Lender Refuses To Accept Underwater-Home Title Surrender, Won't Foreclose, Won't Release Lien; Forceful Negotiation Or An Improper Coercion In Violation Of Bankruptcy Discharge Injunction??? 'It Depends,' Says Federal Appeals Court

From Bankruptcy-RealEstate-Insights.com:

• After filing a chapter 7 bankruptcy, the debtors tried to surrender their residence to the mortgage lender. After the bankruptcy the lender refused to accept a surrender, refused to foreclose and refused to release its lien.
  
  The debtors brought an adversary proceeding claiming that, among other things, this refusal constituted a violation of the discharge injunction they received in bankruptcy. The bankruptcy court found no violation; the Bankruptcy Appellate Panel agreed; and on appeal the 1st Circuit affirmed – but with some cautionary comments.(1)

For more, see Discharge Injunction Violation Can a Lender Refuse to Foreclose, Release Its Lien, or Accept Surrender of a Property.

For the ruling, see Canning v. Beneficial Maine, Inc. (In re Canning), 706 F.3d 64 (1st Cir. 2013).

(1) The court closed with these cautionary comments:

• A coda is necessary before we conclude. Today, where both lenders and homeowners strive to recuperate from hard economic times, this opinion should not be relied upon to leverage a way out of the bargaining table.
  
  It is one thing to insist upon state-law rights in refusing a recalcitrant “foreclosure or release” demand by a debtor, and completely another to refuse negotiating with a debtor willing to compromise.
  
  Put differently, while this case may provide some guidance on the dos and don’ts applicable to the bargaining dynamics between secured creditors and bankruptcy debtors, our remarks in Pratt still control: “the line between forceful negotiation and improper coercion is not always easy to delineate, and each case must therefore be assessed in the context of its particular facts.” 462 F.3d at 19.