Degiacomo v. Traverse, No. 13-9002 (1st Cir. 2014)
Annotate this CaseIn 2005, Debtor secured a loan with a mortgage on her home and stayed current on all mortgage payments on the property. Debtor’s bank, however, failed to record the mortgage with the appropriate registry. In 2011, Debtor filed a petition for Chapter 7 bankruptcy. Although Debtor’s home was subject to a homestead exemption, the Trustee of Debtor’s bankruptcy estate sought to sell the home as property of the bankruptcy estate. Accordingly, Trustee filed a complaint to avoid the unrecorded mortgage and to preserve it for the benefit of the estate. The bankruptcy court granted summary judgment for the Trustee, and the Bankruptcy Appellate Panel (BAP) affirmed. The First Circuit reversed, holding that the Trustee’s lien avoidance and preservation powers did not justify him in selling Debtor’s home as property of the bankruptcy estate.
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