Home Buying in East Falmouth>Question Details

Lois, Home Buyer in East Falmouth

I am under agreement with a short sale, with inspection and appraisal done. The second mortgage holder put a lien on the home

Asked by Lois, East Falmouth Tue Jul 10, 2012

over 10,000 bucks so after 4 months of waiting I have to wait another month for a bankrptcy court date for chapter 13 to wipe out the second lender debt. What is the probability of that happening and me getting to close this house which has been vacant for 3 months now? Or will they forclose and I lose money Ipt into this thing?

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Many lenders will want the loan discharged from bankruptcy before they will allow a short sale approval issued, so if your first lien holder doesn't approve the sale in bankruptcy court, you will still need that second lien negotiated. Your negotiator should have pulled title the minute an offer was presented. That would have showed everything on title so that you didn't find this out after the fact.

It will only get wiped out if you stay in 13 and the first lien holder agrees to the sale. Most first lien holders want a dismissal, discharge from the court. On occassion, a first lien holder will approve a sale while the seller is active in 13, but it's not likely. If the bankruptcy converts to 7 and is discharged or dismissed then the second WILL REMAIN ON TITLE and will need to be negotiated.

Sorry you are going through this. Sounds like you were dealing with someone who didn't know what they were doing.

I hope there wasn't anything else on title.

*I'm not a lawyer and none of this is legal advice :)*
Maryann Little, VP Mitigation
Short Sale Mitigation, LLC
1 vote Thank Flag Link Wed Jul 11, 2012
the second can always buy the property for 1 dollar more than the 1st to protect their position if they feel there is any equity there.
0 votes Thank Flag Link Wed Jul 11, 2012
The second mortgatee has always had a lien on the home... I am not sure what you mean they put a lien on the home.

Unfortunately buying a short sale is always difficult and nerve wracking. I personally don't think the small discount you get is worth the hassle.
0 votes Thank Flag Link Wed Jul 11, 2012
Going into a short sale I always infiorm my clients that there's the chance they might not get the home. I never recommend a home inspection or putting any money into a home they may never own. Some realtors think it's best to get it out if the way I say it's wasted money for the exact reason you are now in. There is nothing sure about a ".short" sale unless you find one that is already approved and even then there's nothing short about it. Attorney Brian Reardon is an expert on short sales. I would consult him and see what his opinion is and if there's anything he might be able to do. Good luck.
0 votes Thank Flag Link Wed Jul 11, 2012
Second mortgage holder already has a position on the home at the time the borrower took out the loan. As to Bankruptcy the seller will no longer need a short and it stalls the foreclosure, as a plan will be presented to the court that will outline the owners obiligations and how they will be taken care of, that once agreed on by the creditors will take effect including the home.

Good luck
0 votes Thank Flag Link Wed Jul 11, 2012
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