Juana M. Dominguez

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UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF MASSACHUSETTS

IN RE
JUANA M. DOMINQUEZ
DEBTOR

CHAPTER 13
CASE NO 09-41010-JBR

ORDER ON OBJECTION TO CONFIRMATION

This matter came before the Court for hearing on the Objection of Saxon
Mortgage Services, Inc. to Confirmation of the Debtor's Chapter 13 Plan. The Objection
[#23] was lodged for two reasons: the plan [#6] listed the prepetition arrearage in an
amount less than that reflected in the creditor’s amended proof of claim and the plan
incorporated additional provisions relating to the accounting for and notification of any
additional charges and fees the mortgagee would be adding to its secured claim over
the life of the plan. Prior to the hearing, the Debtor amended the plan [#35] to reflect
the amount of the prepetition arrears to be consistent with the amended proof of claim.
The additional provision are still incorporated in the amended plan.

The additional provisions contain what the mortgagee deemed acccunting and
notification changes not provided for in the loan documents. These additional changes,
however, track the language of contemplated changes to Fed. R. Bank. P. 3001 and the
addition of Rule 3002.1, which changes the Court believes will be circulated in the near
future for comment. Copies of these proposed rules are attached hereto.

The mortgagee argues that it is not required to send post-petition mortgage

statements or an annual notice of post-petition fees. The mortgagee, however, has

AUTHENTICATED
U.S. GOVERNMENT
INFORMATION

GPO

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provided no evidentiary support for this argument. It has not provided a copy of the
mortgage of the relevant portions of the mortgage. Moreover, without such statements
and notices, the Debtor has no way of knowing whether the Chapter 13 plan payments,
as well as her post-petition mortgage payments are being properly and timely applied.
Given that the mortgage has failed to sustain its burden, the Court would have
overruled the Objection but the Court believes that the more appropriate course of
action is sustain the objection and require the Debtor to file an amended plan in keeping

with the requirements of proposed Rules 3001 and 3002.1.

(fed fuetd

Dated: July 13, 2009 Joel B. Rosenthal
United States Bankruptcy Judge

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Rule 3001. Proof of Claim

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(c) SUPPORTING INFORMATION.

(1) Claim Based on a Writing. When a claim, or an
interest in property of the debtor securing the claim, is based on a
writing, the original or a duplicate shall be filed with the proof of
claim. If the writing has been lost or destroyed, a statement of the
circumstances of the loss or destruction shall be filed with the

claim. When a claim is based on an open-end or revolving

consumer credit agreement, the last account statement sent to the

debtor prior to the filing of the petition shall also be filed with the

proof of claim.

(2) Additional Requirements in an Individual

Debtor Case; Sanctions for Failure to Comply. Jn a case in which

the debtor is an individual:

(A) If, in addition to its principal amount, a

claim includes interest, fees, expenses, or other charges incurred

before the petition was filed, an itemized statement of the interest,

fees, expenses, or charges shall be filed with the proof of claim.

(B) If a security interest is claimed in

property of the debtor, the proof of claim Shall include a statement

of the amount necessary to cure any default as of the date of the

petition.

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23 (C)_If a security interest is claimed in property

24 that is the debtor’s principal residence and an escrow account has been
25 established in connection with the claim, the proof of claim shall be
26 accompanied by an escrow account statement prepared as of the date
27 the petition was filed and in a form consistent with applicable
28 nonbankmptcy law.
29 (D) If the holder of a claim fails to provide
30 any information required by this subdivision (c), the holder shall be
31 precluded from presenting the omitted information, in any form, as
32 evidence in any hearing or submission in any contested matter or
33 adversary proceeding in the case, unless the court determines that
34 the failure was substantially justified or is harmless. In addition to
35 or _in lieu of this sanction, the court may, after notice and hearing,
36 award other appropriate relief, including reasonable expenses and
37 attorney’s fees caused by the failure.
38 KK ok

COMMITTEE NOTE

Subdivision (c) is amended to prescribe with greater
specificity the supporting information required to accompany
certain proofs of claim and, in cases in which the debtor is an
individual, the consequences of failing to provide the required
information,

Existing subdivision (c) is redesi gnated as (c)(1). It is

amended to require that a proof of claim based on an open-end or
revolving consumer credit agreement (such as an agreement

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underlying the issuance of a credit card) be accompanied by the last
account statement sent to the debtor prior to the filing of the
bankruptcy petition. This requirement applies whether the
statement was sent by the entity filing the proof of claim or bya
prior holder of the claim.

