${site.data.firmName}${SEMFirmNameAlt}
New Mexico Lawyers Serving New Mexico's Legal Needs Since 1997

Bank of America Seeks Review of Eleventh Circuit Precedent on Second Mortgages

The Supreme Court plans to hear two cases brought by Bank of America concerning liens created by second mortgages where the value of the home is less than the amount of the lien from the first mortgage. In one federal appellate circuit, the Eleventh which takes appeals from certain southeastern states, the Court of Appeals has said that liens representing second mortgages are voidable.

Bank of America contends that this approach conflicts with the precedent set by all other federal appellate circuits and thereby the Supreme Court needs to resolve the split. Substantively, the Bank’s attorneys argue that secured creditors holding liens from second mortgages should not see those liens rendered worthless because it is possible that, after the conclusion of the bankruptcy case, the real estate which served as the collateral for the second mortgage could rise in value. Hence, the notion that the second mortgage is “underwater” may be merely a temporary problem subject to change when market conditions change.

“This case presents a critical issue of bankruptcy law affecting a large number of chapter 7 cases,” lawyers for Bank of America said in a court filing. The company urged the high court to clarify the rules “and restore uniformity to the administration of chapter 7 cases across the country.”  Bank of America claims hundreds — and possibly thousands — of homeowners in states covered by the 11th Circuit have moved to void underwater second mortgages since the appeals court endorsed the practice two years ago. Those states include Florida, Georgia, and Alabama.

A decision is expected by June of 2015. At stake is whether Chapter 7 debtors in at least those three states will have the chance to void or “strip” liens from second mortgages or whether banks holding such liens can hold them until after the bankruptcy to preserve their security interest in the future.  

In Albuquerque, Giddens, Gatton & Jacobus, P.C. has bankruptcy attorneys who offer expert handling of Chapter 7, Chapter 11, Chapter 12 and Chapter 13 bankruptcy cases in New Mexico. The firm represents many debtors and creditors in Albuquerque, Santa Fe, Taos, Raton, Farmington, Gallup, Grants, Roswell, Los Lunas, Placitas, Belen and the rest of New Mexico. Contact Giddens, Gatton & Jacobus, P.C. at (505) 633-6298 to set up an appointment with one of its New Mexico bankruptcy lawyers or visit the firm’s website at giddenslaw.com. Giddens, Gatton & Jacobus, P.C. is located at 10400 Academy Road N.E., Suite 350 in Albuquerque, New Mexico.       

No Comments

Leave a comment
Comment Information

Watch our videos to learn of the many ways we can help you with your legal needs.

Email Us For A Response

How can We Help You?

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Office Locations

Firm Location:

Giddens, Gatton & Jacobus, P.C.
10400 Academy Road NE
Suite 350
Albuquerque, NM 87111

Phone: 505-273-3720
Fax: 505-271-4848
Map & Directions

Firm Numbers:

  • facebook
  • linkedin
  • gplus
  • twitter
Review Us