Court Would Not Use Its “Power to Prevent Injustice” to Force Nationstar to Honor Modification Letter that Chapter 13 Debtors Never Received

Court Would Not Use Its “Power to Prevent Injustice” to Force Nationstar to Honor Modification Letter that Chapter 13 Debtors Never Received

Debtors filed a Chapter 13 bankruptcy petition on September 4, 2012.  Debtors moved for referral to mortgage modification mediation with Nationstar, and the Court ordered mediation. The parties attended mediation in September 2013.

During continued mediation, the parties discussed a trial mortgage modification letter sent on December 12, 2012 (the “December 2012 Letter”). Debtors testified they did not know of the December 2012 Letter till mediation proceedings. The Court accepts and finds the Debtors did not receive the December 2012 Letter.

Debtors initiated an adversary proceeding against Nationstar on June 23, 2014. The Complaint sought damages based on the alleged non-receipt of the December 2012 Letter, to compel a good faith and expedited review of the Debtors’ mortgage modification application, to compel Nationstar to provide an in-house mortgage modification with the same terms as the December 2012 Letter, to deny any amended proof of claim that requested attorneys’ fees, and to order Nationstar to pay the Debtors’ attorneys’ fees and mediation fees.

Debtors filed, and the Court granted, a Motion to Amend the Mortgage Modification Mediation Order in February 2015. The parties continued mediation. Debtors then moved for approval of a permanent mortgage modification, and the Court granted the request.  Debtors have been operating under the permanent mortgage modification. The Complaint has not been amended.

 

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