Bank of America recently added information to the agent resources section of its website saying the bank can review a short sale offer while the loan is in an active bankruptcy. To complete a short sale and issue the approval letter, the bankruptcy documents must be filed and approved by the court. Any final agreement will require bankruptcy court approval.
Homeowner(s) should consult with their Bankruptcy Counsel about how these programs could affect their mortgage and their bankruptcy case.
When a loan is in bankruptcy, there is an Automatic Stay, also known as a “hold,” of any collection activity placed on any and/or all debts to which the debtor is a party. Before the short sale specialist can discuss the short sale, Bank of America must have written authorization from the Homeowner(s’) Bankruptcy attorney on the law firm’s letterhead to discuss loss mitigation options with the borrower. This is in addition to the Bank of America Third-Party Authorization Form needed from the borrower to speak to the bankruptcy attorney and the listing agent.