Subdivision (c)(2) is added to require additional
information to accompany proofs of claim filed in cases in which
the debtor is an individual. When the holder of a claim seeks to
recover — in addition to the principal amount of a debt — interest,
fees, expenses, or other charges, the proof of claim must be
accompanied by a statement itemizing these additional amounts
with sufficient specificity to make clear the basis for the claimed
amount,

if a claim is secured by property of the debtor and the
debtor defaulted on the claim prior to the filing of the petition, the
proof of claim must be accompanied by a statement of the amount
required to cure the prepetition default. If the claim is secured by
the debtor’s principal residence and an escrow account has been
established in connection with the claim, the proof of claim must
also be accompanied by an escrow account statement showing the
account balance, and any amount owed, as of the date the petition
was filed. The statement shall be prepared in a form consistent
with the requirements of nonbankruptcy law. See, e.g., 12 U.S.C. §
2601 et seg. (Real Estate Settlement Procedure Act).

Paragraph (D) of subdivision (c)(2) sets forth the sanctions
that apply to, or that may be imposed by the court against, a
creditor in an individual debtor case that fails to provide
information required by subdivision (c).

Rule 3002.1 Notice Relating to Claims Secured by Security
Interest in the Debtor’s Principal Residence

(a) NOTICE OF PAYMENT CHANGES. In a chapter 13

case, if a claim secured by a security interest in the debtor’s

principal residence is provided for under the debtor’s plan pursuant

to § 1322(b)(5) of the Code, the holder of the claim shall file and

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serve on the debtor, debtor’s counsel, and the trustee notice of any

change in the payment amount, including any change that results

from an interest rate or escrow account adjustment, no later than 30

cays before a payment at a new amount is due.

(b) FORM AND CONTENT. A notice filed and served

pursuant to subdivision (a) of this rule shall (1) conform

sitbstantially to the form of notice under applicable nonbankruptcy

law and the underlying agreement that would be piven if the debtor

were not a debtor in bankruptcy, (2) be filed as a supplement to the

holder’s proof of claim, and (3) not be subject to Rule 3001(f).

(c) NOTICE OF FEES, EXPENSES, AND CHARGES. In

a chapter 13 case, if a claim secured by a Security interest in the

debtor’s principal residence is provided for under the debtor’s plan

pursuant (0 § 1322(b)(5) of the Code, the holder of the claim shall

file and serve on the debtor, debtor’s counsel, and the trustee a

notice that itemizes all fees, expenses, or charges incurred in

comection with the claim after the bankruptcy case was filed. and

that the holder asserts are recoverable against the debtor or against

the debtor’s principal residence. The notice shall be filed as a

supplement to the holder’s proof of claim and served no later than

180 days after the date when the fees, expenses, or charges are

incurred. The notice shall not be subject to Rule 3001(f). On

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motion of the debtor or trustee filed no later than one vear after

service of the notice, the court shall, after notice and hearing,

determine whether payment of the fees, expenses, or charges is

required by the underlying agreement and applicable

nonbankruptcy law to cure the default or maintain payments in
accordance with § 1322(b)(5) of the Code.

(d) NOTICE OF FINAL CURE PAYMENT. No later than

30 days after making final payment of any cure amount on a claim

secured by a security interest in the debtor’s principal residence,

the trustee in a chapter 13 case shall file and serve upon the holder

of the claim, the debtor, and debtor’s counsel a notice stating that

{he amount required to cure the default has been paid in full. If the

debtor contends that final cure payment has been made and the

trustee does not timely file and serve the notice required by this

subdivision, the debtor may file and serve upon the holder of the

¢iaim and the trustee a notice stating that the amount required to

cure the default has been paid in full.

(¢) RESPONSE TO NOTICE OF FINAL CURE

PAYMENT. No later than 21 days after service of the notice under

subdivision (d) of this rule, the holder of a claim secured bya

secunty interest in the debtor’s principal residence shall file and

serve on the debtor, debtor’s counsel, and the trustee a statement

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49 indicating (1) whether it agrees that the debtor has paid in full the
50 amount required to cure the default and (2) whether, consistent

S- with § 1322(b)(5) of the Code, the debtor is otherwise current on
52 all payments. If applicable, the statement shall itemize any

53 required c.ire or postpetition amounts that the holder contends

54. remain unpaid as of the date of the statement. The statement shall
SS be filed as a supplement to the holder’s proof of claim and shall not
56 be subject to Rule 300i(f). -

57 (f) MOTION AND HEARING. On motion of the debtor
58 or trustee filed no later than 21 days after service of the statement
59 under subdivision (e) of this mule, the court shall, after notice and
50 nearing, determine whether the debtor has cured the default and
61 paid all required postpetition amounts in full.

