Boreyko proposes sale of $600,000 “underwater” property
No verdict yet on the proposed AZPACK sale, but news today that Boreyko wants to sell off more real estate.
The proposal was made with Boreyko’s full knowledge of the preliminary injunction currently in place, which prohibits him from
selling any real estate asset that is owned or controlled by, or held for the benefit of, Defendant Boreyko, directly or indirectly.
Boreyko claims his
interest in the Property is significantly (approximately $600,000) underwater.
With negative equity, it does not make sense for Mr. Boreyko to retain this property and continue to expend resources on a property that is a financial burden.
For those unfamiliar with real estate investment terminology, Boreyko is claiming he’s lost $600,000 on the property and wants out.
Referring to the proposal as a “short sale”, the specific terms of the sale were not disclosed in Boreyko’s proposal. Ditto how much the property is worth, or what will be done with the proceeds of the sale.
Boreyko sought the approval of the FTC for the proposed short sale transaction, including providing substantiating documentation.
In the event that the Court wishes to review the substantiating documentation, Boreyko will file the transaction documents under seal.
No idea why the transaction documents can’t be made public if everything is above board…
Boreyko’s court filings meanwhile reveal the FTC chose not to sign off on request. Like the AZPACK proposal, it now stands before the court awaiting a decision.
Boreyko claims ‘the lender and purchaser are requesting to close the transaction on or about January 18, 2016‘, and has asked the court to make an expedited decision on the matter by January 15th.
Footnote: Our thanks to Don@ASDUpdates for providing a copy of Boreyko’s proposed underwater property sale.
Update 16th January 2016 – The court granted Boreyko’s proposed short sale today, subject to final approval by Bank of America.
he first has to get mortgagor approval to do a short sale. It’s not like he can just do it and say ‘oh well, this is what I got for it’.
The secrecy can only be that he’s going to lie as the transaction would be recorded in county records for all to see.
There won’t be any proceeds. If the mortgagor (the bank) accepts an offer from a buyer, Boreyko will be relieved of the burden, but all the money goes to the bank. If he’s “upside-down $600,000, he has no equity. The bank will come up “short”.
In fact, if Boreyko doesn’t pay off the loan he could be liable for the deficiency.
Short sale agreements do not necessarily release borrowers from their obligations to repay any shortfalls on the loans, unless specifically agreed to between the parties.
Thanks for the clarification John. Any idea how this might stack up with respect to the injunction?
Seems to be pretty broad in that Boreyko is prevented from selling off any assets, in deficit or otherwise.
Also how does one get “upside-down $600,000” with respect to a property, is it simply a matter of missing payments?
I tried not to read too much into the bankruptcy implications, but now I’m not so sure.
If property values have fallen significantly since the purchase, he owes more than the property is worth at sale, thus his loan is “upside down”
IOW, the exact situation in which millions of US home owners found themselves during the 2008 / 09 global financial crisis.
Boreyko is claiming, in essence, he is pouring money down the drain if he can’t sell as real estate values continue to drop.
A short sale is basically an agreement between the owner and the mortgage-backer (bank) that bank will take some of the loss if someone else can be found to take the property and make payments.
Basically BK is saying is since he’s underwater (i.e. owes more than the property’s worth) he should be allowed to sell them despite the asset freeze.
A short sale, as JZ explained, does NOT necessarily absolve the short seller of all responsibility. It depends on how much is owed and how much is short. On residential properties in a depressed market bank often will just eat the losses if they can find someone who can make property payments.
Who knows what sort of properties (commercial? rental?) BK is trying to get rid of that he’s as much as 600K underwater, but as JZ said, he’s not going to see any cash from this, only rid himself of some liabilities.