The Supremes Decide Another One . . .

The Supreme Court decided the case of Bank of America, N.A. v. Caulkett. The Court held, unanimously (except for a caustic footnote related to Dewsnup) that a debtor in a chapter 7 cannot void a junior mortgage lien pursuant to Section 506(d) when there is inadequate equity to support the junior lien because a senior mortgage exceeds the value. SCOTUS reinforced Dewsnup in holding that where, as here, the junior lien claims are secured by a lien and allowed under Section 502, that claim cannot be voided under the definition given to the term “allowed secured claim” that was given in Dewsnup. The Court emphasized that when you add the effect of Section 1322(b)(2), the results might well be different, as they were in Nobleman.

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See also:

Supreme Court Ruling Little Help to Struggling Homeowners

Opinion Analysis: Bad News For “Underwater” Homeowners

Justices Agree, But for the Footnote

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