Bankruptcy Judges Melvin S. Hoffman and Henry J. Boroff, both from Massachusetts, disagree on forcing a mortgage-holder to take title to property under a chapter 13 plan.
Last year, Judge Hoffman held that the chapter 13 plan in a case called Sagendorph could force a lender to take title. Otherwise, the debtor would be stuck with nondischarged post-petition costs for maintaining and insuring the property until the lender forecloses.
Judge Boroff reached the opposite result in an opinion on Jan. 13 and refused to confirm a plan calling for so-called forced vesting. He listed lower court decisions from around the country reaching different results on the issue.
Previously, Judge Boroff held that Section 1325(a)(5), which lists mandatory plan provisions, bars forced vesting unless a lender consents. He held in the new case that Section 1322(a)(9)’s optional provisions do not change the result, even though he was sympathetic to the plight of communities suffering from a blight of abandoned homes.