Posted by lukeNC on March 03, 2006 at 13:40:45:
If they filed chapter 13, they should have noted their payments made on their schedules. The trustee would have seen this and made some type of motion to compel to that lender.
I would have sued the lender in this case…
Since its in Chapter 13, the trustee will probably have to approve the sale, if i’m not mistaken. They are likely insolvent so the forgiven debt wont affect them adversely.
Foreclosure, Chapt. 13, and short selling? - Posted by Merrick
Posted by Merrick on February 28, 2006 at 14:03:59:
I am currently working on a deal, and wondering if I’m simply wasting my time…
Phone Story: Seller Purchased the house in 2002, financed with suntrust (or some such lender), in 2004 a company called Litton Loan Servicing purchased his mortgage from suntrust then basically told him that he had not made a mortgage payment in over a year, he insisted that he had made all of his payments to suntrust and there must be a mistake, they essentially told him to prove it. While he was collecting this proof, they entered him into some sort of research period where he states they would not accept any payments from him (actually returned a $1200 check). This all sounds a little fishy to me, but that’s his story. After months of trying to reach the appropriate person to submit his proof to, they moved him in to foreclosure status. To offset the situation he filed chapter 13 bankruptcy and the loan was released (But of course the lender still gets his house if he doesn’t pay). His attorney suggested that he now try to sell the house…
Update after meeting with this seller:
Apparently the home had already sold at auction on January 6th, but there was a grace period for payment on the foreclosure sale of a few days. During this time is when his attorney filed the chapt 13 papers, effectively stopping that foreclosure sale. He recently received a letter from the lender saying that they may now proceed with the foreclosure process (I forget the name of this document). It’s my understanding that the home will have to go to the auction block a 2nd time. I’m going to try to work a short sale with lender, but I’ve never actually done this before (haven’t done much of anything before lol). I have the Authorization to release loan info, but is there anything else I need to have / know before I submit an offer? Also, the lender is being represented by a local attorney, should I contact the attorney for any reason before trying to contact the lender?
One final question, if I were able to negotiate a short-sale, since the seller has already filed Chapt 13, do you know if the lender can still file a 1099 for the part of the debt that was forgiven, for instance, they owe approx 125k, if I can get it for 70K would the seller still have a tax obligation on that 55k they released? If so, is there a legal way around this, could I simply include in the agreement that the bank is not allowed to try to get a judgment on the seller or file a 1099 on the part of the debt released (or did the bankruptcy take care of this)? Thanks again.
All the Best,
Merrick