Can trustee require current financials - 18 months post discharge (Chap 7)

[freeatlast09]

the money for the "side deal" has to come out of the home price therefore meaning a greater loss
for the mortgage holder.

Exactly! When have you ever seen a large bank leave money on the table?

[freeatlast09]

Can someone please explain to me why anyone would do a short sale that allows for deficiency judgment?

I suppose, if you don't have a bk discharge and would like to get out of your house and avoid a foreclosure, it might make sense to try this. But with a bk discharge, all bets are off. The only benefit is getting your name off the deed quicker.

As far as the banks retaining their rights for a deficiency judgement, I think this is just a little trick on their part. In a short sale, you can request that the bank waive it's right to the deficiency judgement, but you'll end up with a 1099 for the difference. They're probably hoping that some people will forget about that part of the negotiation (most of the time this is between the homeowner and the bank so no attorneys are guiding you) and they can then sell the deficiency judgements off to a third party. We all know that the odds of a bank having the consumers best interest at heart are slim and none. Between current foreclosures, short sales, bankruptcies, and judgements being sold off, this whole mess is going to go on for years - maybe even decades.

There was another post here where the OP had a discharge, but was still thinking about a short sale to get their name off the deed. BofA did tell them, they would not pursue the deficiency. The last time I checked on that thread, I believe the OP had decided not to do that since the upside is not too great. You get $2500, your name off the deed, and avoid additional damage to your credit by avoiding the foreclosure, but there are a lot of hoops to jump through.

[catleg]

If the alternative is a foreclosure/deed in lieu where the deficiency would be even greater.

The puzzling thing here is, usually BK ends the idea of short sale dead in its tracks.
We have no idea why the trustee is pushing the short sale and why the lender is going along with it.
Except for the concept of "side deal" which, if you consider the buyer is willing to pay 'x' dollars either way,
then the money for the "side deal" has to come out of the home price therefore meaning a greater loss
for the mortgage holder.

[keepsmiling]

I'm not sure. The original loan was with with Countrywide which, as we all know, is now BofA. If all this documentation is required of the 'seller' - well... I'm not the seller - the Trustee is. The really, really, really stupid part is that BofA is promoting their new internal short sale program which requires almost no documentation - just an underwater house, an appraisal and an offer with 30-60 day closings - and that is for people without a Chap 7 discharge! So I know they don't 'need' these documents.

Just a quick search will land you on all kinds of real estate blogs and BofA's own site saying how great this new program is. Of course, their own short sale program allows for a deficiency judgements while the HAFA program does not. I read that only 661 HAFA short sales went through in 2010. I guess the banks don't like that one very much. In any event, we can't qualify for any of that since we aren't the seller. (nor do we want to be)

Can someone please explain to me why anyone would do a short sale that allows for deficiency judgment?

[catleg]

I think that everything Countrywide originated was sold into some kind of securitization, either Fannie/Freddie or other wall street criminals.
I think that your name is still on the deed in spite of the trustee's claim to the property. I agree it sounds like stupid city here. The bank
may be trying to throw a monkey wrench into the deal for whatever internal reason they have. It all makes no sense. Would love to know
how this finally works out. Please do keep us informed.

I can tell you on one local house in my neighborhood in NJ, the owners of a house signed the deed over to the bank in October 2009 and the
bank never recorded this with the county until April 2010. No idea what that was about. There are some very creative people trying to help
the banks avoid recognizing their losses for as long as possible. For example, the banks have been given permission by the Federal Reserve
to resume paying dividends to shareholders. Likewise the bonuses go out to the executives.

[freeatlast09]

I'm thinking the paperwork is to satisfy whoever is the "owner" of the mortgage note, probably Fannie Mae or Freddie Mac.
Cause you're right, BofA knows darn well your situation.

I'm not sure. The original loan was with with Countrywide which, as we all know, is now BofA. If all this documentation is required of the 'seller' - well... I'm not the seller - the Trustee is. The really, really, really stupid part is that BofA is promoting their new internal short sale program which requires almost no documentation - just an underwater house, an appraisal and an offer with 30-60 day closings - and that is for people without a Chap 7 discharge! So I know they don't 'need' these documents.

