Bankruptcy And How They Effect Shortsales?
Does anyone know exactly how a bankruptcy will effect a short sale/foreclosure? I know there is a difference between Ch 7 and Ch 13, but exactly how does it effect the foreclosure process. I have completed many short sales in BK, but have found no pattern. I have had FHA's that have short saled(which are not supposed to entertain a short sales if they have or will file BK), and others who won't negotiate if the borrower has or will file. Any insight?
Thanks
I would think that one commonality in all short sales while a mortgagor/seller is in bankruptcy... is that the mortgagor/seller would need bankruptcy trustee &/or court approval to enter into both a listing agreement, and enter into a contract to sell.
One problem that I encountered is that pursuant to the bankruptcy petition, the mortgagor declares a certain value to the real estate. This value may not support a short sale argument.
You will generally be dealing with the trustee in both instances unless the property has been taken out of the bankruptcy estate by the lender by filing a motion for relief from stay. This is generally the case w/ Chapter 7 (liquidation). If its in the estate, you are dealing with the trustee and the lender, if its taken out then just the lender. Dunno if that answers your question.
J