In a ruling of interest to mortgage lenders, a federal bankruptcy judge has held that even a grossly negligent lender is entitled to the benefit of equitable subrogation in determining priority. Judge Kathryn Ferguson, with no precedent to guide her on whether gross negligence or reckless disregard of industry practice is a bar to equitable subrogation, looked at equitable subrogation decisions by lower New Jersey courts and federal case law, and held that the courts would not find gross negligence an absolute bar.
January 19, 2010 at 12:00 AM
1 minute read
The original version of this story was published on Law.Com
In a ruling of interest to mortgage lenders, a bankruptcy judge has ruled that even a grossly negligent lender is entitled to the benefit of equitable subrogation in determining priority.
The Jan. 11 decision is good news for Countrywide Homes Loans Inc., which is trying to recover on a $691,000 loan made to Richard Spair in 2004 for a refinance of his Wall Township, N.J., home. Countrywide acquired the mortgage from Quicken Loans in 2006.
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