HOMEOWNER WIN FIRST ROUND
UPDATE: August 28, 2019:
Bankruptcy Judge James L. Garrity, Jr. of Manhattan ruled that a plan cannot cut off a homeowner’s defenses and rights of recoupment against someone who purchases his or her mortgage. The Judge held that the Ditech chapter 11 plan failed the “best interests test” because it did not provide consumers with a recovery equal to what they would realize in chapter 7, where Section 363(o) would apply and where their claims would survive against a purchaser.
July 23, 2019 – According to an article in the New York Banker: Bank of America, which took heat for how it treated customers in the mortgage crisis a decade ago, has emerged as a champion of elderly borrowers in Ditech’s second trip through bankruptcy.
Ditech’s proposed sale of reverse mortgage business exposes elderly to financial disaster
The bank is siding with a growing list of groups, including the U.S. trustee, attorneys general from several states and consumers, who object to Ditech’s plan to sell its reverse mortgage business.
BofA, for its part, has warned that the sale could leave thousands of BofA’s elderly borrowers without promised services on their loans, according to a court filing.
The reverse mortgages are held by people with an average age of 81, and for many of them, the loan is their primary source of income, court documents show. Some of the loans date from before the financial crisis, according a person familiar with the situation.
“They rely on this income to fund their basic living expenses,” the bank said in the filing. “Any interruption in the servicing of these reverse mortgage loans could have severe consequences for these borrowers.”
MUSINGS FROM DIANE:


Diane is a well respected Arizona bankruptcy and foreclosure attorney. As a retired law professor, she believes in offering everyone, not just her clients, advice about bankruptcy and Arizona foreclosure laws. Diane is also a mentor to hundreds of Arizona attorneys.
*Important Note from Diane: Everything on this web site is offered for educational purposes only and not intended to provide legal advice, nor create an attorney client relationship between you, me, or the author of any article. Information in this web site should not be used as a substitute for competent legal advice from an attorney familiar with your personal circumstances and licensed to practice law in your state. Make sure to check out their reviews.*
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