Servicer of mortgage seeks to reopen the Debtors’ chapter 13 case to correct, as Servicer maintains, a scrivener’s error in Servicer’s Statement in Response to Trustee’s Notice of Final Cure Payment Pursuant to Fed.R.Bankr.P. 3002.1(g) (the “Response”).
Debtors filed their chapter 13 petition, plan, schedules, and statement of financial affairs on July 2, 2012. Debtors listed a secured claim for an unpaid balance on a note secured by a deed of trust on Debtors’ homestead and a pre-petition claim for mortgage arrears in Schedule D. Debtors proposed to pay Bank of America’s (“BOA”) pre-petition claim for mortgage arrears in full through their chapter 13 plan. Debtors’ chapter 13 plan was confirmed on October 18, 2012.
The Chapter 13 Trustee (“Trustee”) filed her Objection to the Claim of BOA on August 23, 2014. Trustee objected on two grounds: (1) the escrow analysis failed to state how the escrow arrears were determined; and (2) BOA failed to provide notice to Trustee and Court that it had transferred its note and Deed of Trust to the Secretary of Veterans Affairs. See Fed. R. Bankr. P. 3001(c)(1)(C) (requiring sufficient proof of an escrow analysis) and 3001(e) (requiring proof of the transfer with the court). An Agreed Order Resolving Trustee’s Objection to Claim of Bank of America was entered on February 27, 2014. The Agreed Order disallowed payment of the escrow arrearage through the chapter 13 plan, but preserved the claim under § 1322(b)(2). Thereafter, Debtors received an inheritance that allowed them to pay off the entire amount of BOA’s pre-petition mortgage claim and pay all other creditors in full (stating that although BOA has failed to provide a notice of a transfer or assignment of lien, Debtors acknowledge that they are delinquent on their mortgage payments).
Trustee filed her Notice of Final Cure Payment Pursuant to Fed.R.Bankr.P. 3002.1(f) indicating that BOA’s pre-petition claim for mortgage arrears paid in full. Additionally, Trustee stated in her Notice:
Within 21 days of the service of the Notice of Final Cure Payment, the creditor MUST file and serve a Statement as a supplement to the holder’s proof of claim on the Debtors, Debtors’ Counsel and the Chapter 13 Trustee, pursuant to Fed.R.Bank.P.3002.1(g), indicating 1) whether it agrees that the Debtors have paid in full the amount required to cure the default on the claim; and 2) whether the Debtors are otherwise current on all payments consistent with 11 U.S.C. § 1322(b)(5).
The statement shall itemize the required cure or post-petition amounts, if any, that the holder contends remain unpaid as of the date of the statement. The statement shall be filed as a supplement to the holder’s proof of claim and is not subject to Rule 3001(f). Failure to notify may result in sanctions.
BOA filed its Statement in Response to Trustee’s Notice of Final Cure Payment Pursuant to Fed.R.Bankr.P. 3002.1(g) stating the following:
- Creditor agrees that the Debtor has paid in full the amount required to cure the default on the claim.
- The Debtor is not otherwise current on all payments as they are due for 06/01/2014.
Local Rule 3002.1(b) states that:
If the holder of a claim, as defined in FRBP 3002.1, files a response which disagrees with the Notice of Final Cure Payment under 3002.1(f), or otherwise asserts that unpaid postpetition amounts are outstanding, and neither the debtor nor the trustee timely file a motion pursuant to FRBP 3002.1(h), the trustee is authorized to close the case.
Trustee and Debtors did not file a motion pursuant to Fed.R.Bankr.P. 3002.1(h) seeking a Court determination that the Debtors had made all post-petition mortgage payments. An Order Discharging Debtors was entered on July 28, 2014. Ultimately, the bankruptcy case was closed and Debtors defaulted on the loan resulting in a foreclosure sale on January 5, 2017. Debtors have filed suit in state court against Servicer for breach of contract, fraud, economic and actual damages, and other causes of action.