In Re Estel Ray Hougland, Ruth Evelyn Hougland, Debtors. Estel Ray Hougland Ruth Evelyn Hougland v. The Lomas & Nettleton Company, Creditor-Appellant
Opinion
Opinion
Fernandez, J.
The Lomas & Nettleton Company (“Lo-mas”) appeals from the decision of the district court, which reversed an order of the bankruptcy court and directed confirmation of the plan of Estel Ray Hougland and Ruth Evelyn Hougland (“Debtors”) under Chapter 13 of the Bankruptcy Code.
The district court determined that the claim of a lender on residential real estate could be bifurcated into a secured and unsecured portion, and that the lender’s rights under the unsecured portion could be modified. In re Hougland, 93 B.R. 718 (D.Or.1988). We affirm.
BACKGROUND FACTS
On January 20, 1983, the Debtors obtained a loan from Lomas. They executed a note and deed of trust. The deed of trust is a first lien on real property which constitutes the principal residence of the debtors. There is no other security for that loan.
The State of Oregon has a program to help veterans of the United States Armed Forces finance the purchase of their homes. That program permits negative amortization, so that the principal balance will actually increase for some time, and then begin to decrease as time goes on. The Debtors’ loan was under that program.