Mortgagee Standing: This Time MERS Is Not The Problem (a/k/a Sloppy Securitization Procedures Strike Again)

Posted on March 15, 2013 by BankruptcyRealEstateInsights

In re Idicula, 484 B.R. 284 (Bankr. S.D. N.Y. 2013) –

A servicer acting on behalf of U.S. Bank National Association, as trustee on behalf of holders of asset backed pass-through certificates, moved for relief from the automatic stay in order to proceed with a mortgage foreclosure.  Although neither the debtor nor the chapter 7 trustee objected, the court denied the motion because it found no evidence that U.S. Bank owned or had a right to enforce the promissory note secured by the property.  Since U.S. Bank did not show that it had standing to pursue the foreclosure, it did not establish that it had a right to relief from the stay. Continue reading →

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Deed in Lieu: Sometimes It Works, and Sometimes It Doesn’t (Round 2)

Posted on March 12, 2013 by BankruptcyRealEstateInsights

In re Kaltenheuser, 474 B.R. 305 (Bankr. D. D.C. 2012) –

In Kaltenheuser, a deed in lieu of foreclosure was executed and placed in escrow in connection with a settlement agreement approved by a state court order.  If the mortgagor failed to make a payment of $1.1 million by a specified date, the escrow agent was authorized to immediately record the deed in lieu conveying the mortgaged property to the mortgagee.

The payment was not made in time, but before the lender could have the deed recorded, the revocable trust that held title to the property filed bankruptcy.  Although the trust bankruptcy was dismissed on the basis that the trust was not an eligible debtor, the settlor revoked the trust (becoming the owner of record of the property), and filed a chapter 11 bankruptcy herself – once again invoking the automatic stay. Continue reading →

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Deed in Lieu: Sometimes It Works, and Sometimes It Doesn’t (Round 1)

Posted on March 8, 2013 by BankruptcyRealEstateInsights

4100 West Grand LLC v. TY Grand LLC (In re 4100 West Grand LLC), 481 B.R. 444 (Bankr. N.D. Ill. 2012) –

In West Grand the debtor attempted to have a deed in lieu of foreclosure set aside as a fraudulent conveyance.  The pivotal question for the court was whether the debtor received reasonably equivalent value in exchange for the deed in lieu. Continue reading →

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Automatic Stay: Rolling the Dice With a Tax Deed

Posted on March 5, 2013 by BankruptcyRealEstateInsights

In re Rugroden, 481 B.R. 69 (Bankr. N.D. Cal. 2012) –

Can the IRS issue a tax deed for real property after a bankruptcy has been filed where the tax sale took place prior to bankruptcy, or is that a violation of the automatic stay?  In reaching its decision the Rugroden court evaluated (i) the nature of the debtor’s property interest after the IRS sale, (ii) the effect of the automatic stay on the debtor’s right of redemption, and (iii) whether issuance of the tax deed deprived the estate of any property interest in violation of the automatic stay. Continue reading →

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Tax Claims: Good Investment (Maybe)?

Posted on March 1, 2013 by BankruptcyRealEstateInsights

In re Kopec, 473 B.R. 597 (Bankr. D. N.J. 2012) –

Does the purchaser of a tax sale certificate hold a “tax claim” for purposes of Section 511 of the Bankruptcy Code?  In Kopec the answer to that question meant the difference between interest on the claim of 18% versus 4%. Continue reading →

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Assignment of Rents: Can You Spend Rents and Still Provide Adequate Protection to the Mortgagee?

Posted on February 26, 2013 by BankruptcyRealEstateInsights

In re Putnal, 483 B.R. 799 (Bankr. M.D. Ga. 2012) –

In Putnal the debtor proposed to use rents over the objection of an undersecured mortgagee.  As a result, the court was faced the question of determining what, if anything, was required to provide adequate protection of the mortgagee’s interest in the rents. Continue reading →

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