Early payoff questions

[justbroke]

A little off topic.. But Just broke what do you mean by non recourse vs recourse....

Non-recourse means that the the lender/creditor cannot sue the debtor for any deficiency created by foreclosure. Most States are recourse States where the lender can sue the debtor for the difference between the loan balance and the amount the property sold for at foreclosure. In almost all States, if the foreclosure is by a "Power of Sale" clause in a non-judicial foreclosure, it is always non-recourse.

States like Arizona and California, already make a "purchase-money" loan non-recourse. "Purchase Money" means that the loan was used to actually acquire/purchase the property. A refinance "destroys" the purchase money status. (There are some arguments that a refinance can't destroy the "purchase money" status of the amount that was actually re-financed. In other words, if you had a purchase-money loan for $200K. Then refinanced for $300K taking a $100K cash-out, the original $200K might still be deemed "purchase money". However, California caselaw, for example, clearly shows that the refinancing destroy the "purchase money" aspect of the entire amount.)

[justbroke]

I am not aware of any deadline to amend a claim. Since it is my understanding that secured creditors get paid as provided for in the Plan, if there is a strip and the creditor does not amend, the claim will not be paid.

In my District, the Order granting the Motion to Determine Secured Status and Strip Lien of Creditor... contains language that the creditor's is allowed an unsecured claim with respect to the bifurcated claim. They don't actually have to file a "new" claim in our District, since a new claim would be seen as a duplicate. The order itself amends the claim. At least in my District.

There have been some arguments, however, that a creditor that has their claim bifurcated into a secured and unsecured component, with the secured component being $0, may be in trouble if they didn't file their claim correctly. I read some cases where secured creditors that didn't anticipate the strip would not be allowed to file a new unsecured claim or amend their existing claim to show a secured and unsecured portion. The creditor would have needed to file the claim initially as both a secured and unsecured claim. I have seen some where the creditor states the full amount of the balance less $1 as the secured portion, and then makes the unsecured portion $1. That way, they can amend the claim... without filing a "new" claim.

So, what you say Des is spot on, but I see very few attorneys, at least in my District, challenging an amended "secured" claim that is all of a sudden an unsecured claim. It is likely because our General Order has a standard lien-strip order that "grants" the unsecured claim.

[jennerik]

I am not aware of any deadline to amend a claim. Since it is my understanding that secured creditors get paid as provided for in the Plan, if there is a strip and the creditor does not amend, the claim will not be paid. OP should check the Trustee's case status system to see how the claim is classified by the Trustee (secured, unsecured, objected to, disallowed etc.)

Des.

It shows unsecured.

[enginegirl]

You are one great attorney! I wish more were like you. (And, the poster is from California which is a non-recourse State. Unfortunately, my state (Florida) isn't.)

A little off topic.. But Just broke what do you mean by non recourse vs recourse....
thanks a frustrated engine girl!

[Pandora]

So, if the 2nd is stripped and the mortgage holder doesn't amend, they get nothing when the case is discharged? Is there a deadline to amend a proof of claim?

Lady - remember when you said your paperwork stated "pro rata" and I told you that looked familiar? I just pulled ours..and it says (judges order) as follows:


"......Because the amount of the first lien on said real estate exceeds the value of the
Residence, there is no equity to which the second lien can attach. The Plan has therefore
proposed that the second lien be avoided in its entirety and the entire debt would be made an
unsecured claim and paid pro rata with the other allowed unsecured claims.

4. Upon consideration of the Complaint, it is hereby ORDERED that:

A. The claim of Defendant, XXXXXXXXXXX, regarding the second deed of trust lien is
allowed as an unsecured claim, subject to review and additional objections by the Chapter
13 Trustee.

B. The second deed of trust lien of Defendant, XXXXXXXX, is void and shall be of
no effect during the pendency of this case under chapter 13. The claim of XXXXXXXXX XXXXXXXX regarding the second deed of trust lien shall be allowed in full as an unsecured claim and shall be treated as such under the Debtors’ Chapter 13 Plan. The lien shall be void for all other purposes when and if the Debtors complete their performance as
required by the confirmed chapter 13 plan.

C. The Debtors shall not file this judgment with the Clerk of the Court for the Circuit Court
of the XXXXX XXXXX until the Debtors have completed their performance as required
under the Chapter 13 Plan and has received their order of discharge. Upon receipt of the
order of discharge in this case, the Debtors may file a copy of this judgment with the
Clerk of the Court for the Circuit Court of the XXXXXXXXXXXX. The Debtors shall also,
at that time, file a copy of the order of discharge with the Clerk of the Court for the
Circuit Court of the XXXXXXXXXXXX.

