Mortgage Cram Down Report

Last week there was a great deal of controversy surrounding the topic of first mortgage cram downs based upon articles I had written about the subject.  Some attorneys became angry and upset while others researched the topic and sent me their comments which appear below.

I hope this article helps to resolve the issue and to calm down the attorneys who were angry and condescending in their analysis.  Let us always remember that we are all in the same boat and we should have a heart to help each other rather than post cruel slurs in an attempt to hurt others who try to do the best they can, based upon the information they know and experiences they have endured.

I wish all of you a happy Fourth of July.

Victoria Ring



I went to a meeting at the Chapter 13 Trustee’s office for the Central District of California in August 2009 and was told by the Trustee that California would allow cram downs on first mortgages IF a hardship situation existed.  This is why many California attorneys proposed them and this is why you undoubtedly worked on them during the past 2-3 years.  However, almost 30 days later, the Chapter 13 Trustee posted a retraction stating that he made a mistake and he was actually referring to second mortgages.  I am sure the attorneys you were working with forgot to tell you this.

Although I did not examine the specific cases you worked on for these attorneys, I believe the reason some of the cases in California were confirmed for first mortgage cram downs was because the home was not placed inside the Plan. Therefore, the amount never really mattered to the Trustee since their office was not paying the claim.  I am sure that the first mortgage company filed a Proof of Claim on the full amount; therefore, the Proof of Claim amount was honored and no Objection was filed.

Finally, even though first mortgage cram downs are not legally recognized, your thoughts in educating others about first mortgage cram downs is exemplary. This legislation has already passed in the House and many Senators also voted for the Bill. I believe first mortgage cram downs will be realized in the near future and I thank you for all you continue to do to support this industry and help debtors.

Lydia Zlobnicki, JD


Here in the Western District of Washington State, an Adversary Matter has to be filed in order to strip or cram down a mortgage.

Amy Wishart
Do It Yourself Documents


The Southern District of Florida will not allow modification of the first mortgage upon the primary residence.

Here is an interesting twist, though:  one of the 2 judges in the West Palm Beach division of the Southern District, Erik Kimball, takes the position that if a stripped off 2nd mortgage, or a stripped down 1st mortgage on a property other than the primary residence, causes enough stripped off secured debt becomes enough unsecured as to disqualify the debtor for a Chapter 13 under Sec. 109(e)

Jeffrey Lampert


Under Chapter 13 you have Section 1322(b)(2) and we can avoid junior liens via this section and ‘cram down’ non-owner occupied properties.  We have similar Sections under Chapter 11.

Congress has not granted bankruptcy courts to ‘cram down’ or otherwise reduce the first mortgage on a debtor’s primary residence.  I am reporting in from the Central District of California


Christine Wilton
Greifendorff Law Offices, PC


I have been out of bankruptcy for a while, however as of last year, our three districts in Oklahoma were uniform in their treatment of home loans – IF a home was worth less money than the sum of the first and 2nd loan, the 2nd was treated as an unsecured debt, and paid that way, with its lien being stripped away. First loan cram downs were not allowed at all. I do not believe that has changed, however as I said, I have not been practicing this year, so am not completely positive.

Michael McCoy
Oklahoma City, OK


In 2007, our office was successful in cramming down a first mortgage because Washington Mutual was going out of business and did not file a Proof of Claim or Objection to Plan.  Since we listed the claim amount the same as the appraised value, the Plan was confirmed.

However, I recently learned that only second mortgages are permitted for cram downs in Ohio, but I do know that first mortgage cram downs are sometimes confirmed also.

Charlie Hafer
Southern District of Ohio


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