The U.S. Supreme Court has agreed to hear two cases in which Bank of America has questioned the practice of voiding second mortgages when homeowners file for bankruptcy protection.
At issue is allowing people in Chapter 7 bankruptcy to "strip off" second mortgages on an underwater home -- one for which the mortgage balance exceeds the home's current value. Courts have been divided over the practice.
This week, the Supreme Court agreed to hear two cases involving Florida homeowners with second mortgages held by the Charlotte bank. The bank has argued that the bankruptcy code does not permit the mortgages to be eliminated.
The hearing comes at a time when many homeowners remain underwater since the housing bubble burst.
In the third quarter of this year, 8.1 million U.S. residential properties were "seriously underwater," according to data firm RealtyTrac. That means the amount still owed on each of those properties is at least 25 percent more than their estimated market value.
Friday, November 21, 2014
BofA to get Supreme Court hearing on second mortgages
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Well, if someone bothered to read the mortgage agreement they make it extremely clear that you are borrowing the money and you have to pay it back no matter what happens to the house. If you don't pay it's not just the house the mortgage holder can claim, they can take any and all of your assets if need be. The banks, unlike the direct loan lenders online, would never loan money to someone who couldn't pay it back - but the government required them to do it and they government guaranteed such loans via Fannie and Freddie.
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