D. The Clerk shall send a copy of this Order to Debtors’ counsel so that he may record the
same in accordance with the Local Rules of this Court.

______________________________
U.

Okay.. so from what I'm reading - its an unsecured even though on PACER its still showing "secured" but also states "Lien Avoided", and its supposed to be paid at the same rate as the other unsecureds..but it wont be. ETA: wanted to note that there are and have been no objections by our trustee.

See where I'm confused...

[despritfreya]

So, if the 2nd is stripped and the mortgage holder doesn't amend, they get nothing when the case is discharged? Is there a deadline to amend a proof of claim?

I am not aware of any deadline to amend a claim. Since it is my understanding that secured creditors get paid as provided for in the Plan, if there is a strip and the creditor does not amend, the claim will not be paid. OP should check the Trustee's case status system to see how the claim is classified by the Trustee (secured, unsecured, objected to, disallowed etc.)

Des.

[LadyInTheRed]

if your 2nd filed a secured claim, but did not amend it to unsecured status, it should not be counted in the mix

So, if the 2nd is stripped and the mortgage holder doesn't amend, they get nothing when the case is discharged? Is there a deadline to amend a proof of claim?

[LadyInTheRed]

You are one great attorney! I wish more were like you. (And, the poster is from California which is a non-recourse State. Unfortunately, my state (Florida) isn't.)

California is non-recourse as to purchase money loans only, which jennerik's 2nd is not.

[jennerik]

Update...I just checked 13datacenter and it matches Pacer. Both show the 2nd as unsecured, not claimed. Does this mean that if all the other debt is paid, I can discharge early or will this start once the other debt is paid?

[Pandora]

I don't have the answer but if you are satisfied with the amount you are paying in, regardless of whether or not it really pays 100%, maybe questioning it is the wrong thing to do?????

Des.

LOL! Very true. I was just curious as to how it could be 2 different %'s. Trust me...not complaining at all!

Thanks for the time.

[despritfreya]

How can one have some unsecureds being paid at 100% yet not all? Trustee's office and lawyers office both state the prop. taxes and dr bills will be paid at 100% - yet the 2nd wont be. I think thats where I'm confused. Does that make sense? I know they're adding it in the mix (as you stated above) because it shows as such.

I don't have the answer but if you are satisfied with the amount you are paying in, regardless of whether or not it really pays 100%, maybe questioning it is the wrong thing to do?????

Des.

[jennerik]

jennerik

Just wanted to say Sorry if it seems like I hijacked your thread didnt mean to - my apologies to you

No worries! Jump in anytime! :-)

[Pandora]

jennerik

Just wanted to say Sorry if it seems like I hijacked your thread didnt mean to - my apologies to you

[jennerik]

Are you looking on Pacer or 13datacenter? I ask because both my mortgages show no claim on 13datacenter (well, they're listed but show $0 under the claim amount), BUT on Pacer they did file a claim. For some reason, it just doesn't show on datacenter. I recommend checking Pacer if you haven't already...

Hi there momofthree. I looked on Pacer and am waiting on my password for 13datacenter. on Pacer, there is no claim from Countrywide/BofA for the second.
Justbroke...what does a "non-recourse" state mean? **Edit...never mind. Just googled it.

[Pandora]

thanks Des for the explanation. Yeah - I added everything up and if we were paying back 100% in full, our plan payment would have to increase like $1K a month so...know its not 100% technically. Our 2nd still shows as secured claim even though strip was approved and all docs elude to that fact (approved strip - states "Lien avoided, 100% unsecured). I guess the real question is - is our 2nd getting paid as an unsecured or secured even though its approved for strip. Attorney says unsecured % applies due to strip, however, how can other unsecured's get 100% of payment (dr bills) but 2nd gets less than 100%?

Our attorney fees incl. AP are $2750 and trustee fee's are 6.9. - base plan is 36K due to non-exempt assets (vehicle valuations and tax return) (under median btw), payment was allowed for 60 months due to not enough DMI to fund a 36 month. So if I break it down to each claim / allowance: trustee fees are essentially $2500 over course of plan, legal $2750 = $88 combined roughly out of our payment @ 100%, Pers. Prop =$15 (100%), dr bills = $34 (100%) ... leaving about $463 or therebouts to the 2nd, yet its short being paid in full by about $50K.

How can one have some unsecureds being paid at 100% yet not all? Trustee's office and lawyers office both state the prop. taxes and dr bills will be paid at 100% - yet the 2nd wont be. I think thats where I'm confused. Does that make sense? I know they're adding it in the mix (as you stated above) because it shows as such.