SUBJECT TO Is GOING INTO BANKRUPTCY
I have a property that I purchased 2 years ago as a subject to. Now the seller is filing for bankruptcy and will be filing paperwork showing this mortgage in the bankruptcy. The mortgage co will be doing a foreclosure once the bankruptcy is finalized..
What or how can I get the bank/mortgage co to work with me?
PNC mortgage is the note holder
What documentation did you use in your Sub-to deal? Do you have a deed? Can you finance out the existing first? Is the first mortgage current? Do you have a tenant? Does the property cash flow? What are the details of the rest of the BK filings? Does the BK seller have lots of other unsecured debts, what caused them to go broke?
My guess is you need an attorney to represent you in the bankruptcy. Assuming you took title two years ago and that the first mortgage is current about the worst that can happen is that the bank would, post bankruptcy, exercise their due on sale clause and accelerate the loan.
The seller does not have to include the property in the bankruptcy. You can ask his attorney to exclude this property. The seller may have an issue with this because after the bankruptcy you could stop paying on the mortgage and let it be foreclosed. Then he has both a bankruptcy and a foreclosure on his credit.
I would recommend contacting his bankruptcy attorney and requesting that this property be excluded. If he refuses, hire an attorney to represent your interest in the bankruptcy.
Patty,
to handle the bankruptcy, explained the situation and they removed the house from the BK after I said I would continue making the payments and showed him the deed in my name (or company name).
If any payments are made after the bankruptcy is filed then whatever was paid on is removed from the bankruptcy.
Many folks who owe on a car keep making the payments as they want to keep the car, same thing for houses.
You might want to check your BK laws, but this is how it works. Also, I have contacted the (attorney appointed by the court "Trustee"
John $Cash$ Locke[ Edited by JohnLocke on Date 02/16/2012 ]
The owners have moved out of state so how would we contact who is the bankruptcy attorney?
We could check the local court records, but not the out of state ones.
One more thing, if it is a Chapter 13, does that make anything different?
www.pacer.gov is the federal/bk court search tool. You can find the BK case there and who all the parties are.
Your atty should be able to do this search for you.
Also, have you looked at the non-recourse financing that people offer for self-directed vehicle owned properties to finance out of the deal?
Are they in default on the mortgage?
Patty,
It should not make a difference whether it is a 13 or not. Since a 13 is done to square away your finances this means they would be keeping the house.
I still go along with anything paid after the filing is released from the BK. This is what you need to check on.
John $Cash$ Locke
John and Chet...thanks soo much for all the info! I signed up for the pacer account and found the bk filing. I left a message for their attorney. I will keep you guys posted
I would be curious to hear how you ended up buying the property sub-2, and in hind sight what you would do differently if anything.
I do short sales with a bk attorney here in Vegas.
We run into this kind of stuff all the time.
You should have no problem at all. Just keep paying the mortgage.
Think of this the same as a due on sale clause. The bank will not foreclose on a performing asset, Bankruptcy or not.
Send the AG a copy of the Contract, along with your side in writing.
[addsig]
Im curious as to where this went.. I assume that it went well, or you would have posted more...
Please let me know...
I sent a letter of explanation and a copy of the note to the Atty General, as well as my seller. That was months ago, so I guess it did the trick. Glad I document everything thoroughly!
What did you do to document your transaction?
When do you plan on refinancing on this property?
Do they call back John M?