Residential Real Estate Bankruptcy

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BofA Underwater Mortgage Cases Hit Supreme Court

The U.S. Supreme Court will hear two cases brought by Bank of America regarding whether a second mortgage on an underwater property can be voided during Chapter 7 bankruptcy. Both cases involve Florida homeowners who sued to...more

An Appeal of a Bankruptcy Sale Order May Be Moot Regardless of Whether the Seller Actually Had the Authority to Sell the Assets

A pair of recent decisions by the Ninth Circuit in In re Mortgages Ltd. underscore the power of the equitable mootness doctrine and the importance of obtaining stays of bankruptcy court orders to avoid having appeals of the...more

New Jersey Bankruptcy Court Holds That Mortgage Was No Longer Enforceable and Borrower Was Entitled to a “Free House”

Action Item: In light of this decision, lenders should ensure that foreclosures in New Jersey are filed within six years of the date of default. Failure to file a foreclosure within six years may cause the action to be barred...more

Cure and Reinstatement of Home Mortgages in Chapter 13: Florida's Bright-Line Rule is Not So Bright

Section 1322(c)(1) of the Bankruptcy Code allows debtors to cure defaults and reinstate a mortgage on their principal residence "until such residence is sold at a foreclosure sale that is conducted in accordance with...more

Strong Arm Powers: Mortgage Boo-Boo Strikes Again

Kellner v First Ohio Banc & Lending, Inc. (In re Geraci), 507 B.R. 224 (Bankr. S.D. Ohio 2014) – A Chapter 13 trustee and the debtor sought to use the strong arm powers of a hypothetical bona fide purchaser of real...more

Low-income housing tax credit workouts and bankruptcies: Understanding the basics

Note: This post is the first in a continuing series on the Credit Report Blog on the subject of workouts and bankruptcies involving low-income housing tax credit (LIHTC) projects....more

Cramdown Hurdles Round 2: Confirmation Can Be An Elusive Prize

In re NNN Parkway 400 26, LLC, 505 B.R. 277 (Bankr. C.D. Cal. 2014) – The primary creditor (an undersecured lender) objected to the debtors’ proposed plan of reorganization on various grounds, including that the plan...more

Cramdown Hurdles: How to Play the Classification Game (Or Not)

In re New Bride Missionary Baptist Church, 509 B.R. 85 (Bankr. E.D. Mich. 2014) – After the bankruptcy court denied confirmation of a debtor’s proposed chapter 11 plan of reorganization because there was no accepting...more

Automatic Stay Prevents Attachment of After-Acquired Judgment Lien

On Sept. 23, 2013, in Rodriguez v. Gelman (In re Local Service), 503 B.R. 136 (Bankr. D. Colo. 2013), the U.S. Bankruptcy Court for the District of Colorado addressed an issue of first impression in that district; namely,...more

Automatic Stay: What Happens When a Case is Reopened?

U.S. Bank, N.A. v. Brumfiel (In re Brumfiel), 514 B.R. 637 (Bankr. D. Colo. 2014) – After a debtor reopened her chapter 7 bankruptcy case, a lender moved for relief from the automatic stay in order to continue with a...more

Proposed Changes to Proof of Claim Procedure Require Mortgagees to Provide More Information in Less Time

On August 15, 2014, the Judicial Conference Advisory Committee on Rules of Practice and Procedure published a preliminary draft of proposed amendments to the Federal Rules of Bankruptcy Procedure and Official Forms. If...more

Rejecting Related Contracts: When Can You Pick and Choose?

