Q: What Federal law allows an Executor of Estate as the only Trustee the court right to sell inherited [mortgage]?
Through Probate [mother willed son to be the Executor and Trustee of their home in South Carolina] whereas the mortgage has gone into the Foreclosure process. He has filed Chapter 7 solely upon the mortgage debt, but the mortgagor will not release the home or accept any offers for said home. What must he do to demonstrate that the mortgagor is to allow him his right to [liquidate assets] sell the property as it is ordained through probate courts. The home has been rebuilt due to fire damage and now appraises well above the balance of the loan. The home is the only real property/asset of the estate and he believes [Planet Home Lending] the mortgage lender wants fair market price and to have all foreclosure fees paid off rather than to have him come current or pay off the loan.
A: Not sure of your question. But if there is a Ch 7 BR then the Trustee owns the property unless there is an agreed reaffirmation or surrender of the property by the Trustee. The will and probate do not control here if the property did go to him and he went bankrupt. Heirs might file suit and claim title, but it will be difficult.
Despite the express wording of Section 506 of the Bankruptcy Code, the US Supreme Court has ruled that there is no "cram-down" of secured claims in a Chapter 7 case, and the provisions of Ch. 13 likewise prohibit a "short sale" of mortgaged property where the holder of the first mortgage objects to such sale.
An estate is not eligible to file for bankruptcy relief.
In other words, if the first mortgage balance is greater than the sales price of the property to be sold, the bankruptcy court will not/cannot order a sale of that property.
As a practical matter, if the heir or owner of the property is unable to make current debt payments to the first mortgage holder, and the property is not worth as much as the debt, why would that owner try to retain the property just to sell it?
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