Question For Short Sale Expert

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Hi: I met with the seller today. She filed BK Chp 7 and ch 13 to stop the foreclosure twice. The bank finally gave up after 2 years and charged her account off. Not only she didn't pay mortgage. She didn't pay tax neither. The house is for tax sale. The house is in good condition and desirable investment area. Instead of compete with other investors at tax sale, I plan to try a short sale with the bank. Anyone has experience with short sale after charge off? What should I watch for. The woman knows how to play game. She said the BK attorney is her friend.


Shirley

Comments(14)

  • bgrossnickle20th May, 2004

    Does a tax sale wipe out all other lien holders? I do not know the answer.

    How much are the taxes owed?

    What is the as-is fair market value of the home?

    When is the sale?

    Brenda

  • TheShortSalePro21st May, 2004

    "The bank finally gave up after 2 years and charged her account off"

    You should know exactly what the bank's position is on this... If the mortgage is valid, and they have been named in the bankruptcy proceedings, why would they charge off a secured loan?

    Let's assume for a moment that they didn't 'charge it off' and are the mortgagee. For you to acquire the real estate via short sale, you would need the cooperation of the Homeowner/Seller... An essential element in any short sale proceeding is to have the Homeowner's/Seller's cooperation....

    Do you?

    You could try to purchase the mortgage via an assignment... (step into the bank's shoes) but you, as mortgagee, and your collection attempts would still be subject to the bankruptcy.

    In most cases when property taxes are seriously delinquent, to protect their interest, a mortgagee will step in and satisfy the tax indebtedness.




    _________________
    Short Sale Practitioners can't predict, or guarantee results... but can take steps to insure the likelihood for success....[ Edited by TheShortSalePro on Date 05/21/2004 ]

  • active_re_investor21st May, 2004

    Shirley,

    1. Sounds like the owner is going to be a pain and knows how to work the system. Why do you want to take her on?

    2. When you say the bank wrote off the mortgage, do you really mean they wrote it off? The technical definition for what you are saying implies that the lender is showing the loan at $0 value on their books. If that is really the case any money they might receive from you would be recorded as profit. They might go very low or just give you the note. Where did you get your info from?

    3. The tax lien and subsequent foreclosure will wipe out anything senior (such as the mortgage). If you buy the note from the bank you need to cure the back taxes.

    It sounds like your options here will need to find a way to get the owner on your side or to fund a court case to get past the bankruptcy. She is a bit limited in that you can only file BK once ever X years. Do you have the time, money and interest to spend in court? Could you just pay her something so she cooperates (maybe she is paid to keep the home but to sign documents so you get a deal out of this).

    I would likely just walk as the owner seems like a cheat and a smart one. I am not sure if you could push her attorney as I am guessing she must be fling false statements at some point in the legal process.

    John
    [addsig]

  • active_re_investor21st May, 2004

    Quote:
    On 2004-05-21 09:00, active_re_investor wrote:
    The tax lien and subsequent foreclosure will wipe out anything senior (such as the mortgage


    I made a mistake.

    Replace 'senior' with 'junior'.

    It should be that any liens junior could be wiped out by a more senior lien's foreclosure. My mind was thinking about stacks and I reverse the phrases. SORRY if I caused any confusion.

    Thanks to the person who PM'ed me pointing out the error.
    [addsig]

  • ppokamon21st May, 2004

    Hi all: Thank you for the reply. The house goes for 50k. need 5k repair. I called the bank today and they confirmed that the account is charged off. They will take $20k to release the lien and they faxed the letter while we were on the phone. But the home owner must deed the house to me. The owner wants $5k to walk. BK ws discharged 2 year ago. The bank did say that they will not do assignment of mortgage. There is 7+k tax lien. I think I am gonna go back to the bank to ask lower than 20k since the seller wants $5k. If the owner signs the warranty deed, I will then fax that to the bank along with cash payoff and then pay deliquent tax. Any suggestions?

  • TheShortSalePro21st May, 2004

    Saying that the Seller wants $5K isn't a compelling reason... to the bank. Find something else to warrant a further reduction.
    [addsig]

  • ppokamon21st May, 2004

    Shortsale pro: I spoke to the woman. She agreed to deed over the house but under the condition that she will move out by Aug 1. She is saying that she can't find a place that quick. I guess she is having hard time to find an apt due to her credit. She said she will pay $500/mo for June and July and will allow potential tenants to see the house. She agree to take $3500 to walk and we will put it in escrow. I am afraid that she decided not to move later. Remember she knows the game. She said that her attorney advised her to sell the house and then they will sue the bank for charging high interest rate and no escrow her taxes. What steps should I take to protect myself?

  • TheShortSalePro21st May, 2004

    If I understand you correctly, you are going to lease back the premises to the former owner? That creates a big ole can of worms... especially in light of the fact that she 'knows how to play the game...'

    If she is still protected under any chapter of BNK, the Trustee would have to approve any transfer of asset from the bankruptcy estate. In theory, after you pay of the tax lien, the Trustee can come back and invalidate the transfer (deed).

    Make certain that she is out long before the tax lien is paid......

    You sure you know what you're doing?
    Have you run this past your attorney?

    _________________
    Short Sale Practitioners can't predict, or guarantee results... but can take steps to insure the likelihood for success....[ Edited by TheShortSalePro on Date 05/21/2004 ]

  • ppokamon21st May, 2004

    Shortsalepro: The tax sale is June 9. She really doesn't have time to move and is adment about needing 2mo's to find a place. I will make sure all the BK are discharged or dismissed before I pay anything. I am struggle with whether I should tell her that she must go and lose the deal .

  • TheShortSalePro21st May, 2004

    Are you certain that the property will be exposed to Tax Sale, or will the bankruptcy trump the sale?

    Either way, it appears that you are going forward. Be careful.

  • GNFunding24th May, 2004

    ppokamon:

    I agree with "shortsalepro". I use to invest in tax properties. If her bankruptcy still applies, you could lose the deal and have paid off her taxes for her.

    I bought a home at a tax sale once and the people filed bankruptcy during redemption period. I didn't lose my money because the county will give it back. However, it was a big waste of time.

    Is there a redemption period in your state? Does the owner of the property have the right to appeal? You should find those things out.

    Nick
    G&N Funding

  • MemphisREI27th May, 2004

    I am interested to find out the final outcome of this short sale? Would you mind posting if the sale went through and what your final outcome was.

    Thanks,
    Kayla Griffin


    [ Edited by MemphisREI on Date 05/27/2004 ]

  • ppokamon27th May, 2004

    I told the seller that she needs to move before 6/9(tax sale date) before I will pay anything. She refused and said that she knows other 40 investors who will be happy to make the deal. She also knows how to delay the tax sale by making the deal with the county. I am passing this deal. It's too risky to get involved with someone like this!

  • Hollismathews27th May, 2004

    There may be a way to "buy " the tax lien and be in first positiion. Always consult a competent "creditor" bankrutpcy attorney. You can request an opinion from the trustee in BK, if there is pending BK filing. In previous comments one writer stated that one could only file a BK every few years. Untrue!!! You can file a chapter 13 as frequently as needed. [Jokingly called a chapter 20 by BK lawyers. Chp 7 + Chp 13].

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