Relying on equitable principles, the court declined to allow Ocwen’s late-filed proof of claim after the debtor filed a proof of claim on its behalf for $1. In re Egan, No. 14-36831, __ B.R. __ (Bankr. S.D. N.Y. March 2, 2015). [Read more…] about Ocwen Stuck with Debtor’s Proof of Claim for $1
Court Turns Jaundiced Eye on Wells Fargo Robo-Mischief
Wells Fargo lacked standing to assert a claim under a Note secured by a Deed of Trust, where a forged endorsement in blank did not give it “holder” status under applicable Texas law. In re Franklin, No. 10‐20010 (Bankr. S.D. N.Y. Jan. 29, 2015). [Read more…] about Court Turns Jaundiced Eye on Wells Fargo Robo-Mischief
Creditor’s Failure to Comply with Rule 3002.1(g) Is Basis for Violation of State Consumer Law
The district court denied PNC’s motion to dismiss the borrowers’ complaint for violations of California consumer protection laws and common law claims based on PNC’s foreclosure action after the plaintiffs completed their Chapter 13 plan. Sokoloski v. PNC Mortgage, No. 14-1374, 2014 WL 6473810 (E.D. Cal. Nov. 18, 2014). [Read more…] about Creditor’s Failure to Comply with Rule 3002.1(g) Is Basis for Violation of State Consumer Law
Late Proof of Claim Amendment Rejected
A proof of claim amendment filed after the debtor successfully completed his chapter 13 plan was too late to increase the mortgage arrears. In re Mason, No. 10-4195, 2014 WL 5502385 (Bankr. S.D. Miss. Oct. 30, 2014). [Read more…] about Late Proof of Claim Amendment Rejected
No En Banc Rehearing in Crawford
The Eleventh Circuit declined to revisit its decision in Crawford v. LVNV Funding, No. 13-12389 (11th Cir. July 10, 2014), where it found that a proof of claim to collect a stale debt in chapter 13 bankruptcy violates the Fair Debt Collection Practices Act. See NCBRC post here. On September 18th, the court denied LVNV Funding and Resurgent Capital Services’ petition for rehearing en banc.
Some commentators predicted that the court might take on the rehearing because the decision upset a body of law prohibiting such FDCPA claims. See, e.g., Inside ARM blog here, and Bankruptcy Law Blog here. Specifically, the Crawford decision conflicts with Walls v. Wells Fargo Bank, N.A., 276 F. 3d 502 (9th Cir. 2002), where the court found that the Bankruptcy Code preempts the FDCPA and that, therefore, the debtor’s remedy for violation of the discharge injunction was limited to contempt under section 105 of the Bankruptcy Code.
In Crawford, the court side-stepped the question of preemption, stating: “Some circuits hold that the Bankruptcy Code displaces the FDCPA in the bankruptcy context. See Simmons v. Roundup Funding, LLC, 622 F.3d 93, 96 (2d Cir. 2010); Walls v. Wells Fargo Bank, N.A., 276 F.3d 502, 510 (9th Cir. 2002). Other circuits hold the opposite. See Simon v. FIA Card Ser., N.A., 732 F.3d 259, 271−74 (3d Cir. 2013); Randolph v. IMBS, Inc., 368 F.3d 726, 730−33 (7th Cir. 2004). In any event, we need not address this issue because LVNV argues only that its conduct does not fall under the FDCPA or did not offend the FDCPA’s prohibitions. LVNV does not contend that the Bankruptcy Code displaces or “preempts” §§ 1692e and 1692f of the FDCPA.”
Ocwen’s Errors Force Debtors into Bankruptcy
A Delaware Bankruptcy Judge took on the task of calculating the debtors’ mortgage payment history in the face of erroneous calculations by Ocwen Loan Servicing, LLC. Judge Shannon found that the debtors were current on their payments when Ocwen initiated foreclosure proceedings and that Ocwen’s errors forced the debtors into bankruptcy to save their home. Williams v. Ocwen, No. 13-12234 (Bankr. D. Del. July 18, 2014). [Read more…] about Ocwen’s Errors Force Debtors into Bankruptcy
Filing of Stale Claims in Bankruptcy Violates FDCPA
Addressing what it termed a “deluge that has swept through U.S. bankruptcy courts,” the Eleventh Circuit took on the question of “whether a proof of claim to collect a stale debt in Chapter 13 bankruptcy violates the Fair Debt Collection Practices Act (“FDCPA” or “Act”). 15 U.S.C. §§ 1692−1692p (2006). Based on the broad language of the FDCPA, Eleventh Circuit precedent, and the record before it, the court found that it does. Crawford v. LVNV Funding, No. 13-12389 (11th Cir. July 10, 2014). [Read more…] about Filing of Stale Claims in Bankruptcy Violates FDCPA
Failure to Follow Condition Precedent to Foreclosure Precludes Recovery for Costs
It pays to read mortgage documents carefully to determine whether the bank or Servicer complied with contractual conditions precedent prior to bringing adverse action against the debtor upon default. In In re Demers, No. 13-11539 (Bankr. R.I. June 5, 2014), American Servicing Co. (ASC) failed to comply with such conditions and was denied recovery of nearly $2,000.00 in claimed fees and costs associated with initiation of foreclosure proceedings. [Read more…] about Failure to Follow Condition Precedent to Foreclosure Precludes Recovery for Costs
Competing Equities Must Be Considered in Claims Allowance Process
Under the claims allowance process, a bankruptcy court must consider competing equities even where the mortgage is “inoperative” under state law. GMAC Mortgage v. Orcutt, No. 13-82 and 13-83 (D. Vt. Feb. 28, 2014). [Read more…] about Competing Equities Must Be Considered in Claims Allowance Process
No Presumption of Validity of Claim under Rule 3002.1
On January 3, 2013, the Chapter 13 trustee filed “Trustee’s Notice of Final Cure Payment and Motion to Deem Mortgage Current,” filed under Rule 3002.1(f) seeking an order that the debtor’s mortgagee was current, that all escrow deficiencies had been cured, and that all fees had been satisfied in full. The mortgage creditor filed a timely objection under Rule 3002.1(g), arguing that the debtor had incurred post-petition arrearages of $25,798.02. However, the creditor did not present any evidence of any disbursements to substantiate the arrearage. The court found that supplemental claims did not enjoy a presumption of validity and, because the debtor had made all payments required by the amended plan, it granted the trustee’s motion. In re Rodriguez, No. 08-80025 (Bankr. S.D. Tex. July 8, 2013). [Read more…] about No Presumption of Validity of Claim under Rule 3002.1