WASHINGTON (11/18/14)--The nation's highest court is going to scrutinize whether or not a second mortgage on an underwater house can be voided during bankruptcy proceedings, according to a report from Reuters. The Supreme Court agreed Monday to hear two cases from Bank of America.
According to the report, two Florida homeowners were victorious in the 11th Circuit Court of Appeals, which ruled in 2012 that homeowners in bankruptcy can void a second mortgage when the debt owed to the holder of the first mortgage is more than the property's current value.
Bank of America is the second mortgage holder in both cases. In court papers, it said that the 11th Circuit's approach is different from other appeals courts around the country. The bank claims the decision could affect thousands of similar cases.
If the 11th Circuit's decision is upheld, lenders could lose the ability to foreclose on the property, even if its value increases.
According to Reuters, the court is likely to make a decision around June 2015.