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Home Foreclosures: 9.4.6.7 Fee Dispute Procedure—Rule 3002.1(e)

If the debtor, chapter 13 trustee, or any party in interest disputes that postpetition fees are owed, Rule 3002.1(e) establishes a procedure for resolving the dispute.386 The debtor or trustee may file and serve a motion within one year after service of the fee notice (Form 10—Supplement 2) seeking a determination of the propriety of the fee.387 If a motion is filed, the court shall determine, after notice and hearing, whether any claimed fee, expense, or charge is required by the mortgage agree

Home Foreclosures: 9.4.6.8 Notice of Final Cure Payment—Rules 3002.1(f) Through 3002.1(h)

Rule 3002.1(f) provides that “[w]ithin 30 days after the debtor completes all payments under the plan, the trustee shall file and serve on the holder of the claim, the debtor, and debtor’s counsel a notice stating that the debtor has paid in full the amount required to cure any default on the claim.” The notice must also inform the creditor of its obligation to file a response to the notice.

Home Foreclosures: 9.4.6.10 Rule 3002.1 and Attorneys General Settlement with Major Servicers

The settlement agreement between the states’ attorneys general and the five leading mortgage servicers, finalized in April 2012, contains terms that mandate compliance by the servicers with Bankruptcy Rules 3001 and 3002.1. The affected servicers in the initial settlement were Bank of America, JP Morgan Chase, Wells Fargo, Citibank, and Ally/GMAC.422 The settlement agreement with those entities was concluded in September 2015.

Home Foreclosures: 9.4.7 Proper Crediting of Plan Payments

The Code was amended in 2005 to provide that the creditor’s willful failure to credit payments received under a confirmed plan in accordance with the plan constitutes a violation of the injunction of section 524(a).435 The section does not apply, however, if confirmation of the plan has been revoked, the plan is in default, or the creditor has not received the plan payments as required by the plan. The provision is also limited to cases in which the failure to credit payments has caused material injury to the debtor.

Home Foreclosures: 9.6.1 Home Secured Loans

11 U.S.C. § 506 provides that a secured claim in bankruptcy may be limited to the amount of the value of the creditor’s collateral.465 The statute further provides that a lien may be voided to the extent it exceeds the value of the collateral to which it is attached.466 The process of voiding liens under this provision has come to be called “strip down.”

Home Foreclosures: 4.6.2a MERS State-Specific Exceptions

MERS’s value to the lending industry rests upon its claim to offer an alternative recording system that operates uniformly nationwide. Because state foreclosure laws are far from uniform, MERS has been forced to react to certain state court rulings that found the MERS business model out of sync with state laws.

Home Foreclosures: 42 U.S.C. § 1471. Financial assistance by Secretary of Agriculture

(a) Authorization and purposes of assistance. The Secretary of Agriculture (hereinafter referred to as the “Secretary”) is authorized, subject to the terms and conditions of this subchapter, to extend financial assistance, through the Farmers Home Administration, (1) to owners of farms in the United States and in the Territories of Alaska and Hawaii and in the Commonwealth of Puerto Rico, the Virgin Islands, the territories and possessions of the United States, and the Trust Territory of the Pacific Islands, to enable them to construct, improve, alter,

Home Foreclosures: Section 1472(d) through (f)

(d) Dwelling units available to very low-income families or persons. On and after November 30, 1983—

(1) not less than 40 percent of the funds approved in appropriation Acts for use under this section shall be set aside and made available only for very low-income families or persons; and

(2) not less than 30 percent of the funds allocated to each State under this section shall be available only for very low-income families or persons.

