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Two Florida cases prompt Supreme Court consideration

Florida residents continue to be confronted by serious financial challenges, despite the fact that there is evidence to suggest that the nation's economy is beginning to recover from the recession. As a result, foreclosure and Chapter 7 bankruptcy are a very real prospect for many. And given that the state's real estate market has not yet fully stabilized, many homeowners and lenders alike have major concerns about how to address underwater mortgages.

According to one source, Florida has the second-highest rate of underwater mortgages in the nation, equaling more than one quarter of all mortgages in the state. That is why Bank of America is hoping that the U. S. Supreme Court will offer clarity and consistency to how to address underwater second mortgages in chapter 7 bankruptcy cases.

The apparent lack of clarity over whether or not second mortgages should become void in bankruptcy was caused, according to Bank of America, by a ruling issued by the 11th U. S. Court of Appeals in response to two Florida cases. The court ruled to nullify the underwater second mortgages in both cases, and is accused by Bank of America of setting an inappropriate precedent in the process. Representatives for the homeowners in those cases claim, however, that the issue of underwater second mortgages is unique.

Now, the Supreme Court is scheduled to weigh in on the issue, and decide if second mortgages can be void in bankruptcy in cases where the amount owed on the first mortgage is greater than the home's market value. Whatever decision the Supreme Court makes may have a profound impact on bankruptcy and foreclosure cases around the country. Anyone with concerns about their mortgage or other financial issues to seek legal counsel any time.

Source: Bradenton Herald, "Court to consider when second mortgage can be void," Nov. 17, 2014

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