Third Circuit Upholds Foreclosure Sale Against Preference Attack

On July 19, the Third Circuit Court of Appeals entered a decision upholding the results of a foreclosure sale against a debtor's allegation that the sale was a preference because the bankruptcy estate could have sold the property for a higher price. Veltre v. Fifth Third Bank (In re Veltre), Case No. 17-2889 (3d Cir. July 19, 2018).

Veltre's home was encumbered by two mortgages prior to her bankruptcy; a senior mortgage in favor of Capital One Bank and a second mortgage held by another bank. Veltre defaulted on her loan, at which point the first lienholder foreclosed and the property went to sheriff's sale. At the sale, the second lienholder purchased the home at auction for $90,000, which paid off the first mortgage in full.