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It's really hard to trust the system...

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  • It's really hard to trust the system...

    I'm in Florida and my wife and I filed a CH13 in Oct 2012 with Trustee responsible for making my mortgage payments. On or around April 2014, my home loan modification went in effect. In November 2017 we made our final payment to the Trustee. In Dec 2017, I contacted the Trustee, in an attempt to get them to expedite my case so it could be discharged ASAP. At that time they advised me that beginning in January 2018, I'd be responsible for making my own mortgage payments. On 1/10/2018, the NDC website was updated to show the "COMPLETED" for the Trustee Case Status and Case Status. I also received a "Chapter 13 Trustee's Notice of Completed Plan - With Discharge" letter in the mail dated 1/10/2018. A few days later, I received "Discharge of Debtor After Completion of Chapter 13 Plan" dated 1/11/2018.

    In January 2018, I made my mortgage payment directly to the mortgage company (Mr. Cooper FKA NationStar). They informed me that my mortgage was still in the bankruptcy department and once it's transferred to "normal" status, I'd be able to make payments online again. In early February, I contacted the mortgage company for an update and I was advised that my mortgage was now in normal status. They also dropped a BOMB on me!! They advised me that my mortgage was past due 12 months to the tune of close to $19K and that if it wasn't paid by 3/7/18 they'd start foreclosure proceedings!!

    After the shock factor, I asked how could this be? How could I come out of CH 13 BK seeking a new start, only to find out I'm behind the 8 ball? They said that the Trustee didn't make the full amount of mortgage payments, after my loan modification went into effect. They walked me through each month and it seemed to make sense. Their contention is that although they KNEW that the Trustee wasn't sending them enough money, they were "unable" to make them aware because of the bankruptcy. I immediately contacted my CH 13 lawyer to address this and sent him a barrage of emails, documents and letters received from the mortgage company.

    My lawyer let me know that he was reaching out to my Trustee to "try" get this resolved. His opinion was that
    the Trustee under paid the mortgage company and over paid by $20k the unsecured creditors. He would try to see if they can recoup that money from the unsecured creditors and use it to pay the mortgage company what it is owed. He believes the mix up happen when one of the motion to modify payment were filed.

    Today, I received a "Notice of Final Cure Payment" filed by the Trustee sent to all parties involved concerning the mortgage... So it seems like the Trustee is trying to put the responsibility back in Mr. Cooper's court. I have a call scheduled with my Attorney tomorrow to explain this letter in detail to me and explain how it affects me.

    Am I in trouble here and in jeopardy of losing my home to foreclosure for a mistake that obviously was not my fault? Do I have any legal recourse? Any help/advice anyone could provide would be greatly appreciated!! Thanks.

  • #2
    You will need your attorney to work this out with the Trustee. The Trustee should not have paid the unsecured creditors when they should have been paying the mortgage. Mistakes do happen and this is precisely the purpose of the final audit.

    Your legal recourse could include suing the Trustee, in the bankruptcy court, by filing an Adversary Proceeding. But, before we get to that, let's have your attorney work with the Trustee to claw back the overpayments to the unsecured creditors. Human error is possible in complex cases (a modification in the middle of the case). Personally, I would have expected an overpayment ot the mortgage company and not the unsecured creditors.
    Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
    Status: (Auto) Discharged and Closed! 5/10
    Visit My BKForum Blog: justbroke's Blog

    I am not an attorney. Any advice provided is not legal advice.


    • #3
      Let me add my personal experience that Nationstar/Mr. Cooper is completely incompetent in bankruptcy. In my case:
      • Chapter 7. I reaffirmed the mortgage. My attorney notified Nationstar that they could continue to send me statements, phone calls, etc.
      • Nationstar never sent anything.
      • During the C-7, my escrow changed due to an increase in real estate taxes and insurance. Nationstar never notified me, so for 7 months I was underpaying my mortgage.
      • Nationstar contacted the TRUSTEE about the mortgage GOING INTO DEFAULT.
      • Trustee contacted my attorney, who contacted me. I contacted Nationstar. Nationstar claimed they had mailed letter after letter to me and my attorney... found out they were sending everything to my ex-wife (who was tossing it into the trash.)
      • For two tax years, Nationstar never mailed me a 1099. I had to request them myself. But they never arrived. I had to request them again, to be emailed and faxed.
      • Every conversation with Nationstar, they were rude and naughty, claiming "the law" prevented whatever I was requesting. Several times they refused to honor my attorney's instructions, until the TRUSTEE threatened sanctions.

      My case is not yet closed (waiting on final accounting) but Nationstar is impossible to work with. Despite my attorney's instructions, Nationstar still refuses to send me a statement, refuses to give me escrow information over the phone.

      Nationstar is a poster child for allowing the mortgage payer to choose their own service agency.


      • #4
        Thanks for the feedback guys and the advise...

        Here's an update: So I spoke with my Attorney and he believes that the Trustee made a mistake and didn't pay enough to Mr. Cooper, but they filed that "Notice of Final Cure Payment" to put it back in the mortgage company's court. He said that he will file a motion (should it be him or the Trustee??) to have the payments made to unsecured creditors in error returned. Of all the unsecured creditors, at first glance it looks like only Sallie Mae (student loans) were paid enough to cover the short payments made to Mr. Cooper. Not sure to how Sallie Mae will react to this, but adding up all the other unsecured creditors doesn't even come close to the deficit.

