Debtor-Owner Allowed to Modify Mortgage in Bankruptcy Even if Debtor Is Not Obligor Under the Mortgage Loan

In a recent decision in In re Taing, the U.S. Bankruptcy Court for the District of Massachusetts held that a mortgagee holds a claim that could be modified by a Chapter 11 plan even if the debtor was not indebted under the mortgage, but limited the ability to “cram down” the plan terms against the lender to the extent it modified the lender’s rights against the nondebtor obligor.

November 25, 2024 at 11:30 AM

7 minute read

By Andrew C. Kassner

By Joseph N. Argentina Jr.

As the old saying goes—interesting facts make interesting law. In this post-great recession era where mortgage lenders are carefully scrutinizing borrowers for credit worthiness and have tightened underwriting criteria, the assumption is that they know the identity of their borrowers, and if the mortgaged property is transferred, the lender can demand payment of its loan.

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