Frequently Asked Questions
Below we have compiled the questions that we are most frequently asked.
What is a Consented Sale™?
A Consented Sale™ is the sale of property that is a part of a Bankruptcy Estate.
The sale is conducted subject to Bankruptcy law under the auspices of the Bankruptcy Court, and is often completed within 90 days of being listed.
The Trustee, as a fiduciary, is responsible for administering the sale's process. As a result, the Trustee will file all legal documents required to facilitate the sale. The Consented Sale presents advantages that far exceeds a foreclosure and REO sale.
Can any real estate agent handle a Consented Sale™?
Yes, but not effectively. A Consented Sale™ is a very complicated real estate transaction that has very important implications for a bankruptcy estate. More than any other type of residential real estate transaction, only trained experts who have substantial experience with the process, including a strong track -record of successful negotiations with lenders/servicers, should handle a Consented Sale™.
Why should a Trustee choose a Consented Sale™ over foreclosure?
Absent a specific license agreement in place contemplating maintenance and support services, Bankruptcy Listing Services may provide or terminate support and maintenance services for the Software Application at its sole discretion. In addition to the disclaimers and limitations of liability set forth in Section 3 incorporated herein by reference, Bankruptcy Listing Services does not warrant that the Software Application will perform without error, that it will run without immaterial or material interruption, that it will meet Your requirements nor that data generated by or contained in the Software Application will be accurate or
How do I know if a property qualifies for a Consented Sale™?
BK Score™ calculates the probability and confidence that a property will qualify for a Consented Sale™. BK Score™ takes into consideration more than 30 data points that are analyzed and factored into a score. The higher the BK Score™, the more likely it is the BK Global team will receive pre-approval from a lender/servicer for a Consented Sale™. The advantage to a Trustee is the ability to quickly identify the properties that have potential value and ease of saleability, which empowers him or her to focus time and effort on assets that have a greater possibility of a return to the estate.
Will the bankruptcy estate benefit from the proceeds from a Consented Sale™?
Yes! Lenders/servicers will generally provide BK Global with a pre-approved strike price for the Consented Sale™. The strike price provides brokers and agents with a baseline value from which to set sales pricing. All proceeds, less broker commissions and a carve-out for professionals and unsecured creditors, are to the benefit of the estate. The Consented Sale™ benefits both secured- and unsecured-creditors.
How long will an average Consented Sale™ take?
BK Global shortens the average time of a Consented Sale™ by obtaining lender pre-approvals, which streamlines the process. Its expert negotiators have existing relationships with all servicers, with clear requirements to reduce the standard average time it takes to complete a Consented Sale™. The average Consented Sale™ takes approximately three-to-four months from the acceptance of an offer to a completed purchase.
What costs are involved in the Consented Sale™ process?
There are no additional costs to the estate when pursuing a Consented Sale™. The standard broker fees and necessary professional and unsecured carve outs apply.
Who is responsible for the costs in a Consented Sale™ process?
BK Global is responsible for all costs involved in a Consented Sale™, including title and property insurance, as well as filing fees related to motions to allow the sale of property (if any).
How late in the pre-foreclosure process can a Trustee start a Consented Sale™?
Any time! Real estate assets are identified as soon as the Trustee receives a bankruptcy case. BK Global will provide the Trustee with a BK Score™ within days to determine a probability of sale of each property. If the BK Score™ is in excess of 70 percent for the property, the Trustee will have a strong indication of the likelihood of potential saleability. BK Global, in addition to providing a BK Score™, will prepare additional clarification questions for the Trustee in advance of each 341(a) meeting. Often questions serve as a means for the BK Global team to evaluate the original BK Score™ and either increase or decrease it, giving the Trustee a strong indicator of whether to pursue a sale of such property. Upon qualification, the asset can be listed and the Consented Sale™ process will begin -- and most likely finish -- well before foreclosure.
How does BK Global obtain multiple offers on a Consented Sale™?
BK Global markets all assets on the largest bankruptcy listing services marketplace in the United States, BKGlistings.com (BLS), around-the-clock. The national exposure and syndication -- and the ability for buyers to submit offers direct online -- ensures the most effective marketplace for disposition of assets. BLS’ advanced technology platform allows buyers and sellers to connect interactively to manage multiple offers, as well as accept or reject them.
