WASHINGTON Nov 17 The U.S. Supreme Court agreed
on Monday to hear two cases brought by Bank of America Corp
questioning whether a second mortgage on an "underwater" house -
one with a mortgage balance exceeding its current value - can be
voided during bankruptcy.
Both cases the justices agreed to hear come from Florida,
where many homeowners have struggled to pay their mortgages
following the recent housing crisis.
The homeowners in the two cases, David Caulkett and Edelmiro
Toledo-Cardona, both won before the regional appeals court that
The 11th U.S. Circuit Court of Appeals ruled that homeowners
in Chapter 7 bankruptcy can void - or in bankruptcy terms "strip
off" - a second mortgage when the debt owed to the holder of the
first mortgage is more than the property's current value.
That means the lender loses its ability to foreclose on the
property even if its value increases.
Bank of America, which is the second mortgage holder
in both cases, said in court papers that the approach taken by
the 11th Circuit is different than other appeals courts around
the country. The bank says that potentially thousands of cases
pending in lower courts could be affected by how the Supreme
A decision is due by the end of June.
The cases are Bank of America v. Caulkett and Bank of
America v. Toledo-Cardona, U.S. Supreme Court, Nos. 13-1421 and
(Reporting by Lawrence Hurley; Editing by Will Dunham)