Foreclosure: First Circuit would not force mortgagee to foreclose.

Canning v. Beneficial Maine, Inc. (In re Canning), ___ F.3d ___(1st Cir. Feb. 1, 2013).

The refusal by the Chapter 7 debtors’ mortgage creditor to accede to the debtors’ demand that the creditor either foreclose the mortgage on their residence, which the debtors had surrendered and vacated, or release its lien on the property did not violate the discharge injunction. Distinguishing In re Pratt, 462 F.3d 14 (1st Cir. 2006), in which the court held that a secured creditor's refusal to foreclose or release its lien on an inoperable, worthless car was intended to objectively coerce the debtor into paying a discharged debt, the court observed that the creditor offered to release its lien through either a settlement offer or a short sale, which indicated the intent to collect no more than the value secured by the underlying lien, as well as a willingness to negotiate a palatable solution for all involved.

Click here for the full opinion from the court's web site:  Click here: USCA1 Opinion