Hello everyone: I am trying to figure out whether I shoudl start a short sale on a property when the owner has filed for bankcruptcy. The bankcruptcy has been going on now for a year. She is cooperative and is willing to do the short sale…just want out. What are you guys’ take on this?
My second question is, could a 2nd be short by itself if it’s held by the same lender of the 1st? In other words, Wellsfargo holds both the 1st and 2nd. I would like to short the second and sub-2 the first. Any input? Thanks.
You are going to have to get permission from the bankruptcy courts. All you can do is to ask and see what they say.
As for short sale-ing one mortgage and subject to-ing the other one, the short sale policy is usually that the owner can not benefit in any way from the short sale. I suspect that the bank will not short sale the second when it appears that the owner is keeping the property.
Thanks for the input, sir.
Are you familiar with the process of asking the bankcruptcy court for permission? Also, just to reiterate, the bankcruptcy has not bee approved yet. Does that make any difference?
I am not an attorney but this is how we have done it in the past.
You need to petition the bankruptcy trustee to release the house from under the bankruptcy. You need to show the trustee that there is no equity in the property and that the seller will not be receiving any money. They normally will entertain this.
As far as shorting the second and taking the first “subject to” I doubt you will be able to pull that off. Depending on who owns the second, you may try to purchase the second mortgage. See if the lender will sell it to you at a steep discount. That may work if it is a smaller bank. If the loan is with a major lender or if it was packaged as a security it won’t happen.
Good luck.
isn’t it interesting how they have been in and/or involved in a BK for over a year and have not gotten approved for the BK yet… interesting!
If you see there is plenty of potential equity in the deal, I would petition the trustee but as seeing how it has been a year and they are still in limbo I would move on; otherwise, I would keep their name and info and contact them once a month until they get kicked out of BK or something and then short sale, because ultimately you can’t do anything with the property until the BK protection has been removed and/or the property get puts into the foreclosure process by the lender.