The U.S. Supreme Court yesterday handed a win to Bank of America Corp., and, by extension, to other commercial lenders, by ruling that a second mortgage on an "underwater" home — one with a mortgage balance exceeding its current value — cannot be voided during bankruptcy, Reuters reported yesterday. On a unanimous vote, the Court ruled against two homeowners, David Caulkett and Edelmiro Toledo-Cardona, in Florida, where many homeowners have struggled to pay their mortgages following the recent housing crisis. Caulkett and Toledo-Cardona had both won before the regional appeals court that oversees Florida. The U.S. Court of Appeals for the 11th Circuit had ruled that homeowners in chapter 7 bankruptcy can void a second mortgage when the debt owed to the holder of the first mortgage is more than the property's current value. But Bank of America, which is the second mortgage holder in both cases, argued in court papers that the approach taken by the 11th Circuit was different than that used in other appeals courts around the country. The cases are Bank of America v. Caulkett and Bank of America v. Toledo-Cardona, U.S. Supreme Court, Nos. 13-1421 and 14-163. Read more.
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