How can I buy my parents house if they filed for bankruptcy?

Asked by Spacedace2000, 08610 Fri Jul 15, 2011

I live in a second home that my father and step-mother own. She has lost her high paying job and no longer can cover the rest of the mortgage. There is 226 left on the mortgage and I cannot take a loan for that amount, and even if, the house is valued at less than 200. The house was part of the bankruptcy filing a year ago and they have already taken one of the cars. In addition, I am in a month to month lease and want to know my options. They aren't asking me to pay anymore because the lawyer said they can just hand the keys to the bank. After that, I can negotiate with the bank. I also have been told that they cannot short sale to me because I am a relative, but is a bankruptcy case the same as a forclosure or short sale? My grandfather built the house and my father and I restored it. I want to get it to provide a home for my brother and niece, as well as myself. I will do anything to get it but also see it foolish to pay more than its worth.

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Jill Conner, Agent, Robbinsville, NJ
Fri Jul 15, 2011
Maria beat me! Call her, she's great :)
1 vote
Marsha Bowen…, Agent, Livingston, NJ
Sun Jul 17, 2011
Good luck to you, let us know how you make out.
0 votes
Spacedace2000, Home Buyer, 08610
Sat Jul 16, 2011
Thanks for all the info so far everyone! As far as I know, the house was part of their bankruptcy claim. We kept current on it so we were able to keep it. Now that she lost her job I cannot cover the rest of the mortgage. The mortgage is only one month late so it is just the beginning. Meanwhile I am living in a house and not paying anything....and it is not in my name. Is a house that is listed in a bankruptcy different than a forclosure or short sale case? I just dont know if someone will be knocking on the door telling me to get out. Meanwhile I have excellent credit and enough for a down payment and save more every week. I am waiting to hear from my parents bankruptcy lawyer and then will be contacting the bank to work something out with them. I want my name on the deed.
0 votes
Ron Thomas, Agent, Fresno, CA
Sat Jul 16, 2011
You cannot buy it through a Shortsale. PERIOD
You probaly cannot buy it after the Foreclosure.

You didn't say whether the house was inside or outside of the BK: makes a difference

Why don't you call their Lender and try to negotiate you taking over the loan?

As far as the house being Upside/Down:

We get a lot of questions about Homeowners being Upside-Down on their house.
I will try to cover the field on this topic:
1.) Just being Upside-Down is not sufficient reason for the Bank to do anything for you:
2.) The Bank did not create the Recession and the bank has it’s own problems.
3.) For some RELIEF, you need a dire Financial Hardship to exist; such as you lost your job, or you had a Medical Catastrophe.
4.) If you want to do a Shortsale, you will have to prove to the Bank that they must help you, now or later. Most Banks will not even talk to you if you are CURRENT; so you will have to go past the Point-of-no-Return before they will do anything.
5.) The first step would be to find a Realtor, well versed in Shortsales, who will help you.
6.) This is not as simple as it sounds; many Agents have “sworn off shortsales” because of what is involved in them.
7.) It will make a very big difference if you have ONE LOAN as opposed to having a SECOND. The chances of succeeding in your Shortsale are greatly reduced by having a SECOND loan.
8.) You will have to sit down and compose a letter to your Lender; telling them exactly why you have a hardship and what you plan to do. It is my experience that you have to do this, personally; your Realtor cannot do it, and your Attorney cannot do it for you. You should be OPEN and HONEST, don’t try to B.S: This is about the only thing in the whole process that is PERSONAL. (If you really want to be PERSONAL, do it on a lined pad in your own LEGIBLE handwriting or printing.)
9.) If successful, you now can say (in the Listing) that your Shortsale is pre-approved by your bank.
10.) Now, you can List the house with your Realtor and the MLS. Your Realtor will do a CMA, (Comparative Market Analysis) to determine the Listing Price. The Bank may order a BPO, (Broker Price Opinion) to determine the Listing Price. In many cases, you will be on your own; the Bank will not communicate with you.
11.) If you get an Offer, you will probably “rubber stamp” it and your Realtor will forward it to the Bank.
12.) There is no set time for the Bank to respond; we have heard of three weeks, and we have heard of a year or more. This is not fair, not reasonable, and in fact, it is rude and ridiculous. But it is a fact; so do not get impatient or upset with your Realtor, it is not their fault and they have no control over it. They will gently try to push it along, calling every week or two; but they understand that the person who has that file on their desk, probably has 100 to 300 other files, (they could accidently take a file and move it to the bottom of the pile; things like that have been know to happen.)
13.) You must understand that the Bank is there to make money; they are not a social service organization. It is possible that they believe that they might be able to make more money by letting the property go through Foreclosure. Or, they might believe that next year (or six months from now) the Market will be stronger and they can either COUNTER your offer, or, let it go through Foreclosure.
14.) Now, it is seven months later, and you get a Letter of Acceptance from the Bank: It will probably delineate the terms that they deem acceptable: For example; it may say that the Escrow is to be 45 days, that XYZ is going to be the Title Company, that they are not going to pay for any Inspections, that they will pay a maximum of [$750] for Schedule A(1) repairs due to Pest Inspection, and that if you are not ready to close on time, you will be charged [$50] per day for each and every day.
15.) If you are still in the game, your Buyers will do their Inspections, and set up their Loan. The Bank will order the Appraisal.
16.) Follow your Realtor’s guide and in 45 days, you will be moving.
17.) That would cover a SHORTSALE: But what about a Foreclosure; that would be a separate topic.
18.) You’re not out of the woods yet. If the Bank accepted [$100,000] less than the amount of the loan, they might come after you with a Deficiency Judgment. The list of Non-Recourse States is changing fast. Please consult an Attorney at this point; I am not equipped to answer Legal Questions. But,
19.) I will say that it looks like Deficiency Judgments are like an ice berg sitting out there, waiting for your ship to come along. You need to do your Diligence.

Good luck and may God bless
0 votes
Marsha Bowen…, Agent, Livingston, NJ
Sat Jul 16, 2011
Hi Spacedace,

It might be helpful to contact the bankruptcy attorney's trustee to find out the answers to your questions.
0 votes
Gloria Kubick, Agent, Hamilton, OH
Sat Jul 16, 2011
these are questions for a real estate lawyer to answer. I cannot give legal advise with regard to this unfortunate situation
0 votes
Suren Pogosov, Agent, Princeton, NJ
Sat Jul 16, 2011
Give me a call so we can discuss your options. I can help.
Realtor, Sales Associate Selling in NJ & PA
Keller Williams Princeton & Delaware Valley Realty
Office: (609)987-8889 Ext.1328 Cell: (347)782-2036
My web-site:
0 votes
Maria A. Rem…, Agent, Hamilton, NJ
Fri Jul 15, 2011
You need legal advice. I would be happy to help you with propery value and put you in touch with some attorneys that can help. Please call or email me. Thank you, Maria Remboski 609-851-3705 or
0 votes
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