Short Sale during active bankruptcy

[jmanford]

We put our house up for sale and got an offer in one week. My realtor uses a third party short sale company to submit the short sale package to the lender. PNC mortgage, our lender wouldn't accept the package. They said they can't accept any documents until the BK is discharged. Our discharge is somewhere around July 11. That sucks! Anyone ever had this happen or heard of this happening?

[HHM]

Actually, that really shouldn't come as a surprise. While your BK is pending, the house is under the legal control of the BK trustee.

[jmanford]

Yeah, I get it now. I told my attorney what we were planning on doing and he mentioned nothing about this minor detail.

[calgirl67]

with that being said: we also plan on listing our home as a short sale once our CH 7 discharge is final in July. Will the 1st & 2nd mortgage holders give us grief and screw us around or will they just take what they can get and release the liens and get the property sold??

[HHM]

with that being said: we also plan on listing our home as a short sale once our CH 7 discharge is final in July. Will the 1st & 2nd mortgage holders give us grief and screw us around or will they just take what they can get and release the liens and get the property sold??

It depends, in general, I believe a short sale becomes a little easier after chapter 7. One aspect of getting a short sale approved is having a hardship. The most misunderstood part about a short sale is that it is not enough that your house is underwater and you want to sell, most short sale requirements require some sort of demonstrable hardship. The chapter 7 BK will often be accepted as that hardship.

[calgirl67]

yes I would think a CH 7 BK is a hardship.. one wouldn't file unless you were in hardship!!

I would think that the lenders would not give us too much trouble accepting a short sale - their ONLY other solution is a foreclosure and they always go on about them not wanting to take possession of the house, legal fees to forelclose, etc.

BUT who knows, the banks do not seem to do anything LOGICAL.