Ventura County Short Sale Specialist Why Bankruptcy May Not Work

By
Real Estate Agent with Allison James Elite CA. BRE 01501699

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®

Supreme Court Outlaws Chapter 7 ‘Stripping Off’ of Second Mortgages

gavel-five

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

https://www.linkedin.com/today/author/17316767

http://www.linkedin.com/in/chrisbjohnson

http://activerain.com/profile/chrisbjohnson

http://activerain.com/blogs/chrisbjohnson

 

https://www.youtube.com/c/ChrisBJohnsonRealtor

http://www.sellventuracountyhomes.com

http://chrisbjohnsonrealtorluxuryhomes.blogspot.com/

http://www.ChrisBJohnson.Realtor   

http://www.ChrisBJohnsonRealtor.com

http://www.twitter.com/CBJRealtor

http://moorparkshortsalespecialist.com/

http://moorparkshortsalespecialist.com/short-sale-decision-maker/

http://stopforeclosureventuracounty.blogspot.com 

http://venturacountyshortsalerealtor.wordpress.com/
http://venturacountyshortsalespecialist.com

http://venturacountyshortsalespecialist.theshortsaleguide.com

http://www.facebook.com/VenturaCountyShortSaleRealtor

http://www.facebook.com/MoorparkShortSaleSpecialist

http://www.facebook.com/StopForeclosureVenturaCounty   

http://www.facebook.com/pages/Moorpark-Short-Sale-Specialist-Chris-B-Johnson/290866904359682?ref=stream

http://hosted.cdpe.com/VenturaCountyShortSaleSpecialist                                                                        

http://www.VCNeighborhoodValues.com   

http://moorparkshortsalespecialist.com/helpful-resources/short-sale-vs-foreclosure/

http://ChrisBJohnson.housingtrendsenewsletter.com

What is a CDPE?  http://hosted.cdpe.com/VenturaCountyShortSaleSpecialist/What-is-a-CDPE.aspx

Posted by

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Topic:
Home Selling
Location:
California Ventura County
Tags:
your best choice for a realtor in ventura county ca
ventura county short sale help
stop foreclosure institute of ventura county
your top listing realtor with allison james estates homes elite

Post a Comment
Spam prevention
Spam prevention
Post a Comment
Spam prevention

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainmaker
326,835

Chris B Johnson

REALTOR®Quality Not Quantity #ChrisBJohnsonRealtor
Is it Too Late to Short Sell My Home??
*
*
*
*
Spam prevention

Additional Information