me I present it to someone at the auction and they pull the property from the days list of properties. I don’t have to wait around until the property comes up for bid either. When I get there they have a list of all the properties scheduled to be auctioned that day. I scroll through the list to see if mine is listed. If it is, I point it out with the letter and leave.