if a lender sells the Note after a loan modification has started and in underwriting and the buyer (new lender) initiates a foreclosure sale and the buyer at the trust sale is affiliated with the seller; is the final buyer (insider) considered a bona fide purchaser (BFP)?
? ?Let’s see - you bought a Note knowing a loan mod was in process. ?You are now trying to allege you are not bound by that process. ? ? How would you rule if you were the Judge?
? ? Worse than the actions of the buyer of the Note, are the actions of the original Note holder who was acting in bad faith, pretending to be working out a loan mod while actually selling the loan to a 3rd party. ?
? ?All I can say is: ?I’d like to be the Plaintiff’s (homeowner’s) atty. ?Two deep pickets to go after! ? I’d like to hear “idannyb” weigh in on this.
Here is one BFP definition from a legal dictionary: “Bona fide purchaser?n. commonly called BFP in legal and banking circles; one who has purchased an asset (including a promissory note, bond or other negotiable instrument) for stated value, innocent of any fact which would cast doubt on the right of the seller to have sold it in good faith.”
From my review of case law related to trustee sales … a “bona fide purchaser for value” BFP status is based on two factors: 1) if the bidder paid consideration (i.e. money) and 2) _“without notice of any adverse interest or of any irregularity in the sale proceedings” _(thereby affirming the holding in Calhoun v. Nguyen (2003). My *interpretation* of point #2 is that you are participating (bidding as an investor) in a free/fair, open public auction, and have no insider relationship with a party to the sale (e.g. lender or trustee) that would grant you opportunities not available to the public. You may find other interpretations and my opinion is an uneducated one (I have no legal background). More discussion on this topic here > http://www.foreclosureradar.com/forum/buyers-and-investors/buying-auction/bona-fide-purchaser-value
I suspect BFP status could also be ‘challenged’ (successfully? who knows? may depend on merits of case) if a property owner had a filed a lis pendens (litigation) related to the loan/lender/foreclosure proceedings, and said lis pendens was recorded _ before _ the trustee sale.?
A couple of questions re your BFP query … Are you suggesting that the lender sold the loan while in the midst of a loan modification??? That seems doubtful … particularly under new foreclosure regs. An ‘in process’ loan mod would have to be formally ‘turned down’ before the loan could be sold (assigned) and/or moved back on to the ‘foreclosure track.’ ?Has the loan (DOT) now been sold at trustee sale? Did it go bank owned (REO) or was it purchased by a 3rd party investor? If you are suggesting or asking whether the second lender (who bought the loan) and later foreclosed (and property went REO) could lose BFP status? … If that’s your question, my answer would be “No!” The loan owner ( beneficiary ) is not a BFP and would not need BFP insulation. If a 3rd party investor bought the loan at trustee sale and they were an employee (‘insider’) of the trustee/bene/servicer etc. w some inside knowledge re the loan that went to trustee sale … then BFP status might be subject to challenge.?