        My Attorney said he will also "re-open" the case to prevent Mr. Cooper from attempting foreclosure. I'll be following up with him to make sure he does what he say's he'll do. Thanks again.


        • #5
          Thank you. There was a post on this forum by user JAW that had a trustee paying too little to the mortgage company after a change was made. I'll do whatever I can to track this, as with my luck it will happen to me. I escrow taxes and insurance and they both go up each year, so my payment changes. Hate to get 5 years down the road only to be told I am months behind - eek.


          • #6
            JAW, can you give an update on what happened in your case?
            LadyInTheRed is in the black!
            Filed Chap 13 April 2010. Discharged May 2015.
            $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!


            • #7
              +1 JAW I'm only 8 months into my Ch13, in FL and Mr Cooper is my mortgage company so I want to keep up with this in case I need it later.


              • #8
                smithma3 LadyInTheRed Time2Change

                So after some digging with the Trustee, I discovered that the Trustee did nothing wrong as they were paying the amount they were supposed to be paying. I spoke with the Trustee's Attorney (sort of off the record) and he told me that there were two competing orders in my case: 1) the original bankruptcy order that said pay "X" and 2) the loan modification order several month's later that said pay "Y". He shared with me that it was MY ATTORNEY'S responsibility to put in the motion to "merge" the two competing orders, but that was never done! So, the Trustee continued to only pay "X", which resulted in a severe shortage.

                So, I immediately contacted my BK attorney, who unfortunately is not the same attorney handling my case at the time this error was done, to try to hold them accountable. Without confirming or denying that his firm did anything wrong, he kept insisting/implying that it was the Trustee that short-payed the mortgage, which is true, but they had a good reason as I previously explained. He told me that I could seek outside counsel if I felt the need to go after them for responsibility, but I'm not sure that would have been worth it (more costs, more time), although I was livid. He did offer to do a free loan modification for me or another CH 13, of which I denied both. As a side note, it was uncovered that if the motion to merge the two competing offers had been in place, one of the creditors that was paid "Z" amount of dollars (Sallie Mae Student Loans), wouldn't have been paid this amount of money for interest during the case, so my attorney has been seeking an order from the Court to force Sallie Mae to refund the funds, which in turn would be paid to my mortgage company. I don't think there's a chance in the world that this ever happens, because why would they give up the $$ that they've already received? And why would the courts force them to if during the time they were paid per the plan in place?

                After 5 years of getting through this CH 13 and being a part of that very small percentage that complete their CH 13, I was eager to put this mess behind me and get on with the rest of my life... Mr. Cooper offered ANOTHER loan modification that could put all this behind me, and I accepted, even though none of this was my fault, I was still on the hook for it! If my Attorney comes through with the funds being returned that can apply to my loan balance, that's good, but if not, so be it... I just want to get the words "Attorneys", "Chapter 13" and "Bankruptcy" out of my vocabulary, once and for all.

                The lesson I learned from this is that during your CH13, it is YOUR (and mine) responsibility to follow-up on things. Even though my attorney is working for me, they are human and foul-ups can happen that can have a negative effect on you. Word to the wise: DO NOT PUT SO MUCH TRUST IN YOUR ATTORNEY'S AND HAVE A "SET IT & FORGET IT" MENTALITY; TRUST BY VERIFY; ASK QUESTIONS, ESPECIALLY THE MORE COMPLICATED YOUR CASE IS (loan modifications as an example). All of this could have been avoided if Mr. Cooper had informed me that although they were receiving payments from the Trustee, they were short, but they're response was that they couldn't notify me because of the communication laws around CH13 and then they said something very profound: "It's your Attorney's responsibility to make sure things like this don't happen; that's what you pay them for". All I could do is agree and bite my tongue.

                One final note, Mr. Cooper sold my mortgage to another investor last month, of whom, I'm not very impressed with right now, but that's another story. Hope all of this helps someone else!


                • #9
                  File another BK, let the BK judge sock it to the trustee and the bank


                  • #10
                    JAW Thanks for the information. I hope everything works out for you. I didn't do a loan modification I decided to wait until after my Ch13. My mortgage is VA so hoping to just be able to sell at the end of my Ch13 an move on. I'm so over everything. In my next life I just need a 1bed, 1ba condo for me! 48 more months to go and I'm so ready for this to be over!!!


                    • #11
                      OH man....our mortgage company is Mr. Cooper too. This scares me!!!!


                      • #12
                        RollTide smithma3 bankruptcyme LadyInTheRed Time2Change UPDATE: Much to my surprise, my Attorney was able to successfully navigate the court system to have the funds paid to Sallie Mae in error, returned to the Trustee; The Trustee has already submitted the entire refunded portion to my mortgage company last week, and the past due balance should be completely cleared up in a few days. After this is cleared is, whether I continue with the loan modification or not is based upon if the terms are better than what I have now. Either way, it looks like I'll be whole pretty soon! I'm not happy I had to go through this experience, but again I hope it helps someone else avoid this situation in the future...

                        smithma3 It's truly a "bear off of your back" once it's done and over with! Good luck on your journey.


                        • #13
                          JAW that's great news your attorney was able to get the payments to Sallie Mae returned!!! Thanks for the update and I will truly be happy once it's over and done! Thanks again and best of luck to you!


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