In re Pace

(B.A.P. 6th Cir. June 20, 2017)

The Sixth Circuit B.A.P. holds that 11 U.S.C. § 522(f)(2)(C) does not preclude avoidance of mortgage deficiency judgment liens. Rather, based on the plain meaning of the statute, that section simply makes clear that entry of a judgment in a foreclosure action does not convert the underlying mortgage agreement into a judicial lien that may be avoided. Here, the bankruptcy court denied the debtor’s motion to avoid a deficiency judgment lien following a real property foreclosure action, stating that § 522(f)(2)(C) bars avoidance of a foreclosure deficiency judgment lien. The B.A.P. analyzes conflicting case law from multiple jurisdictions and reverses the bankruptcy court.

Judge: Wise

Attorney for Debtor: T. Robert Bricker

Author: Matt Lindblom

2017-06-20 – in re pace

Rogan v. U.S. Bank, N.A. (In re Partin)

(Bankr. E.D. Ky. Sep. 9, 2014)

The bankruptcy court finds that the bank’s three mortgages were not in recordable form when they were accepted by the county clerk, and thus the trustee can avoid them. KRS § 382.330 requires the date and maturity date of the underlying obligation to be included in recordable instruments. The three mortgages only contained the maturity date for the underlying promissory notes. Under Kentucky case law, the trustee, as a hypothetical lien creditor or bona fide purchaser, did not have constructive notice even though the county clerk accepted and recorded the noncompliant mortgages. Opinion below.

2014-09-09 – in re partin