In re Trinity Coal Corp., 514 B.R. 526 (Bankr. E.D. Ky. 2014) – The debtors sought to reject easement and disposal agreements with the owners of adjacent coal mines. The adjacent owners objected on the basis that the...more

Mortgage Modifications: Senior Loans May Become Not So Senior

Sperry Assoc. Fed. Credit Union v. US Bank Nat’l Ass’n (In re White), 514 B.R. 365 (Bankr. E.D.N.Y. 2014) – A junior mortgagee sought to subordinate the senior mortgage loan based on an argument that modification of...more

Mortgage-Backed Securities: “It Is The Rare Ordinary Human Being Who Understands Them”

In re Lehman Bros. Holdings Inc., 513 B.R. 624 (Bankr. S.D.N.Y. 2014) – A purchaser of residential mortgage-backed securities filed proofs of claim based on alleged misrepresentations by the debtors in offering...more

When Your General Contractor Files Bankruptcy

The case is Branch Banking & Trust Co. v. Construction Supervision Services Inc. (In re Construction Supervision Services Inc.), 753 F.3d 124 (4th Cir. 2014). After a general contractor filed bankruptcy, several of its...more

Sales Free and Clear: What About Restrictive Covenants?

Heatherwood Holdings, LLC v. HGC, Inc. (In re Heatherwood Holdings, LLC), 746 F.3d 1206 (11th Cir. 2014) – A chapter 11 debtor owned property that had always been used as a golf course and club. When it requested that...more

Strong Arm Powers: What Can Be Done With An Avoided Lien?

DeGiacomo v. Traverse (In re Traverse), 753 F.3d 19 (1st Cir. 2014) – A chapter 7 trustee sought to avoid an unrecorded first mortgage and to preserve the lien for the benefit of the bankruptcy estate. In response, the...more

Delayed Recording: Sometimes Late Is No Better Than Never

Collins v. JP Morgan Chase Bank, N.A. (In re Flannery), 513 B.R. 1 (Bankr. D. Mass. 2014) – A chapter 7 trustee sought to avoid as a preference a mortgage that was recorded within 90 days before a bankruptcy filing....more

Equitable Subrogation: “Complete and Perfect Justice” Requires Party To Be Without Fault

Ocwen Loan Servicing LLC v. Summit Bank, N.A. (In re Francis), 750 F.3d 754 (8th Cir. 2014) – A lender that attached the wrong legal description to its recorded mortgage sought equitable subrogation and/or reformation...more

Fannie Mae Issues Fact Sheet on Prior Derogatory Credit Event Policies

On September 8, Fannie Mae published a fact sheet about borrower eligibility after a derogatory credit event. The fact sheet reviews Fannie Mae’s recently updated policy related to the minimum waiting periods following a...more

To Caesar, Only What Is Due - An Opportunity under § 505(a)(2)(C) for Ad Valorem Taxes?

Plagued with financial uncertainty and inadequate resources, debtors often fail to take the steps that are needed to minimize property taxes in the period leading up to bankruptcy. Tax protests go unfiled and valuations go...more

California Retroactively Extends Mortgage Debt Forgiveness Tax Relief, But Only For 2013

At the end of July, the California state legislature enacted an extension of its modified conformity to federal mortgage debt forgiveness tax relief for 1 year, through 2013. The law allows exclusion of income realized as a...more

Abandonment: When Property Drops Out of the Bankruptcy Estate

In re Rich, 510 B.R. 366 (Bankr. D. Utah 2014) – In a case that was converted from a chapter 11 reorganization to a chapter 7 liquidation, the debtor sought an order directing the trustee to abandon certain real...more

Improperly Indexed Mortgage: How Far Does Your Record Review Need to Go to Be Safe?

Albert v. Green Tree Servicing, LLC (In re El Erian), 512 B.R. 391 (Bankr. D. D.C. 2014) – A chapter 7 trustee sought to avoid the lien of a recorded deed of trust because (1) it contained both correct and incorrect...more

Fraudulent Transfer: A Case Where Strong Arm Powers Were “An Inch Too Short”

A Chapter 11 trustee sought to avoid a transfer of property under Section 544 of the Bankruptcy Code that occurred after (1) the bankruptcy petition was filed and (2) a chapter 11 plan of reorganization was confirmed. ...more

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