Summary:
Following In re Owens and In re Peach from the W.D.N.C., Judge Kahn weighed in on the increasingly thorny interplay between Rule 3002.1 notices of postpetition fees and North Carolina’s Mortgage Debt Collection and Servicing Act (§ 45-91).
Here, the debtor, Christopher Rogers, was not personally liable on the mortgage note—his non-filing spouse was—but the couple’s residence was encumbered by a deed of trust in favor of SIRVA Mortgage. The loan was contractually current at filing, yet SIRVA filed a proof of claim asserting a projected escrow shortage and, later, a Rule 3002.1(c) notice claiming a $400 “proof of claim fee.” At the same time, SIRVA sent the debtor’s spouse separate state-law notices under § 45-91 listing over $950 in “BNK ATTY FEES & COSTS.”
The debtor, relying on In re Owens (Whitley, J.) and the recent In re Peach (Beyer, J.), objected, arguing that this “dual booking” practice violated Rule 3002.1’s disclosure mandate.
Court’s Ruling
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Violation of Rule 3002.1(c): Judge Kahn held that SIRVA’s conflicting notices ran afoul of Rule 3002.1, which was designed to prevent hidden or undisclosed fees from ambushing Chapter 13 debtors after plan completion.
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Interpretation of § 45-91: The court rejected SIRVA’s strained reading that the statute requires servicers to “assess” every conceivable fee, even those never intended to be collected. Instead, “assess” means impose—not merely “note” or “disclose.” Thus, notices of waived or phantom fees were not required.
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No Safe Harbor in Federal/State Regulations: Other federal mortgage servicing regulations (e.g., RESPA’s Reg. X, TILA’s Reg. Z) only require reporting of transactions that actually credit or debit the account, not ghost fees.
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Adoption of Owens and Peach: Like Judges Whitley and Beyer, Judge Kahn ruled that subjective creditor intent is irrelevant; if fees are assessed to the account, they must be noticed under Rule 3002.1.
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Remedy: The court disallowed both the $400 proof of claim fee and the undisclosed $551.69 of additional charges, and prohibited SIRVA from ever seeking to recover them against the debtor or the property.
Commentary:
This decision reinforces a bright-line “use it or lose it” approach to Rule 3002.1. Servicers cannot play a double game—filing sanitized notices in bankruptcy court while simultaneously sending borrowers conflicting state-law statements padded with attorney’s fees.
The ruling also provides much-needed clarity on § 45-91, reading it in its plain sense as a consumer protection measure designed to limit fees, not generate paperwork for phantom charges. This aligns with legislative intent to protect homeowners from abusive servicing practices and avoids the absurdity of requiring disclosure of fees the creditor admits it cannot collect.
Practically, this case is a reminder that debtor’s counsel must stay vigilant. Here, counsel Koury Hicks deserves praise for spotting the discrepancy and forcing judicial review. Without objection, those $951 in “assessed” fees might have lurked as a future foreclosure trap, exactly the problem Rule 3002.1 was enacted to prevent.
The opinion joins Owens and Peach in building a solid body of North Carolina precedent insisting on full transparency and accountability from mortgage servicers. One suspects that repeated violations may soon warrant harsher sanctions under Rule 3002.1(i) and § 45-91, especially if servicers continue to shrug off the rule as mere paperwork. Whether those arise in bankruptcy courts or through class action lawsuits elsewhere remains to be seen.
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