Some First Mortgages May be Stripable

[AlbanyMan]

https://ecf.dcb.uscourts.gov/cgi-bin/show_p...?2008-00686-107

[LadyInTheRed]

The link doesn't work for me.

[LadyInTheRed]

Justbroke posted the link in the other thread where you wrote about this https://ecf.dcb.uscourts.gov/cgi-bin...2008-00686-109

As Justbroke pointed out, this case doesn't change the fact that you can't bifurcate a loan on property that is your primary residence. The debtor in the case had actually moved out of the property and the dispute was whether it was in fact her primary residence. The court ruled it wasn't. Maybe I'm missing something, but I don't see the implication that she may have been able to bifurcate the loan even if she still lived there.

[NoTomatoCan]

Justbroke posted the link in the other thread where you wrote about this https://ecf.dcb.uscourts.gov/cgi-bin...2008-00686-109

As Justbroke pointed out, this case doesn't change the fact that you can't bifurcate a loan on property that is your primary residence. The debtor in the case had actually moved out of the property and the dispute was whether it was in fact her primary residence. The court ruled it wasn't. Maybe I'm missing something, but I don't see the implication that she may have been able to bifurcate the loan even if she still lived there.

I agree. The case seems to turn on simply whether the individual was living in the property as their primary residence - not much else. I think the fact she had moved out (and had moving receipts) was a key piece of evidence. Had she still been living in the property and using it as a business I do not believe the case would necessarily have had the same outcome.



If a property is your primary residence AND a business, I do not think this case would support you being able to modify the loan.

HOWEVER - where I do see this being of interest is for the folks who "buy and bail". If they were to move from an underwater primary residence, rent it out (or use it primarily for a business like this case) and were living someplace else then this case provides good support.

[HHM]

I concur with the others; this issue isn't particularly novel. Everyone agrees that primary mortgages can be crammed down on non-primary residence. This court was only trying to determine whether the condo should be considered a primary residence.

However, we still haven't touched on the big problem of cramming down mortgages, you must pay the value of the cram down inside the plan. For example, if the mortgage is $120,000, and the cram down value is $80,000, that $80K must be paid, in full, within the 60 months of the chapter 13 plan. So, from a practical perspective, although it is possible to cram a primary mortgage under certain circumstances, for most debtors, it is not practical to do so because they have no means to pay the crammed down amount.

[AlbanyMan]

[HHM]

I appreciate the creativity, but you are not going to be able to do 522(f) on this; you haven't read 522(f) closely enough, it ONLY applies to "judicial liens" on real estate, as for the rest of the provision, it does not apply to real estate it only applies to personal property (household goods, furnishings, electronics, etc).

Let's clear up one conceptual mistake, a second mortgage is not avoided under 522(f), it is avoided under 506(d). The problem is, the 1st mortgage WILL ALWAYS have an allowed secured claim to at least the value of the property. There IS NO scenario in which the homestead exemption trumps the primary mortgage...sorry.

I am not sure what you end game is, but if your goal is to try and cram down a primary mortgage on a house you actually live in, forget it. It ain't gonna happen. Despite this one court's ruling (which is totally consistent with what I said above) the majority is pretty clear on this issue. Also, you will run into some recent case law regarding whether the bank has to object. Generally, 1322 is considered self executing. The court CANNOT confirm a plan that proposes to cram down a 1st mortgage on a primary residence.

[AlbanyMan]

I appreciate the creativity, but you are not going to be able to do 522(f) on this; you haven't read 522(f) closely enough, it ONLY applies to "judicial liens" on real estate, as for the rest of the provision, it does not apply to real estate it only applies to personal property (household goods, furnishings, electronics, etc).

Let's clear up one conceptual mistake, a second mortgage is not avoided under 522(f), it is avoided under 506(d). The problem is, the 1st mortgage WILL ALWAYS have an allowed secured claim to at least the value of the property. There IS NOT scenario in which the homestead exemption trumps the primary mortgage...sorry.

I am not sure what you end game is, but if your goal is to try and cram down a primary mortgage on a house you actually live in, forget it. It ain't gonna happen. Despite this one court's ruling (which is totally consistent with what I said above) the majority is pretty clear on this issue. Also, you will run into some recent case law regarding whether the bank has to object. Generally, 1322 is considered self executing. The court CANNOT confirm a plan that proposes to cram down a 1st mortgage on a primary residence.

I agree 1322 is self exicuting in some situations, if not most. However - when there is the implied temporal claus, according to that judge 1322 would have at best ceased on the 1 year post closing date. If that is indeed the case and some mortgages are not protected or receive time limited protection, than there may be other conditions within a plan which effect the creditors.

In my case: My Plan is Confirmed and Completed. My Plan states that "all accounts become current on date of filing and that interest and late fees cease accuring on all accounts on date of filing."

Under Secured Creditors whos claims are allowed:
"A 1st mortgage lien taken 6/05 by WFNB. Debtor cured default, creditor withdrew its claim and will not survive this bankruptcy. Debtor to continue regular payments."

I was in full foreclosure and they demanded full payment prior to BK.

under Discharge within my plan:
"Upon confirmation and receipt of the full base amount, the debtor will be entitled to a successful discharge and debtor and all entities will be bound by the terms of the confirmed plan and discharge. Unless provided by court order, no obligation to any creditor will remain and this plan along with the confirnation order and order of discharge will consitite a complete and full satisfaction and releases all liens"

one other note, although the creditor withdrew its claim, it did not do so until after the plan was confirmed and without notice and motion as required, further they unoffically amended the claim upward and the letter withdrawing its claim made no mention of the unoffical amended claim.

SO because WF is being a complete idiot I want to find every tool in my toolbox to defeat the lien. so if this would at least make the plan provision legal then I am on my way.

[HHM]

So, you are saying you are OUT of chapter 13. Your chapter 13 has been discharged.

I am not sure how to say this in a way that is not at least tacitly rude, there is no option to defeat the lien on this point. a Bankruptcy CANNOT discharge lien. Liens can only be avoided or crammed down. If you didn't file a motion in your BK to do this, then the lien is intact. I am not sure what you hope to accomplish.

The lien survived, if you stop making payments at this point, they can foreclose. You may be missing a fundamental point here, there is a difference between the "lien" (or security interest) and the "loan" (or note). The loan is your personally promise to "pay" the loan; that obligation is discharged in bankruptcy. But a lien (or security) interest is NEVER discharged. The lien can only be avoided or crammed down. Doesn't sound like you did either in your chapter 13 and wouldn't have been able to do so anyway.

Sounds like you are grasping at straws.