Posted by Brian on March 24, 2015
Chapter 7 Mortgage “Strip Off”???
When working as a Virtual Bankruptcy Assistant there is a significant need to keep up on your bankruptcy training, new bankruptcy laws, and court decisions.
Currently the U.S. Supreme Court is hearing a case in which a debtor is trying to do a “strip off”, or removing the lien, of a second mortgage in a chapter 7 bankruptcy. Their argument is that the loan is so far under water that the junior lien holder wouldn’t receive any compensation if the home was foreclosed on anyway. Currently, investors holding second mortgages have been known to obstruct arrangements between homeowners and first mortgage holders that could benefit both parties. Being able to “strip off” a second mortgage would allow these arrangements to take place and allow more home owners to stay in their homes and secure more money for the first mortgage holder than if they were forced to foreclose on the home.
The argument from the banks is that there are gray areas in many cases. How far under water does the home have to be before the second mortgage can be “stripped off”? If the home is only slightly under water and the housing market is increasing why should they be able to get rid of their second mortgage and benefit from the new equity in their home? In addition, they argue that banks will be less willing to loan where they would be the junior lien holder thus, hurting the housing market.
In any case this will be an interesting ruling when it comes out, most likely in June. It could play a big part in what you are able to do when filing a chapter 7 petition. It also shows the importance of staying up to date on your bankruptcy training. When you keep up on the current trends you will offer much more value to the attorneys you are working for.
At 713 Training we offer the most current and up to date bankruptcy training. Our training will give anyone, with or without experience, the skills they need to properly and thoroughly prepare chapter 7 and 13 bankruptcies for licensed attorneys. Whether you are looking at bankruptcy training for the first time or just a refresher course we have something for you.