November 17, 2009
By Holly C. Thurman, Esq.
Effective January 1, 2010, the Western District of Pennsylvania Court Procedure will change regarding notifying the Court and the Debtor of monthly mortgage payment changes. The Chapter 13 Trustee is the acting disbursing agent for ongoing mortgage payments in this district.
Notice of Mortgage Payment Change must be filed with the Court at least twenty-one (21) days prior to the date that the change is to become effective or the Creditor is forever barred from collecting the difference in the change. In order to comply with this deadline, your attorney will need the information and documents as soon as possible after the escrow changes or the interest rate changes.
The Notice of Mortgage Payment Change must include:
- A complete and accurate loan payment history;
- A computation of the payment change “in a format which is readably understandable by the Court and the Parties-in-Interest;” and
- A declaration under penalty of perjury by a competent official of the Creditor substantiating the veracity and accuracy of the requested change
The Notice can no longer simply state what the monthly payment is and the effective date, rather, we will have to compute and accumulate detailed information justifying the change.
If a loan is transferred or sold, the procedure will now require the new owner to file a copy of any applicable lien assignment evidencing the Creditor’s alleged right to payment if the Creditor is not currently a Creditor “of record”. The assignment must also include, on a separate page, a narrative summary of the chain of title evidencing the Creditor’s authority to act and be paid.
After a Notice of Mortgage Payment Change is filed, the Court will issue a standard order requiring the debtor to:
- Amend the chapter 13 plan;
- File a declaration that the existing chapter 13 plan is sufficient to fund the plan with the modified debt; or
- File an objection to the Notice of Mortgage Payment Change as stated and the Court will schedule a hearing on the matter
If a Declaration is filed by the debtor that the monthly plan payment doesn’t need to change, we recommend a review of the Chapter 13 Trustee’s website to be sure that the changed monthly payment amount is disbursed. If an Objection to the Notice of Mortgage Payment Change is filed, additional documentation may be necessary to defend the Notice of Mortgage Payment Change.
If lenders want to be paid post petition fees, expenses or charges, then within 180 days from the date incurred, lenders must file a Notice of Post-Petition Fees, Expenses and Charges. Examples of fees incurred post petition are attorney fees, BPO fees, property inspections and other administrative fees. The notice must include an itemized list of the fees and expenses and when they were incurred. The Court will issue a standard Order giving the Debtor twenty-one (21) days to amend the plan, file a declaration, or object to the Notice.
Lenders must now be very diligent in administering loans secured by real estate and file the required notices with the court on a timely basis, or they will be barred from collecting increases in payments and other expenses. WWR is continuing to monitor these developments and will advise you as procedures change so that you can take the steps necessary to protect yourself while the debtor is in bankruptcy.
The Administrative Order implementing this new procedure can be found on the Western District of Pennsylvania Bankruptcy Court’s website at http://www.pawb.uscourts.gov.
If you have any questions regarding this client advisory, please contact Ms. Holly C. Thurman, Esq. Holly is an associate in the bankruptcy department within the Real Estate Default Group of Weltman, Weinberg & Reis Co., L.P.A., and is located in the Pittsburgh office. She can be reached directly at 412.338.7105 or via e-mail at firstname.lastname@example.org.