High Court rules homeowners can’t void second mortgage in bankruptcy

06/02/2015 // JusticeNewsFlash // (press release)

Washington – The Supreme Court has ruled that homeowners cannot void a second mortgage if they have declared bankruptcy. As reported by the Associated Press, the high court determined that even if a home’s value is less than what is owed on the primary mortgage, the second loan cannot be “stripped off.”

The ruling stems from two Florida cases involving property owners who were allowed to nullify their Bank of America held second loans by lower courts. The bank alleged that the rulings in the cases, which had been affirmed by the Atlanta-based 11th U.S. Circuit Court of Appeals, conflicted with a precedent that had been set by the Supreme Court.

Bank of America claims that many homeowners in states covered by the 11th Circuit including Florida and Alabama, had sought to void second mortgages that were underwater after the practice was endorsed by the appeals court.

The homeowners assert that the second loans had no value.

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