Chris B Johnson, REALTOR® Oxnard REO Coming To Market Featured Listing
Mortgage Pre Approval Time To Buy A Home Chris B Johnson, REALTOR®, SFR®, CDPE®, CHS®
The U.S. Supreme Court ruled on Monday that an underwater second mortgage cannot be extinguished, or "stripped off," as unsecured debt for a debtor in bankruptcy, according to theSupreme Court's website.
In the cases of Bank of America v. Caulket andBank of America v. Toledo-Cardona, Florida homeowners David Caulkett and Edelmiro Toldeo-Cardona had filed for Chapter 7 bankruptcy and had second mortgages with Bank of America extinguished by a bankruptcy judge following the housing crisis of 2008 based on the fact that they were completely underwater. On Monday, just more than two months after hearing arguments for the case, the Supreme Court ruled in favor of the bank.
When the Supreme Court heard arguments for two cases on March 24, attorneys representing Bank of America contended that the high court should uphold a 1992 decision in the case of Dewsnup v. Timm, which barred debtors in Chapter 7 bankruptcy from "stripping off" an underwater second mortgage down to its market value, thus voiding the junior lien holder's claim against the debtor. Attorneys for the debtors argued that the Dewsnup decision was irrelevant for the two cases.
Bank of America appealed the bankruptcy judge's ruling for the two cases, but the 11th Circuit U.S. Court of Appeals upheld the bankruptcy court's decision in May 2014, going against the Dewsnup ruling by saying that decision did not apply when the collateral on a junior lien (second mortgage) did not have sufficient enough value. The bank subsequently appealed the 11th Circuit Court's ruling.
The Supreme Court ruled on Monday that the second mortgages should not be treated as unsecured debt, hence upholding the Dewsnup decision. Justice Clarence Thomas, in delivering the opinion of the court, wrote that, "Section 506(d) of the Bankruptcy Code allows a debtor to void a lien on his property '[t]o the extent that [the] lien secures a claim against the debtor that is not an allowed secured claim.' 11 U. S. C. §506(d). These consolidated cases present the question whether a debtor in a Chapter 7 bankruptcy proceeding may void a junior mortgage under §506(d) when the debt owed on a senior mortgage exceeds the present value of the property. We hold that a debtor may not, and we therefore reverse the judgments of the Court of Appeals."
"The Court has spoken, and we respect its ruling," said Stephanos Bibas, an attorney for defendant David Caulkett, in an email to DS News. "But we are disappointed that the Court extended its earlier precedent in Dewsnup v Timm, even though it acknowledged that the plain words of the statute favor giving relief to homeowners such as Messrs. Caulkett and Toledo-Cardona. We hope that in the near future, the Administration's home-mortgage-modification programs will offer more relief to homeowners in this situation struggling to save their homes."
A Bank of America spokesman declined to comment on Monday's Supreme Court's ruling.
Click here to read the complete text of the Court's ruling.
Moorpark Home Values & Market Trends Moorpark Condo Values & Market Trends
Simi Valley Home Values & Market Trends Simi Valley Condo Values & Market Trends
Thousand Oaks Home Values & Market Trends Thousand Oaks Condo Values & Market Trends
Westlake Village Home Values & Market Trends Westlake Village Condo Values & Market Trends
Agoura Home Values & Market Trends Agoura Condo Values & Market Trends
Oak Park Home Values & Market Trends Oak Park Condo Values & Market Trends
Calabasas Home Values & Market Trends Calabasas Condo Values & Market Trends
Newbury Park Home Values & Market Trends Newbury Park Condo Values & Market Trends
Camarillo Home Values & Market Trends Camarillo Condo Values & Market Trends
Somis Home Values & Market Trends More on Ventura County Real Estate
Oxnard Home Values & Market Trends Oxnard Condo Values & Market Trends
Port Hueneme Home Values & Market Trends Port Hueneme Condo Values & Market Trends
Ventura Home Values & Market Trends Ventura Condo Values & Market Trends
Santa Paula Home Values & Market Trends Santa Paula Condo Values & Market Trends
Oak View Home Values & Market Trends Ventura County Trends
Ojai Home Values & Market Trends Ojai Condo Values & Market Trends
Fillmore Home Values & Market Trends Fillmore Condo Values & Market Trends
Moorpark Market Activity-Belmont Simi Valley Homes 4 Sale
Moorpark Country Club Estates and Highlands Thousand Oaks Homes 4 Sale
Moorpark Luxury Homes and Estates First Time Buyers
Moorpark Short Sale Report Buying a Home This Winter
Your Moorpark Neighborhood Specialists Selling Your Home This Winter
Moorpark Short Sale Your Equity Is On The Rise!
Moorpark Homes 4 Sale Return Of The Housing Market J
More On Moorpark Real Estate SEARCH THE MLS FOR HOMES
Your Neighborhood Market Report The Cost Of Waiting
Moorpark Short Sale HELP!! California May Pay You To Short Sale
Oxnard REO Coming To Market Santa Paula Home For Sale
What is a CDPE? http://hosted.cdpe.com/VenturaCountyShortSaleSpecialist/What-is-a-CDPE.aspx