mortgage lien avoidance

The avoidance or "lien stripping" of "underwater" second or other junior liens has been much in the news lately since the U.S. Supreme Court's ruling in the Bank of America cases. The Court held that wholly underwater second or other junior mortgages are not avoidable in a chapter 7 bankruptcy case.

Still Avoidable in Chapter 13 Cases

Two days, two chapter 7 section 506 decisions by the the 11th Circuit Court of Appeals.  On September 29, 2014, the Court issued its decision in In re Phillip, 2014 WL 4802758 (11th Cir. Sept. 29, 2014)(not selected for publication). On September 30, 2014, the Court issued its decision in In re Vaner Iest, 2014 WL  4825253 (11th Cir. Sept. 30, 2014)(not selected for publication).  The mortgage lender in both cases was Bank of America, N.A.

A Central Illinois Bankruptcy Court Judge ruled the trustee who oversees administration of a bankruptcy case can avoid mortgage liens that do not comply with an Illinois law that requires the mortgage contain notice of the interest rate, loan amount and maturity due date.  See In re Crane [Crane vs. Richardson, CDIL 11-09067], on appeal to US District Court.