Creditor’s Motion to Reopen and Compel Surrender of Home Denied Where No Relief was Justified (since Husband had Died and Wife Not on Note)

Creditor’s Motion to Reopen and Compel Surrender of Home Denied Where No Relief was Justified (since Husband had Died and Wife Not on Note)

Trust Company  seeks to reopen this long ago closed Chapter 7 bankruptcy case asking the
Bankruptcy Court to compel a dead man to surrender his home.

Debtors filed this routine and uneventful Chapter 7 bankruptcy case over eight years ago
on February 19, 2010.3 They received their discharge on July 1, 2010.     In their Statement of
Intentions, the Debtors indicated they wanted to reaffirm the mortgage debt encumbering their  home, which was held by Bank of America. Only the husband Debtor, Charles,  signed the promissory note connected to the mortgage. The Debtor/wife, Susan, had no debt to reaffirm.

Bank of America never sent husband a reaffirmation agreement for him to sign. Instead,
the lender sent a letter to the Debtors’ lawyer inviting him to explore the bank’s “home retention programs” with his clients. Bank of America had actual knowledge of the bankruptcy filing but filed no proof of claim with the Bankruptcy Court and took no action in this Chapter 7 case.

Similarly, husband never prepared, signed, or filed any reaffirmation agreement with the Bankruptcy Court. But, he always acted consistently with his intent to reaffirm the debt. He
was current with his payments when his bankruptcy case was filed and remained current when he received a discharge.10 He made multiple payments, all accepted by the lender, after his bankruptcy case was closed.

Trust acknowledges the Debtors were current on their mortgage payments when they filed bankruptcy on February 19, 2010, and they made all future payments through February 2011.  Husband, by this point, was dying. Because he could no longer earn his regular income and despite his declining medical condition, husband valiantly tried to restructure the loan.

Bank of America eventually offered a loan modification to Mr. McHale in August 2011.14 Debtors made ten full payments under the temporary loan modification agreement that was only supposed to last for three months.15 Bank of America accepted every payment, the last one being made by the Debtors’ daughter on May 23. Husband died on April 26, 2012.
Bank of America refused to accept any of the many later payments tendered by wife. The lender also refused to issue a permanent loan modification or to assist wife, the surviving Debtor, with restructuring the mortgage encumbering her home. The testimony was uncontroverted that wife, assisted by her family, was willing and able to continue paying for her home. Bank of America simply failed to work with their borrower’s widow.

Bank of America and later the Trust instead pursued two separate foreclosure actions against wife. The first foreclosure case was filed on January 4, 2013. Because the lender could not procure a witness to prove its alleged debt,  Trust voluntarily dismissed the first foreclosure on October 3, 2014.

Trust filed a second foreclosure action on May 19, 2015. The second foreclosure action remains pending. Trust, not wife, has asked to continue the trial in this second foreclosure case at least three times. Then, on June 18, 2016, almost six years after the Debtors received their discharge in this bankruptcy case and three and a half years after the initial foreclosure action was filed,  Trust filed its motion to reopen this closed Chapter 7 case.  Trust argues the Debtors did not properly reaffirm the debt then due to Bank of America, and the Bankruptcy Court should compel the surrender of the home.

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