How do I get started on a Consented Sale™ with BK Global?
It’s simple. BK Global will automatically run the BK Score™ on each property listed in each estate and determine those that qualify for a Consented Sale™. In addition, BK Global will provide the Trustee with information through its initial analysis, at no cost, if additional unscheduled assets are identified and provide a BK Score™ on these, too. BK Global can receive the data either directly from your office or automatically through your case software management system.
What documents are necessary to proceed with a Consented Sale™?
The individual documents necessary to proceed with the Consented Sale™ will depend on the lender. Typically, the lender will require a hardship letter that details the circumstances behind the Consented Sale™. A signed, valid purchase and sales contract, preliminary HUD-1 settlement statement and a preliminary estimate of proceeds to the lender. There may be additional requests for more detailed information on the financial condition of the seller (e.g. paycheck stubs, bank statements, personal financial statement, monthly budget assessment, etc.).
If the debtor is current on his or her mortgage, will the lender/servicer consider a Consented Sale™?
Maybe. Some lenders/servicers will accept a Consented Sale™ file for approval on loans that are not delinquent. Other lenders/servicers will not accept the file until the loan is delinquent. BK Global can assist you with a Consented Sale™ file within a couple days and submit it for approval. Remember: There is no charge for this. This is the best way to determine if your lender/servicer will accept a file for approval on a loan that is current.
Why would a lender/servicer agree to accept a Consented Sale™?
There are actually several reasons a mortgage company would approve a Consented Sale™ payoff, including, but not limited to:
- Legal concerns
Mortgage lenders have come under legal pressure to equitably resolve situations in which a borrower is unable to meet his or her mortgage obligations, particularly when he or she makes an effort to initiate a compromise solution.
- Wall Street is watching
Mortgage lenders rely heavily on their ability to package and sell bundles of loans on the secondary mortgage market. They need to sell these bundles of loans to put the funds back to work by loaning the money again and collecting loan fees along the way. If mortgages perform poorly after they are sold, it could impact a lender's ability to sell its loans on the secondary market. A successful Consented Sale™ gets the loan payoff resolved quickly.
- Asset management expenses
If a lender acquires a property through foreclosure, it will be managed until it is repaired and resold. It is expensive for lenders to manage real property assets – numerous homes spread throughout the region, state and possibly even the nation. Keeping properties maintained, with utilities turned on, making repairs and the administrative costs attached to these activities are all costs the lender would prefer to avoid. A successful Consented Sale™ reduces the time in which a lender is responsible for these costs, as well as eliminates most of these costs.
- Reserve Requirement
Delinquent- and non-performing loans place another burden on mortgage lenders. For all delinquent- and non-performing loans lenders must set aside funds in reserve to deal with potential losses. These funds cannot be put to work to generate new loan fees until the bad loans are resolved. A successful Consented Sale™ lets the lender put more money to work.
Do lenders/servicers approve all Consented Sales™?
No, which is the reason it is critical to work with someone who has extensive experience at getting Consented Sales™ approved. From the presentation of the BK Score™, to receipt of a strike price preparation and submission of the Consented Sale™ package, as well as communicating and negotiating with the lender to working with the lenders Loss Mitigations Department, BK Global-trained professionals know how to keep the file moving toward approval.
If the debtor’s property is in rough shape and requires work, can BK Global still conduct a Consented Sale™?
Absolutely. In fact, lenders are more motivated to do a Consented Sale™ on a property that needs work than on a property that doesn’t. The lender knows the risk of loss increases when it forecloses on a property that needs repairs. Aside from expense of completing the work, lenders are simply not set up to get renovations done. That’s because lenders are in the loan business … not the home fixer-upper business.
Will a lender/servicer allow the Trustee to make a profit on a Consented Sale™ for the benefit of the estate?
In all cases, the lender understands that a Consented Sale™ will also include payment of broker’s fees, as well as include a carve out for estate professionals and for the unsecured creditors in the bankruptcy estate. BK Global and its professionals will work with the Trustees to determine sales price and anticipated fees to ensure a successful sale of each property listed.
Are there tax implications in a Consented Sale™?
