Bowen Ten Cardani, PC

Two convenient office locations in Henrico’s West End and Ashland

Call Us For Your Initial Consultation

804-767-6850

Supreme Court debating fate of 2nd mortgages

As many Virginia residents may know, a case before the U.S. Supreme Court focuses on whether a second mortgage holder may be able to hold up negotiations when a debtor is going through bankruptcy. In this case, the appellate court for the 11th Circuit held that the debtor could dispose of a second mortgage in bankruptcy. The holder of the mortgage, Bank of America, objected to that ruling.

The appellate court in the case said that the debtor was able to dispose of a second mortgage on a property that was worth less than the original loan. The second mortgage holders might not collect any monies if the home went to foreclosure but might be able to block a settlement that may eventually benefit debtors if the property appreciates in value.

The members of the court debated the use of any law that might make bankruptcy beneficial for debtors. The plaintiff's attorney argued that while bankruptcy does allow debtors to start over, it is not intended to allow them to walk away from debt on their home yet keep the residence and receive additional benefit if house prices go up.

The court is evaluating whether a second mortgage on an underwater property should be disposed of by bankruptcy. Under current regulations, a second loan against the property might survive bankruptcy while the first loan might not. This, some of the justices agreed, may have disastrous results for a debtor.

If a debtor is in the position of losing his or her home, speaking with an attorney may be beneficial. The attorney may provide insight into whether bankruptcy might help. If that is the case, the attorney may provide guidance on how to file with the bankruptcy court.

Source: Forbes, "Second-Mortgage Case Has Justices Second-Guessing An Old Decision," Daniel Fisher, March 24, 2015

No Comments

Leave a comment
Comment Information
Email Us For A Response

We’re ready to work with you.

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Bowen Ten Cardani, PC

Richmond Office
3957 Westerre Parkway
Suite 105
Richmond, VA 23233

Toll Free: 866-601-7371
Phone: 804-767-6850
Richmond Office Location

Ashland Office
9410 Atlee Commerce Blvd
Suite 2
Ashland, VA 23005

Toll Free: 866-601-7371
Phone: 804-767-6850
Ashland Office Location

Super Lawyers | K. Matthew Long