Bankruptcy-RealEstate-Insights

Pierce v. Carson (In re Rader), 488 B.R. 406 (9th Cir. BAP 2013) –

A chapter 7 trustee objected to the unsecured deficiency claim of a mortgage lender that remained after the lender obtained relief from the automatic stay and proceeded with a foreclosure.  The trustee contended that the claim should not be allowed because the lender did not comply with a state law requirement that an action must be commenced within 90 days after a non-judicial sale to preserve the deficiency claim.  The bankruptcy court overruled the trustee’s objection, and on appeal the bankruptcy appellate panel affirmed. Continue reading →

In re Wright, 486 B.R. 491 (Bankr. D. Ariz. 2012) –

In Wright, a mortgage lender obtained relief from the automatic stay in a chapter 11 bankruptcy and proceeded with a state non-judicial foreclose sale on two properties.  However, it did not take the next step and file an action as required under state law to preserve its deficiency claim.  The lender then attempted to pursue a claim for the deficiency in the bankruptcy court.  The court begins its opinion with the following:  “Ultimately this is a cautionary tale woven from wealth and its loss, a proof of claim that was lost in the paperwork, and hazy memories of years past.”  Translation: The lender lost. Continue reading →