Just a quick search will land you on all kinds of real estate blogs and BofA's own site saying how great this new program is. Of course, their own short sale program allows for a deficiency judgements while the HAFA program does not. I read that only 661 HAFA short sales went through in 2010. I guess the banks don't like that one very much. In any event, we can't qualify for any of that since we aren't the seller. (nor do we want to be)

[catleg]

I'm thinking the paperwork is to satisfy whoever is the "owner" of the mortgage note, probably Fannie Mae or Freddie Mac.
Cause you're right, BofA knows darn well your situation. Seems to me you should be getting cash for keys if this was a
foreclosure, and then the bank would end up selling the property for less money presumably.

Seems to me the normal process should be:
Trustee abandons interest in property
Bank files foreclosure suit in state court
You sign deed in lieu of foreclosure and get cash for keys (possibly)

Seems like the trustee has decided to rip off Fannie/Freddie by imposing this deal fee.

This should be a federal crime.

[freeatlast09]

It occurs to me that from BofA's perspective, they want the short sale rather than the foreclosure so they can deliver clean title to the buyer.
Otherwise they might have to indemnify the title insurance company for any future problems. That might account for their willingness to go
along with the deal. Especially if your mortgage is recorded through MERS.

If you're right, they should just knock off this attempt to look at our post petition finances and proceed with the short sale. We're not attempting to stop them so it's between them and the Trustee.

At this point we don't even know if BofA has agreed to the side deal or are even aware of it. All we know for sure is that there is some sort of short sale offer on the house and the real estate agent 'claims' there is absolutely no way BofA will proceed without prying into our post-discharge finances even though that information is private and irrelevant.

[catleg]

It occurs to me that from BofA's perspective, they want the short sale rather than the foreclosure so they can deliver clean title to the buyer.
Otherwise they might have to indemnify the title insurance company for any future problems. That might account for their willingness to go
along with the deal. Especially if your mortgage is recorded through MERS.

[keepsmiling]

Strikes me that regardless of whether the tt contacts your atty or not, there is a case to be made here. As the lawyers say, "res ipsa loquitur". SOMEBODY needs to let the good guys know what the bad guys are doing.

[freeatlast09]

The question is: Will this new attny take the case and run with it?

I'm not sure there is anything to run with just yet. As of today, the Trustee still has not made any contact with our attorney. The real estate agent has been the only one to ask for these documents and told us about the side deal. I've only just met the new attorney so I can't say for sure that he'll be getting deeply involved, but he was very smart and helpful for a first visit. At this point I think he was more mystified than angry by the all these shenanigans. Maybe I'll point him to this thread. We'll keep posting as events unfold and information is discovered.

[despritfreya]

[QUOTE=freeatlast09;510128]. . . we just got back from a meeting with another attorney. I figured I wouldn’t take bad medical news without a second opinion so why take legal advice without it? You should have seen this attorney’s expression. . .QUOTE]

Praise be! The question is: Will this new attny take the case and run with it? And, if the answer is "yes", will he do it on principal or to earn his fee? The funny thing is I told my boss about this matter and asked him to read the thread. We can't help you since we are not in your district but, if he read the thread I will bet his blood was boiling just as much as mine was.

Des.

[keepsmiling]

Sounds like it's about to get REALLY interesting!

Free, good for you for going to see the new guy. Here's a fervent wish that this works out well for you and really badly for Mr. Smartypants.

I think this is gonna be a mega-thread......

[catleg]

It occurs to me that BofA is probably just the servicer, and it's a 3 way ripoff between BofA, the realtor, and the BK trustee. The victim being probably Fannie Mae/Freddie Mac. If we had a functional legal system the FBI in theory should be interested, it just goes to show how far we have lapsed into banana republic-hood.

[catleg]

I think if you have some guts and wouldn't mind a little publicity you could share you story with an activist website such as 4closurefraud.org
Particularly if there is a history of this practice. It's amazing how much money is being successfully diverted from these TBTF banks in all kinds of scams like this one. Nobody cares because in the end it's all taxpayer funds. (also known as "free money")
And I'm sure that somewhere, someone is rationalizing this by saying "chapter 7 trustees only get paid about $70 for a no asset case"