The Supreme Court of the U.S. this week ruled unanimously in favor of Bank of America regarding two lawsuits involving negative equity, second liens and Chapter 7 bankruptcy. While the ruling favors holders of second liens, industry analysts suggest that it could have an impact on loss mitigation negotiations between lien holders and prompt borrowers to shift to Chapter 13 bankruptcy filings. The cases considered were Bank of America v. Caulkett and Bank of America v. Toledo-Cardona. In both cases, borrowers in a negative equity position on their second liens sought to void the second liens as part of a Chapter 7 bankruptcy. The Eleventh Circuit Court of Appeals had ruled in favor of borrowers in such cases. “The court’s decision not only resolved...