March 1, 2008
Addendum to Chapter 13 Plan from the Central District of California
Here in the Central District, emails and postings from consumer bankruptcy attorneys have been flying back and forth for the past few months regarding language that different attorneys are adding to chapter 13 plans trying to deal with problems homeowners are having with mortgage lenders during the plan. It seems that it is fairly common to have a debtor finish a chapter 13 plan, receive a discharge and a new notice of foreclosure saying that the debtor is behind on the mortgage x thousands of dollars because of charges incurred during the plan, unbeknownst to the debtor.
Eric Clark of Borowitz, Lozano & Clark, LLP in West Covina, spearheaded the effort to get standardized language that the courts here would agree to without the necessity of additional briefings, hearings and the like. He did a great job since the attorneys were adding a few paragraphs and the addendum is five pages.
The addendum requires the mortgage company to provide monthly statements (if it had been previously providing monthly statements) which contain a bunch of specified information including the telephone number and contact information the debtor may contact "to obtain reasonably prompt information." In addition, the mortgage company in every case must provide specified information to the debtor, "at least quarterly," including any "property inspection fees, servicing fees, or appraisal fees." If the mortgage company believes the debtor is in postpetition default, it must notify the debtor by letter "before taking any steps to modify the automatic stay." The information may be provided electronically.
The addendum provides that the automatic stay is modified to permit the mortgage company to speak directly to the debtor - circumventing a familiar excuse mortgage companies had for refusing to communicate with the debtor. It provides that the debtor may enforce the addendum by request for OSC but the debtor must wait for 60 days after the failure to act and must make a good faith effort to contact the mortgage company and determine the "cause of any non-compliance."
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