Sounds like you didn’t vote for him.

HECM Vet,rnrnI did not know you are an attorney (just being facetious). Are you certain the Judge did not rely on South Carolina law in part in reaching his conclusion? I have not read the opinion. Can you cite where on the web we can find the actual decision?

While most are looking at this as a negative issue what a great proof that heirs really inherit the home. Not only that but the judge has all but allowed “a measure of assumption” of the reverse mortgage through bankruptcy.

As an originator this is a great and practical illustration of the fact that heirs actually inherit the home.

Section 1322(c)(2) of the bankruptcy code is unambiguous. Read it here:nnhttp://www.doney.net/bkcode/11usc1322.htmnnThis judge wasn’t making new law or applying his personal beliefs. He applied existing law to the facts of this case. nnThe decision requires that the debtor repay the entire debt over five years, at a market rate of interest (in this case, 5.25 percent). It is difficult to see how the lender is being screwed, and the homeowner may have an opportunity to save the home from foreclosure. nnThis is a bankruptcy case; as such, it was decided by a Federal court.

One more judge who feels he has to protect the borrowers and screw the lenders. Let’s see how this one plays out.

The first question is, was this a HECM, a Home Keeper, or a Cash Account? If this was a HECM, it seems that it had not reached its cross over point and been assigned to HUD by the date of death of the borrower. While an interesting case, it was decided in South Carolina.

What does it matter how much the home was worth? It seems the court decided the issue based on principles of equity. The big question is how much precedence will this decision have outside of SC?

No doubt HUD will be looking at this case quite intently. Can and will Financial Freedom or HUD appeal this decision?

What about charging MIP if a HECM? What happens to the FHA insurance at this juncture?

Is Fannie Mae involved and will they have to pay off any investors or will Fannie Mae just be saddled with a questionable payoff plan?rn

Lots of questions, few answers.

Probably one of the “empatheitc judges” that are so in vogue with this administration and empathy trumps rule of law.

The Honorable John E. Waites
United States Bankruptcy Court, Columbia

Judge John E. Waites is a graduate of Davidson College and the University of South Carolina School of Law. On June 27, 1994, he was appointed United States Bankruptcy Judge for the District of South Carolina. Prior to appointment, he was a partner at Nexsen, Pruet, Jacobs and Pollard, specializing in bankruptcy practice. Appointed by the United States Attorney General, Judge Waites served as United States Trustee for the 4th Judicial Circuit and District of Columbia from 1987-1992. Prior to that appointment, he was the Estate Administrator of the U.S. Bankruptcy Court in the District of South Carolina from 1984-1987.

That's an interesting president – I thought Debtors could only take personal debt into their chapter 13. Her Mother aquired the debt, so the daughter isn't obligated, yet she's able to include it in her repayment schedule.

I would never have thought of it … but now heirs have an additional way to pay back a Reverse Mortgage.

HECM Vet,

Did President W. Jefferson Clinton appoint him to the Bankruptcy Court?

rainmand,

This decision is not based on the debtor being personally liable for the debt but rather the jurisdiction of the court over the asset securing the debt. Not only are the personal debts of the petitioner under the oversight of the bankruptcy court but so are her assets. 11 U.S.C. § 1322(c)(2) appears to provide the basis for this decision and states in part: “… a claim secured only by a security interest in real property that is the debtor’s principal residence ….” Notice there is no requirement that the debt be recourse. The claim in this case is not being made against the petitioner but rather her principal residence.

Per the interpretation of the HECM Vet, this section and this section alone is sufficient to authorize the Judge to override the terms of the reverse mortgage note and reschedule repayment over 5 years. I have not read the full decision and do not know if the Judge also relied on some aspect of South Carolina law in reaching his conclusion; however, it seems the HECM Vet is correct which would give this decision national application.

So in response to your comment, while this may not be a “president,” it certainly could set precedence. Again it will be interesting to see if Financial Freedom appeals the decision. If the HECM Vet is correct, why would Financial Freedom appeal it unless they believe that the provision should not apply or if some odd aspect of South Carolina might apply so as to limit the application of the federal provision (— although that seems highly unlikely)?

The case appears to have limited application except in cases where the owner of the home declares bankruptcy. It seems doubtful if the same consideration would be given to the petitioner if the debt was so substantial that the petitioner could not pay it off nearly so quickly or in cases where the balance due exceeded the value of the home at the time of the decision; however, since I am not a practicing attorney, I am just guessing.

It certainly would be much harder to have it apply where there is more than heir and the heirs are not spouses. This is a very interesting decision. I hope to find the full decision soon and quickly read through it.

Trial court decisions (available to those who have need to know and pay a subscription fee) do not create precedent for other courts to follow. If the lender appeals the trial court's decision and the appellate court's decision is published (appellate decisions sometimes are not published because they apply only to the narrow set of facts of a particular case), that will create a precedent for other Federal bankruptcy courts to follow.

All bankruptcy cases are handled by Federal bankruptcy courts; however, state property laws are respected by the court.

Trial court decisions (available to those who have need to know and pay a subscription fee) do not create precedent for other courts to follow. If the lender appeals the trial court’s decision and the appellate court’s decision is published (appellate decisions sometimes are not published because they apply only to the narrow set of facts of a particular case), that will create a precedent for other Federal bankruptcy courts to follow. nnAll bankruptcy cases are handled by Federal bankruptcy courts; however, state property laws are respected by the court.