In this case, Greg's Clients owned a Mobile Home worth $20,000.00 while owing over $100,000.00 on their Mobile Home Loan. Greg filed a Chapter 13 Plan which proposed paying only $20,000.00 on the secured portion of the the Mobile Home Loan and discharging the balance of the loan. This means, at the end of the Clients' Plan, the other $80,000.00 would be discharged and the Clients never had to pay it.
Prior to the decision in this appeal to the United States District Court for the Southern District of Ohio, the Bankruptcy Courts held that a loan encumbering a Mobile Home could NOT be crammed down if the title to the Mobile Home had been surrendered OR the Mobile Home had been permanently affixed to the real property in such a way it met the definition of a fixture under applicable state law. Greg, however, argued that a recent holding by the Sixth Circuit modified this interpretation and the surrender of the title to the Mobile Home was not dispositive on the Cramdown issue.
The Bankruptcy Court, following its prior decisions on identical fact patterns, held that, because the Title to the Mobile Home had been surrendered, the Mobile Home had become Real Property and the Mobile Home Loan could not be subjected to a Cramdown but had to be paid in full.
On appeal, the District Court held that a Mobile Home Loan could be subjected to a Cramdown unless: (1) the Title to the Mobile Home had been surrendered to the Clerk of Court; (2) the Mobile Home was affixed to a permanent foundation; AND (3) the Debtor was the owner of the Mobile Home and the Real Property on which it was located.
Because the Clients Mobile Home in this case was not affixed to a permanent foundation, the District Court approved the Chapter 13 Plan and held the Mobile Home Loan could be subjected to Cramdown and the Clients only had to pay $20,000.00 as opposed to the full secured balance of the loan.