E.D.N.C.: In re Hurlburt- Anti-Deficiency Mortgage Statute does not Circumvent Anti-Modification Provisions

Summary: After direct appeal to the 4th Circuit was declined, the district court affirmed the opinion of the bankruptcy court in Hurlburt that the anti-deficiency statute of N.C.G.S. § 45-21.28 does not allow debtors to circumvent the anti-modification provisions of 11 U.S.C. § 1322(b)(2) and (c)(2), with Witt v. United Companies Lending Corp. (In Re Witt), 113 F.3d 508 (4th Cir. 1997) controlling. Commentary: The district court did explicitly draw attention to the fact that in neither Witt nor Nobelman v. American Savings Bank, 508 U.S. 324 (1994), did those courts address mortgages where anti-deficiency statutes would have precluded an unsecured claim, thereby limiting the mortgage claim to the value of the collateral. This and the substantial criticism of Witt notwithstanding, the district court was bound by that decision. This is, one suspects, just the second step in an attempt to have the 4th Circuit revisit or narrow Witt and failing that, seek certiori from the Supreme Court to finally address this issue. For a copy of the opinion, please see: Hurlburt- Anti-Deficiency Mortgage Statute does not Circumvent Anti-Modification Provisions