Judge Rules Against Bank in Foreclosure

NASHVILLE, Tenn. (AP) — A federal bankruptcy judge in Nashville has ordered the sale of a flood victim’s home after the lender refused to foreclose, in what legal observers say is a first-of-its-kind ruling.
Sheryl Pigg lost nearly everything in the 2010 flood, according to The Tennessean. She ultimately found a new home, declared bankruptcy and discharged her debts.
But a 2005 change to federal bankruptcy code made Pigg liable for continuing homeowners association fees at her abandoned home, because she was still the legal owner. Pigg sued mortgage holder Bank of America to get the lender to foreclose, accept a deed in lieu of foreclosure or allow a sale of the Nashville condominium.
In his ruling, Judge George Paine II ordered Pigg’s bankruptcy reopened so that a trustee can sell the home, with the proceeds going first to the homeowner’s association and then the bank. He reasoned that Bank of America has consented to the sale of the flood-damaged condominium through its inaction.
“With the real estate collapse, lenders, who otherwise have the right to do so, are choosing not to foreclose on their collateral leaving homeowners in limbo,” Paine wrote. “Congress’ broadening of (the bankruptcy code) to protect HOAs deprives the debtor of a fresh start, and thwarts the goals of the entire Bankruptcy Code.”


NASHVILLE, Tenn. (AP) — A federal bankruptcy judge in Nashville has ordered the sale of a flood victim’s home after the lender refused to foreclose, in what legal observers say is a first-of-its-kind ruling.
Sheryl Pigg lost nearly everything in the 2010 flood, according to The Tennessean. She ultimately found a new home, declared bankruptcy and discharged her debts.
But a 2005 change to federal bankruptcy code made Pigg liable for continuing homeowners association fees at her abandoned home, because she was still the legal owner. Pigg sued mortgage holder Bank of America to get the lender to foreclose, accept a deed in lieu of foreclosure or allow a sale of the Nashville condominium.
In his ruling, Judge George Paine II ordered Pigg’s bankruptcy reopened so that a trustee can sell the home, with the proceeds going first to the homeowner’s association and then the bank. He reasoned that Bank of America has consented to the sale of the flood-damaged condominium through its inaction.
“With the real estate collapse, lenders, who otherwise have the right to do so, are choosing not to foreclose on their collateral leaving homeowners in limbo,” Paine wrote. “Congress’ broadening of (the bankruptcy code) to protect HOAs deprives the debtor of a fresh start, and thwarts the goals of the entire Bankruptcy Code.”

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