Two recent cases deal with the determination good faith in the context of a chapter 13 plan modification. In re Martin, No. 10-64790 (Bankr. N.D. Ohio November 27, 2013) and In re Maxwell, No. 11-17873 (Bankr. E.D. Cal. Nov. 8, 2013). [Read more…] about Good Faith in the Plan Modification Context
HAMP Trial Period Plans – Wells Fargo’s Fraudulent Coin Toss
Yesterday, the Ninth Circuit Court of Appeals held in Corvello v. Wells Fargo Bank, N.A., No. 11-16234, that Wells Fargo was contractually obligated under the terms of a HAMP trial period plan (TPP) to offer permanent modifications to borrowers who complied with the TPP by submitting accurate documentation and making trial payments. Such an interpretation of the TPP, the Court stated, “avoids the injustice that would result were Wells Fargo’s position accepted and Wells Fargo allowed to keep borrowers’ trial payments without fulfilling any obligations in return. The TPP does not contemplate such an unfair result.” More scathing was Judge Noonan’s concurrence in which he stated that:
“No purpose was served by the document Wells Fargo prepared except the fraudulent purpose of inducing Corvello to make the payments while the bank retained the option of modifying the loan or stiffing him. “Heads I win, tails you lose” is a fraudulent coin toss. Wells Fargo did no better.”
The Court rejected arguments that Wells Fargo’s failure to return a signed copy of the TPP to the borrower precluded liability. For purposes of the decision, the Court assumed that the borrowers fulfilled all of their obligations under the TPP, as alleged. The Court noted, however, that Wells Fargo could still raise factual disputes during the litigation.
Acceleration Clause Clears Way for Modification
A bankruptcy court in Maryland found that an acceleration clause in a deed of trust, making the remaining debt immediately due, triggered the modification clause of section 1322(c)(2). Fed’l Nat’l Mtg. Ass’n v. Griffin (In re Griffin), No. 12-19863 (March 18, 2013). [Read more…] about Acceleration Clause Clears Way for Modification
New CFPB Rules Fail to Resolve Problem of Dual-Tracking on Delinquent Mortgages
On January 17, 2013, the Consumer Financial Protection Bureau enacted mortgage servicing rules implementing the Dodd-Frank Wall Street Reform and Consumer Protection Act provisions relating to the Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA). [Read more…] about New CFPB Rules Fail to Resolve Problem of Dual-Tracking on Delinquent Mortgages
In re Bullard, No. 12-54 (B.A.P. 1st Cir.)
Type: Amicus brief
Date: November 20, 2012
Description: Whether Chapter 13 plan that bifurcates residential lien and pays secured portion outside plan and unsecured portion within plan must pay off entire mortgage within five years.
Result: Judgment affirmed, May 24, 2013, Case dismissed by First Circuit as interlocutory, No. 13-9009 (May 14, 2014); U.S. Supreme Court cert. granted No. 14-116 (Dec. 12, 2014)
Section 1325(b) Requirements Not Applicable to Plan Modification
The Ninth Circuit BAP found that the requirement of Section 1325(b) that all of the debtor’s projected disposable income be paid into the plan during the applicable commitment period is not incorporated into Section 1329 for plan modification. In re Mattson, No. 11-1478 (B.A.P. 9th Cir. April 5, 2012). [Read more…] about Section 1325(b) Requirements Not Applicable to Plan Modification
In re Scarborough, No. 04-4298 (3d Cir.)
Type: Amicus
Date: July 10, 2006
Description: Whether chapter 13 debtor may modify under section 1322(b)(2) an undersecured mortgage on a multi-unit property that includes a unit in which the debtor does not reside.
Result: Reversed. Debtor won. 461 F.3d 406 (3d Cir. 2006)
Scarborough NACBA Amicus 3rd Cir.
EZ Tax Transcripts for Loan Modifications
The IRS has created a new Form 4506T-EZ, Short Form Request for Individual Tax Return Transcript, to order a transcript of a Form 1040 series return. The IRS created this streamlined form to help those taxpayers trying to obtain, modify or refinance a home mortgage. Transcripts may also be mailed to a third party, such as a mortgage institution, if specified on the form. Form 4506T-EZ can be used to to request a tax return transcript for the current and the prior three years that includes most lines of the original tax return.