WASHINGTON (CN) - Bank of America persuaded the U.S. Supreme Court on Monday to take up cases in which its "underwater" liens on bankrupt individuals were voided.
The 11th Circuit ruled against Bank of America in both of the cases that the Supreme Court accepted. Its brief decisions in each case stem from decisions by the Middle District of Florida.
In the first, delivered on May 15, Bank of America had a junior lien on property owned by Edelmiro Toledo-Cardona.
This individual had two mortgage liens at the time he filed for Chapter 7 bankruptcy, and the debt owed on the first mortgage exceeded the fair-market value of the property.
Bank of America held the second mortgage, worth more $100,000, but the bankruptcy court considered this junior lien wholly "underwater" because the debt secured by the first lien exceeded the value of the property.
As such the bankruptcy court agreed to "strip off" or "void" Bank of America's lien, and the District Court affirmed.
The District Court also affirmed the void of another unsecured second-priority lien that Bank of America had on a different Chapter 7 debtor, David Caulkett.
After the 11th Circuit affirmed for Toledo-Cardona on May 15, 2014, it cited that case in affirming for Caulkett on May 21.
The Supreme Court granted Bank of America writs of certiorari in both cases Monday. With the exception of consolidating the cases for an hour of oral argument, and permitting the filing of an amicus brief from a group led by the Loan Syndications and Trading Association, the court made no comment on the case.
Read the Top 8
Sign up for the Top 8, a roundup of the day's top stories delivered directly to your inbox Monday through Friday.