Probably No Strip-Offs After Supremes Rule
The headline for this post will be mysterious and perhaps slightly salacious in a general newsfeed, but bankruptcy experts will know it means the time is nigh in the 11th Circuit for lien strip-offs. The Supreme Court agreed to hear Bank of America v. Caulkett and Bank of America v. Toledo-Cardona, where the 11th Circuit allowed lien strip-offs of wholly underwater junior mortgages in a chapter 7. The Supreme Court case of Dewsnup v. Timm would seem to hold otherwise, but the 11th Circuit ruled Dewsnup applied only to partially underwater mortgages. Hence, the 11th Circuit believe it was bound by its own pre-Dewsnup precedent allowing strip-offs for wholly underwater junior mortgages.
I like the 11th Circuit rule as a matter of policy, but I have to believe that as a matter of precedent, the Supreme Court is almost certain to reverse. I have to get back to work on some other things, but perhaps other Credit Slips bloggers might have more to say. Until then, SCOTUSBlog also has a summary.
Precedent? We don't need no stinking precedent! Dewsnup was wrongly decided! I have it on the highest authority - one of my local bankruptcy judges.
If only the Supremes hadn't granted cert. Then we might have been able to have several years worth of experience with which to compare the real world effects of strip off vs. no strip off and its effect on the recovery from the bursting of the housing bubble.
Posted by: David Yen | November 18, 2014 at 10:45 AM
Indeed, if the Supremes had left the 10th Circuit decision in place, we would not be dealing with the thorough bollocks-fest they created.
Posted by: Knute Rife | November 25, 2014 at 04:03 PM