No One Gets a Free House—Unless the Statute of Limitations Runs

“No one gets a free house.” The Honorable Michael B. Kaplan of the Bankruptcy Court for the District of New Jersey begins his opinion in Washington v. Specialized Loan Servicing, LLC, No. 14-01319 (TBA), 2014 WL 5714586, at *1 (Bankr. D.N.J. Nov. 5, 2014), with this oft-repeated maxim from bankruptcy courts around the country. However, Judge Kaplan, “with proper measure of disquiet and chagrin,” retreated from this position and, “with figurative hand holding the nose,” granted the debtor’s motion for summary judgment in an adversary proceeding to determine the extent and validity of the defendant creditors’ note and mortgage. (The defendant creditors are Specialized Loan Servicing, LLC (SLS) and the Bank of New York Mellon (BONY) (as trustee for the certificate holders of the CWABS, Inc., asset-backed certificates, Series 2007–5).) Accordingly, the debtor’s mortgage lien was held to be void under 11 U.S.C. § 506(d).