Home Foreclosures: Amendment History

[July 15, 1949, ch. 338, tit. V, § 502, 63 Stat. 433; Pub. L. No. 87-70, tit. VIII, § 801(b), 75 Stat. 186 (June 30, 1961); Pub. L. No. 87-723, § 4(a)(2), 76 Stat. 671 (Sept. 28, 1962); Pub. L. No. 89-117, tit. X, § 1002, 79 Stat. 497 (Aug. 10, 1965); Pub. L. No. 89-754, tit. VIII, § 802, 80 Stat. 1282 (Nov. 3, 1966); Pub. L. No. 93-383, tit. V, § 505(b), 88 Stat. 693 (Aug. 22, 1974); Pub. L. No. 95-128, tit. V, § 502(a), 91 Stat. 1139 (Oct. 12, 1977); Pub. L. No. 96-153, tit. V, § 503, 93 Stat. 1134 (Dec. 21, 1979); Pub. L. No. 96-399, tit. V, § 514(a), 94 Stat. 1671 (Oct. 8, 1980); Pub.

Home Foreclosures: 7 C.F.R. § 3550.4 Reviews and appeals

Whenever RHS makes a decision that is adverse to a participant, RHS will provide the participant with written notice of such adverse decision and the participant’s rights to a USDA National Appeals Division hearing in accordance with 7 C.F.R. part 11. Any adverse decision, whether appealable or non-appealable may be reviewed by the next-level RHS supervisor.

Home Foreclosures: 7 C.F.R. § 3550.68 Payment subsidies

RHS administers three types of payment subsidies: interest credit, payment assistance method 1, and payment assistance method 2. Payment subsidies are subject to recapture when the borrower transfers title or ceases to occupy the property.

(a) Eligibility for payment subsidy.

(1) Applicants or borrowers who receive loans on program terms are eligible to receive payment subsidy if they personally occupy the property and have adjusted income at or below the applicable moderate-income limit.

Home Foreclosures: 7 C.F.R. § 3550.69 Deferred mortgage payments

For qualified borrowers, RHS may defer up to 25 percent of the monthly principal and interest payment at 1 percent for up to 15 years. This assistance may be granted only at initial loan closing and is reviewed annually. Deferred mortgage payments are subject to recapture when the borrower transfers title or ceases to occupy the property.

(a) Eligibility. In order to qualify for deferred mortgage payments, all of the following must be true:

Home Foreclosures: 7 C.F.R. § 3550.204 Payment assistance

Borrowers who are eligible may be offered payment assistance in accordance with subpart B of this part. Borrowers who are not eligible for payment assistance because the loan was approved before August 1, 1968, or the loan was made on above-moderate or nonprogram (NP) terms, may refinance the loan in order to obtain payment assistance if:

(a) The borrower is eligible to receive a loan with payment assistance;

Home Foreclosures: 7 C.F.R. § 3550.205 Delinquency workout agreements

Borrowers with past due accounts may be offered the opportunity to avoid liquidation by entering into a delinquency workout agreement that specifies a plan for bringing the account current. To receive a delinquency workout agreement, the following requirements apply:

(a) A borrower who is able to do so will be required to pay the past-due amount in a single payment.

Home Foreclosures: 7 C.F.R. § 3550.207 Payment moratorium

RHS may defer a borrowers scheduled payments for up to 2 years. NP borrowers are not eligible for a payment moratorium.

(a) Borrower eligibility. For a borrower to be eligible for a moratorium, all of the following conditions must be met:

(1) Due to circumstances beyond the borrower’s control, the borrower is temporarily unable to continue making scheduled payments because:

Home Foreclosures: 7 C.F.R. § 3550.208 Reamortization using promissory note interest rate

Reamortization using the promissory note interest rate may be authorized when RHS determines that reamortization is required to enable the borrower to meet scheduled obligations, and only if the Government’s lien priority is not adversely affected.

(a) Permitted uses. Reamortization at the promissory note interest rate may be used to accomplish a variety of servicing actions, including to:

(1) Repay unauthorized assistance due to inaccurate information.

Home Foreclosures: 7 C.F.R. § 3550.211 Liquidation

(a) Policy. When RHS determines that a borrower is unable or unwilling to meet loan obligations, RHS may accelerate the loan and, if necessary, acquire the security property. The borrower is responsible for all expenses associated with liquidation and acquisition. If the account is satisfied in full, the borrower will be released from liability. If the account is not satisfied in full, RHS may pursue any deficiency unless the borrower received a moratorium at any time during the life of the loan and faithfully tried to repay the loan.