The Real Deal Miami

Judge approves rare residential loan modification

Miami man had been renting out half his building
May 15, 2014 03:45PM

imgres-1A judge agreed to lower the debt on a Miami man’s residential mortgage by $200,000 in a Chapter 13 bankruptcy case, even though he made a profit renting part of his property.

Bankruptcy code typically bans the modification of interest rates, principal and other terms on residential first priority mortgages, according to the Daily Business Review.

For “bankruptcy purposes the inquiry is not whether the property is the debtor’s primary residence,” Judge A. Jay Cristol wrote. “Rather the inquiry is whether the property is solely the borrower’s primary residence. Where the borrower resides in one unit and rents out the other unit of a duplex, the property is not solely the borrower’s primary residence and as such the mortgage is subject to modification.”

The lender in the case, Landsdowne, argued that it expected Luis Ramirez to occupy the full two-unit building. But the judge disagreed. [DBR] Christopher Cameron