Surrender and Vesting: Shedding the Underwater House

By The Honorable Robert E. Nugent, Chief United States Bankruptcy Judge, District of Kansas (Wichita)

Even before the financial crisis of 2008, home mortgage holders didn’t always hurry to foreclose on and take possession of defaulting debtors’ homes. For reasons of rational economics (or, sometimes, simple inertia), lenders didn’t want their collateral back, even when debtors wanted to give it to them. This left homeowners (and particularly condominium or townhouse owners) saddled with continuing liability for upkeep, common area maintenance, homeowners’ association assessments, or ad valorem property taxes. Not even bankruptcy protected the owners from continued . . .

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