The Supreme Court today will hear consolidated oral argument in the cases of Bank of America v. Caulkett and Bank of America v. Toledo-Cardona. The two cases, deal with a common scenario in the wake of the housing crisis, according to a SCOTUS Blog argument preview: a homeowner who files for chapter 7 bankruptcy has two mortgages, but the value of the house is less than the primary mortgage. Does the Bankruptcy Code allow courts to void the second mortgage, which is essentially worthless? The Supreme Court’s answer, according to the blog could hurt the bottom line of banks that have issued second mortgages or, alternatively, reduce the flexibility of debtors and banks holding first mortgages to work together to stave off foreclosures and keep the homeowners in their houses. Click here to read the full post.
For further information on the cases, including petitions and amicus briefs filed before the Supreme Court, be sure to visit ABI’s Newsroom.
