Bankruptcy Law Questions? Ask a Bankruptcy Lawyer.
Saturday, August 11, 2012 2:51 PM EST
Thank you for the clarification: No we did not reaffirm the mortgage in chapter 7. No my father did not file for bankruptcy protection we need to know if we can still sell our home even though we filed chapter 7. Response 1: Yes, you can. Even if your mortgage was discharged in bankruptcy, you are still the legal owner of the property until the bank forecloses on the property. However, if you are selling the house on a short-sale, you would need the lender's approval. Or is my father still liable for the home if we let it go into foreclosure then if is he liable can he sell the home?
Response 2: Since your father did not file for bankruptcy protection, he is the only one now liable for the mortgage because your obligation on the Note was discharged in your bankruptcy. If the house is foreclosed, the lender can go after your father for the deficiency.
If your father is joint owner of the property, he can sell the house. However, as a joint owner he cannot sell the house without your consent, without the other joint owner’s consent. All joint owners’ signatures are required for the sale. All joint owners must sign the Deed. If your father is just on the loan but not on the title, not on the Deed, then your father does not have any right to sell the house because he is not a joint owner of the property. He is not the legal owner of the property despite him being a co-signer on the loan.
Thank you for your quick response: You mean short-sale the property? yes short sale Your Question: so to clarify my dad is on the deed. so if we agree to have him quick sell the house do we still need the mortgage companies approval? Response: Yes. You cannot short-sell the property without the lender's approval. In a short-sale, you are selling the property for less than the mortgage on the property. So, the mortgage holder who is going to be impacted must be notified of the sale and approve of it before the sale can go through. That is the only way the lender can release the mortgage on the property. Otherwise, the Buyer would be stuck with the mortgage. In any event, no title company would approve of the sale. No buyer would purchase the property where there is a mortgage on the property if the Seller is not going to be paying off the mortgage as part of the sale.
When the lender approves a short-sale, the lender is basically saying that it would take the sale proceeds as pay-off for the mortgage and the Buyer would get the property free and clear of the mortgage although in some instances, some lenders would approve the short-sale only on the condition that the Seller pay additional $5,000.00 to $20,000.00 to the lender. You should not agree to this. You would want a written agreement from the lender that it would take the sale proceeds as pay-off for the loan and the lender would not come after your father for additional money after the short-sale.