- Court: United States Supreme Court
- Area(s) of Law: Bankruptcy Law
- Date Filed: June 1, 2015
- Case #: 13-1421
- Judge(s)/Court Below: THOMAS, J., delivered the opinion of the Court, in which ROBERTS, C. J., and SCALIA, GINSBURG, ALITO, and KAGAN, JJ., joined, and in which KENNEDY, BREYER, and SOTOMAYOR, JJ., joined except as to the footnote.
- Full Text Opinion
Petitioner holds junior mortgages for both Respondents who also have senior mortgages. Both Respondents carry senior mortgages that exceed the value of their homes in addition to the junior mortgages, making the junior mortgage entirely underwater. Respondents are attempting to void their junior mortgages in Chapter 7 bankruptcy under section 506(d) of the Bankruptcy Code. The district court allowed Respondents to void their junior mortgages and the Eleventh Circuit upheld the decisions. The Supreme Court did not allow Respondents to void their junior mortgages under 506(d). The Court previously held in Dewsnup that a "secured claim" in 506(d) does not allow a debtor to reduce the amount owed on a junior mortgage that is partially underwater. The Court found no reason to hold that a junior mortgage entirely underwater should be treated differently.