Summary:
PHH Mortgage assessed $472.25 in post-petition fees against the Debtor’s loan, but did not file and serve a notice pursuant to Rule 3002.1(c) of these fees within 180 days, asserting that these fees were not presently recoverable against the Debtor or their residence and will not be collectible unless the Debtors’ Chapter 13 case was dismissed or converted. PHH asserted that it was required by N.C.G.S. § 45-91 to send notice to the Debtors of these fees, even if not currently intended to be collected.
The bankruptcy court rejected this argument, finding that Rule 3002.1 applied to these fees as “[a]sserting a fee has been charged and then making a conditional promise to waive the fee if certain conditions are met is still an assertion of a fee as recoverable.” Further, as both the Supremacy Clause and N.C.G.S. § 45-91 itself require that compliance with N.C.G.S. § 45-91 not violate any provisions of the bankruptcy laws, its notice should either have stated in the assessment notices that:
(1) The fees will not be required to cure default upon the completion of the confirmed plan and that the fees will be waived upon entry of discharge, or
(2) Complied with the form and manner of notice required by Rule 3002.1(c) and then allowed Debtors’ counsel to seek disallowance of the fees unopposed.
Lastly, the bankruptcy court explicitly rejected the “Just Trust Us/Wait and See” approach advanced by the mortgage servicer, as disclosure requirement of Rule 3002.1 does not turn on the creditor’s intent regarding later collection.
No attorneys fees were awarded against PHH as this was a matter of first impression for the bankruptcy court, but such would not necessary be the result in the future.
Commentary:
Read with In re Saeed and In re Hillmon, these cases require compliance with both N.C.G.S. § 45-91 and Rule 3002.1.
Additionally, neither Rule 3002.1 nor N.C.G.S. § 45-91 condition the waiver of fees on completion of a Chapter 13 plan, with Rule 3002.1 specifically allowing preclusion of evidence of these amounts “in any contested matter or adversary proceeding in the case”, which should include a case converted to Chapter 7. Further, if a state court foreclosure or other court proceeding is brought involving these undisclosed fees, the debtor could argue that judicial estoppel, an equitable doctrine under which a party is precluded from asserting a claim in one legal proceeding that is inconsistent with a claim made in a previous proceeding, prevents the assertion of default based on fees that should have been disclosed in the bankruptcy case, either under Rule 3002.1 or N.C.G.S. § 45-91. As mortgage servicers seem very fond of using judicial estoppel following a foreclosure to prevent subsequent claims against by homeowners, this reciprocal use of the doctrine is a fine Gander Sauce. See Petri v. Bank of America.
http://ncbankruptcyexpert.com/?p=4582
For a copy of the opinion, please see:
Owens- Rule 3002.1 Applies to Mortgage Fees even if Collection is Not Currently Attempted
Saeed- Failure to provide Notice of Assessment of Fees
InreHillmon
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