62 (g) FAILURE TO NOTIFY. If the holder of a claim

63 secured by a security interest in the debtor’s principal residence
64 fails to provide any information required by subdivision (a), (c), or
65 (e) of this rule, the holder shall be precluded from presenting the
66 omitted information, in any form, as evidence in any hearing or
67 submission in any contested matter or adversary proceeding in the
68 case, unless the court determines that the failure was substantially
69 justified or is harmless. In addition to or in lieu of this sanction,
70 the court may, after notice and hearing, award other appropriate

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relief. including reasonable expenses and attormey’s fees caused by

the faijure.
COMMITTEE NOTE

This rule is new. It is added to aid in the implementation of
§ 1322(6)(5), which permits a chapter 13 debtor to cure a default
and maintain payments of a home mortgage over the course of the
debtor's plan.

In order to be able to fulfill the obligations of § 1322(b)(5),
a debtor and the trustee must be informed of the exact amount
needed to cure any prepetition arrearage, see Rule 300 I(c)(2), and
the amount of the postpetition payment obligations. If the latter
amount changes over time, due to the adjustment of the interest
rate, escrow account adjustments, or the assessment of fees,
expenses, or other charges, notice of any change in payment
amount needs to be conveyed to the debtor and trustee. Timely
notice of these changes will permit the debtor or trustee to
challenge the validity of any such charges, if necessary, and to
adjust postpetition mortgage payments to cover any properly
claimed adjustment. Compliance with the notice provision of the
rule shculd also eliminate any concern on the part of the holder of
‘he claim that informing a debtor of a change in postpetition
payment obligations might violate the automatic stay.

Subdivision (a) requires the holder of a claim secured by
the debtor’s principal residence to notify the debtor, debtor’s
counsel, and the trustee of any postpetition change in the mortgage
payment amount. Notice must be provided at least 30 days before
the new payment amount is due.

Subdivision (b) provides the method of giving the notice of
& payment change. The holder of the claim must give notice of the
change in substantially the same form that would be used
according to the underlying agreement and nonbankruptcy law if
tne debtor were not a debtor in bankruptcy. In addition to serving
the debtor, debtor’s counsel, and the trustee, as required by
subdivision (a), the holder of the claim must also file the notice of
payment change on the claims register in the case as a supplement
to its proof of claim. Rule 3001(f) does not apply to this notice,

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aad therefore it will not constitute prima facie evidence of the
validity and amount of the payment change.

Subdivision (c) requires an itemized notice to be given,
within 180 days of incurrence, of any postpetition fees, expenses,
or charges that the holder of the claim asserts is recoverable in
connection with a claim secured by the debtor's principal residence,
Tis amount might include, for example, inspection fees, late
charges, or attorney's fees. Filing and service requirements for this

notice are the same as for the notice required under subdivision (a).

Within a year after service of a notice under subdivision (c),
the debtor or trustee may move for a court determination of
whether the fees, expenses, or charges set forth in the notice are
required by the underlying agreement or applicable nonbankruptcy
law to cure a default or maintain payments.

Subdivision (d) requires the trustee to issue notice within
30 days after making the last payment to cure a prepetition default
on a claim secured by the debtor’s principal residence. If the
trustee faiis to file this notice within the required time, this
subdivision also permits a debtor who contends that the prepetition
de‘ault has been cured to file and serve the notice.

Suddivision (€) governs the response of the holder of the
claim to the trustee’s or debtor’s notice under subdivision (d).
Within 21 days after service of notice of the final cure payment, the
holder of the claim must file and serve a statement indicating
whether the prepetition default has been fully cured and also
whether the debtor is current on all payments in accordance with
3 1322(6)(S) of the Code. If the holder of the claim contends that
final cure payment has not been made or that the debtor is not
current on other payments required by § 1325(b)(5), the response
must itemize all missed amounts the holder contends are still due.

Subdivision (f) provides the procedure for the judicial
resolution of any disputes that may arise about payment of a claim
secured by the debtor’s principal residence. The trustee or debtor
may move no later than 21 days after the service of the statement
under (e) for a determination by the court of whether the
prepetition default has been cured and whether all postpetition
obligations have been fully paid,

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.

Subdivision (g) specifies sanctions that may be imposed if
the holder of a claim secured by the debtor’s principal residence
fails to provide any of the information required by subdivisions (a),
(c), or fe).

If, after the chapter 13 debtor has completed payments
under the plan and the case has been closed, the holder of a claim
secured by the debtor’s principal residence seeks to recover
amounts that should have been but were not disclosed under this
rule, the debtor may move to have the case reopened in order to
seek sanctions against the holder of the claim under subdivisio

(g). ,

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