Home Funds Direct v. Monroy (In re Monroy)

Summarized by Laury Macauley , Macauley Law Group, a Professional Corporation
14 years 8 months ago

Citation:

--F.3d-- (9th Cir. 2011); case no. 10-60018 (June 20, 2011)

Tag(s):

Ruling:

The Ninth Circuit Court of Appeals affirmed, without further opinion, the decision of the Ninth Circuit Bankruptcy Appellate Panel, upholding provisions in Chapter 13 plans that require mortgage lenders to provide additional reports and disclosure of certain charges to debtors post-confirmation that are not otherwise mandated under the terms of their mortgage contracts or by the Real Estate Settlement Procedures Act, 12 U.S.C. Section 2601, et seq. ("RESPA"). These provisions are suggested in Local Form 3015-1.1A in the Central District of California (the so-called "Addendum"). The B.A.P. decision upheld by the Ninth Circuit rejected the mortgage lenders' objections to the Addendum provisions, finding that: 1) RESPA did not preempt the ability of the Bankruptcy Court to approve Chapter 13 plans with additional reporting requirements and disclosures nor did it conflict with the Addendum provisions; and 2) that the Addendum provisions did not violate Bankruptcy Code Section 1322(b)(2) as an impermissible modification of contractual rights, because the provisions did not alter a "bargained for" right of the mortgage lenders. The B.A.P. decision emphasized the intent of RESPA as a consumer protection statute and its determination that the Addendum provisions only serve to provide heightened protection to consumer debtors post-confirmation.

Procedural context:

Appeal from the Ninth Circuit Bankruptcy Appellate Panel affirming orders of the U.S. Bankruptcy Court for the Central District of California.

Facts:

In these consolidated appeals, a number of mortgage lenders objected to their treatment in various Chapter 13 plans proposed by debtors. These plans had each contained certain provisions taken from an optional "Addendum" published as Local Rule 3015-1.1A by the U.S. Bankruptcy Court for the Central District of California. The Chapter 13 plans at issue had each provided that all post-petition payments be cured and that all pre-petition arrearages be paid out over time under the specific terms of the plan. However, the additional provisions of the Addendum included in each Chapter 13 plan imposed a series of "enhanced reporting requirements" upon the mortgage lenders, including the disclosure of certain fees imposed post-confirmation.

Judge(s):

The Honorable Stephen S. Trott; The Honorable Pamela Ann Rymer; and the Honorable Stephen M. McNamee.

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