Chapter 13 Plans with Loan Modifications

Good afternoon Members of the Bar:

For those cases were your client will be applying for a loan modification under the Homeowner’s Bill of Rights and the arrearage for the 1TD causes the plan to be infeasible, please use the following language for cases filed with our office:

“The debtor(s) will recapitalize the current arrearage in the amount of ____________with Secured Creditor ______________________________ by loan modification which will be completed within six months of the mortgage servicer’s receipt of the loan modification application or within the six months after the filing of the case, whichever is greater. A true and correct copy of the Secured Creditor’s Receipt of the Loan Modification Application is attached to the plan as Exhibit “A”. Concurrently, a Stipulation for Relief from the Automatic Stay will also be filed with the court in order to facilitate modification of this loan pursuant to the “Homeowner’s Bill of Rights” enacted into law by the State of California on January 1, 2013. The debtor(s) shall tender all post petition mortgage payments to the Secured Creditor on a timely basis until the loan modification application is approved and the arrearage has been recapitalized. Thereafter, the debtor(s) shall tender all post petition mortgage payments to the Secured Creditor in the amount set forth in the loan modification agreement and in compliance with the terms of the modified loan agreement.” Just make sure to read these five things to remember before getting a payday loan.

As you can see, the language will require your client to provide a receipt from the mortgage servicer acknowledging receipt of the loan modification application which will be attached to the plan and to make post petition mortgage payments in the amounts required by the promissory note and the subsequently modified loan agreement.  Also, your client will need to obtain a stipulation for relief from the stay for purposes of availing yourself of the Homeowner’s Bill of Rights.

Sincerely,

Akihito Koyama
Senior Staff Attorney  Kathy Dockery – Chapter 13 Trustee