Comments on Homestead Blog Entry

My September 16 blog entry on a Bankruptcy Court decision on the effect of refinancing on a Declaration of Homestead has prompted some replies from the legal community. Your feedback is terrific - we want this to become more of a dialogue than a monologue. In keeping with that concept, here's the gist of one comment:

I read with interest your recent blog on the Lawyers Weekly article on the DesRoches Bankruptcy case. I agree with you that it is a confusing decision, and one must read it with care, the problem that I have is with your "unscientific" conclusion at the end of the blog. I fear that people, including those who should know better, will read your blog and conclude that they should re-record a homestead when they should not. You have the opportunity to influence because of your position and the presumption that you know about these things. I also think that the percentage of lawyers who say that you should not re-record is significantly greater than 50%. I personally think that in most cases, it is not necessary to re-record a homestead and it is costing people needless money to do so, and possibly hurting them vis a vis creditors. The VAST majority of mortgages contain a release of homestead, including all FNMA/FHLMC mortgage forms, and most HELOC forms. Under DesRoches analysis and its emphasis on the fact that the mortgage did not contain a release of homestead, the court made it clear that if there were such a release, the mortgage would act as a subordination. In either case the result would have been the same for the DesRoches, release or subordination since they had no equity in the property beyond the mortgages. They were really looking for a benefit that most would not expect them to have received.

If you have any thoughts on this topic, please use the "comment" feature below to respond.