Mortgage Preference: Dilly-Dally Around with Recording and You May Lose

USAA Fed. Sav. Bank v. Hope, 589 B.R. 914 (M.D. Ga. 2018) –

A bankruptcy trustee sought to avoid a security deed granted to a refinancing lender as a preference. In defense the lender asserted that there was a substantially contemporaneous exchange of the grant of the lien for the new loan. The bankruptcy court granted the trustee’s motion for summary judgment and the lender appealed to the district court. Continue reading

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Delinquent Property Tax Sales and the Equity of Redemption: When Is Property Really, Really, Really Gone?

Reverend C.T. Walker Housing Dev. Fund Corp. v City of N.Y., 586 B.R. 534 (E.D.N.Y. 2018) –

A bankruptcy court denied a debtor’s motion to sell real property and granted a motion for relief from the automatic stay in a related case involving property that was sold at a delinquent property tax sale prior to bankruptcy. The debtor appealed both orders to the district court. Continue reading

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Disallowed Claims: Just Because a Claim Is Rejected Does Not Mean the Underlying Lien Disappears

Shoemake v. SN Servicing Corp., 586 B.R. 741 (M.D. Tenn. 2018) –

Chapter 13 debtors brought an adversary proceeding against mortgage loan servicers (1) seeking a determination that a deed of trust lien was extinguished when a proof of claim filed for the lender was disallowed and (2) seeking to recover for violations of the automatic stay and the debtors’ confirmed plan. The bankruptcy court granted the loan services’ motion to dismiss, and the debtors appealed to the district court. Continue reading

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Wraparound Mortgages: Sorting Things Out

In re Tejeda, 586 B.R. 831 (Bankr. W.D. Tex. 2018) –

In connection with acquisition of real property a debtor executed a wraparound mortgage in favor of the sellers. The original note and deed of trust executed by the sellers remained outstanding at the time the debtor filed a chapter 13 bankruptcy. The trustee objected to the proof of claim filed by the holder of the sellers’ mortgage loan. Continue reading

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Designating Votes: Selfish Informed Self Interest v. Untoward Advantage

Pacific Western Bank v. Fagerdala USA-Lompoc, Inc. (In re Fagerdala USA-Lompoc, Inc.), 891 F.3d 848 (9th Cir. 2018) –

A secured creditor sought to block a Chapter 11 plan of reorganization by purchasing claims from some of the creditors in the general unsecured creditor class. At the debtor’s request, the bankruptcy court designated the votes of the purchased claims under section 1126(e) of the Bankruptcy Code. The district court affirmed and the secured creditor appealed to the Ninth Circuit.
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Avoiding an Unrecorded Mortgage: Variations on a Theme

Miranda v. Banco Popular De Puerto Rico (In re Mercado), 587 B.R. 224 (Bankr. D. P.R. 2018) –

A chapter 7 trustee sought to avoid an unrecorded mortgage and preserve the lien for the benefit of the bankruptcy estate. The decision on the trustee’s motion for judgment on the pleadings turned on treatment of the mortgage under state law. Continue reading

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Reverse Mortgages: Ignore Loan Documents at Your Peril

D’Alessio v. CIT Bank, N.A., 587 B.R. 211 (Bankr. D. Mass 2018) –

A chapter 13 debtor sought a court determination that he was a “Borrower” for purposes of a reverse mortgage executed by his deceased wife. The mortgagee disagreed contending that only his wife was a borrower, and consequently it (1) objected to treatment of its claim in the debtor’s chapter 13 plan and (2) moved for relief from the automatic stay so that it could foreclose. Continue reading

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