Much like the issue of credit reporting, the circumstances are individual to the lender. As a Consented Sale™ represents a loss for the lender, it can report the amount lost as debt forgiveness to the seller. If a formal 1099 tax form is filed, the seller may be responsible for paying taxes on the amount of debt forgiveness. We need to validate this under bankruptcy law.
How long does it take to close a Consented Sale™?
A normal real estate transaction can close at will once the contract is “four cornered,” which means that all signatures are affixed and there has been a meeting of the minds. In a Consented Sale™, all agreements are “subject to lien holder approval.” Since the seller is requesting a discounted payoff from the lien holder, all parties must allow the lien holder to complete an evaluation to determine the value of the home and if the loss is justifiable. The lender wants to mitigate its losses; therefore, the process of evaluation must be complete before approval is granted. This process can delay closing for several months.stions that are most frequently asked.
If the debtor files bankruptcy, should he or she still complete the Consented Sale™
One of the main goals in the completion of a Consented Sale™ is to minimize the damage to the credit of the individual debtor. While bankruptcy may have a negative credit impact, adding additional credit risk and headache related to a foreclosure exacerbates the amount of time and ability of a debtor to qualify for a home loan in the future. Once foreclosure begins, an arduous and stressful process begins for the homeowner. The mailbox starts to fill up with demand letters and confusing documents, and constant exchanges with the lender's legal team ensue. In a Consented Sale™, there are still negotiations, meetings and paperwork to weave through. But, the process plays out more like a traditional sale as opposed to a litigious and pressure-packed foreclosure proceeding.
How long after a Consented Sale™ can the debtor purchase another home?
The debtor’s ability to purchase a new home depends on several factors. Credit is only one of the factors. We have seen cases where minimal credit damage was caused as a result of a Consented Sale™ and the client repurchased within six months with little down and with an excellent rate. A lender/servicer is most interested in the borrower’s ability to repay the loan. If the problems that led to a Consented Sale™ are behind and there are at least 12 months of good credit with three or more credit accounts, he or she should be able to purchase with minimal down payment at a competitive interest rate.
If I do a Consented Sale™, how much will I have to pay to sell the Debtor’s home?
Nothing. It’s true in most cases that you will pay literally no sales costs if your lender approves a Consented Sale™. All real estate commissions, title and escrow fees are paid by the lender as part of the Consented Sale™ approval. We will include the following clause in the contract.
How Do I Get Started on a Consented Sale™?
It’s easy. You simply complete the listing agreement and we'll get started. There is no charge to you to get started. It is as simple as contacting us and we will get to work.
What is a Bankruptcy Estate Fee
The Bankruptcy Estate Fee is a cost disclosed on the HUD-1, which is required to be paid to the bankruptcy estate. The Fee is an investor approved amount, and per the Bankruptcy Code, must be meaningful in order for the Bankruptcy Court to allow the sale of the property in Bankruptcy.
What determines a bankruptcy estate fee and why is it paid?
Bankruptcy case law precedence has shown that in order to comply with Bankruptcy Law and for the Trustee to fulfill their fiduciary responsibility to the case, that the Bankruptcy Estate must receive a meaningful distribution. In cases where properties have equity the excess funds fulfill this requirements. For case with over-encumbered properties, the creditors must agree to a "carve-out" to be paid as the Bankruptcy Estate Fee.
The Consented Sale and the Bankruptcy Estate Fee helps avoid many of the costs that an Investor would incur during the course of the foreclosure and REO process. This makes the Consented Sale a less expensive and quicker alternative to a foreclosure and REO sale.
Does the bankruptcy estate fee cover court-required costs associated with administering the sale of the property in bankruptcy?
Yes. The Bankruptcy Estate Fee covers the following costs:
- Court Costs
- Paying Unsecured Creditors
(listed in bankruptcy schedules)
- Trustee Administrative Fees
(to conduct the case in court)
- Hiring and Managing Third Parties
(i.e. accountants, attorneys)
- Compliance Costs
(noticing of interested parties associated with property and subject to the sale)
- Liability Insurance
- Court Motions
- Eviction Costs
- Debtor Communication
All Costs and Fees associated with a Bankruptcy Estate are reviewed and approved by the Bankruptcy Court and the US Trustee Office