Mortgage

FinTech Trends and Issues

BAPCPA Didn’t Entirely Stop Mortgages from ‘Riding Through’ Chapter 7

The lender’s failure to demand reaffirmation before discharge in chapter 7 barred enforcement of a default based on the filing of bankruptcy.

In Divided Opinion, Fifth Circuit Confirms Secured Lenders May Not Reform Security Instruments Post-Petition

If a mortgage is ambiguous or contains a mistake, a lender may generally reform the mortgage under state law. [1] But what if a borrower files a bankruptcy petition before a lender does so? In a divided opinion, the U.S. Court of Appeals for the Fifth Circuit confirmed that a lender may not reform a mortgage post-petition. [2] The dissent, however, offers lenders a potential pathway around this prohibition in future cases.