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Can A Mortgage Company Receive A Termination of Stay After The Bankruptcy Trustee Has Obtained a Ruling For Sale of Real Estate?

  • By: Christopher Benson
  • Published: February 21, 2014

Q: Can A Mortgage Company Receive A Termination of Stay After The Bankruptcy Trustee Has Obtained a Ruling For Sale of Real Estate?

The Trustee (chapter 7) has received approval from the presiding judge to sell real property. The property was then listed as a short sale. An offer came in and was accepted by the second lender. The first lender apparently receives 100% with no need to negotiate. Now that same first lender has entered a motion to terminate the stay and proceed with foreclosure?

Additional information

A closing date has been set, if the first lender obtains approval to terminate the stay and proceed with foreclosure (why would they???) how will this affect the sale?

Chris Benson’s Answer:
The short answer is “Yes” if the secured lender is deemed to not be “adequately protected” concerning it loan. Adequate protection can mean a number of things such as receiving regular monthly payments and/or sufficient equity cushion in the property. Just because they received an Order Granting Relief from stay does not necessarily mean that foreclosure is coming up right away. It just means they have permission from the court to pursue their remedies available. Continue to work with the secured lender and keep them informed of the status of the short sale.
Christopher Benson

About the Author Chris served on the Board of Directors for Habitat for Humanity
Seattle/S. King County for 10 years and served as Vice President
of the organization during part of that time. Read More