For homeowners, especially those that have dealt with foreclosure and have multiple mortgages recorded against the real property, this post is a MUST-READ for you.
The Supreme Court of the United States, earlier this term, granted review of two cases addressing whether a mortgagor may avoid an underwater lien (otherwise known as “stripping a lien”) in a chapter 7 bankruptcy case. As of now, courts across the country have been split on whether a homeowner may strip off junior liens in a chapter 7 case.
Oral arguments in these cases were already heard. It is anticipated that the Court will issue a decision sometime in late June as the term comes to a close. If the Court rules against the lender (in this case, Bank of America), it would mean that homeowners may strip off junior liens in a chapter 7 case (provided the value of the real property is less than the value of the first mortgage). If the court rules against the homeowner, it would mean that junior liens may only be stripped off in a chapter 13 case, as is currently the law.
If you are a homeowner struggling with foreclosure and/or a second mortgage, you should contact a bankruptcy lawyer immediately to discuss whether bankruptcy might be an option for you. If you would like to speak to a bankruptcy lawyer, contact LORK, (718) 738-2324, or [email protected]