Rivera v. Deutsche Bank National Trust Co. (In re Rivera)
- Summarized by Joel Newell , Jennings, Strouss & Salmon, PLC
- 6 years 8 months ago
- BAP No. NC-15-1120-KiTaJu (BAP 9th Cir. Oct. 6, 2016)
- The BAP for the 9th Circuit affirmed the ruling of the bankruptcy court (N.D. Cal.) denying chapter 13 debtors' objection to mortgage creditor's claim. BAP agreed with bankruptcy court's computation of claim amount, including specific application of partial payments, plus addition of fees and costs. BAP agreed that payment to mortgage holder of certain amounts by loan servicer did not diminish claim amount. Dismissal of the debtors' chapter 13 case during the pendency of the appeal did not moot appeal; liquidation of the claim amount would be binding on the parties outside of bankruptcy as well.
- Procedural context:
- Chapter 13 debtors objected to creditor's claim; bankruptcy court denied objection. Debtors appealed to BAP.
- the Debtors obtained a refinance loan for their home in Bethel Island, California (the "Property"). They executed an Adjustable Rate Note ("Note") for $440,000, payable to Lender. To secure the Note, the Debtors executed a deed of trust in favor of Lender. The deed of trust was subject to an adjustable rate rider, and the Note provided for monthly interest rate changes. The Lender provided different option for the Debtors to remit monthly payment, also known as "pick a pay". The Debtors had been paying pursuant to the "reduced interest and escrow" plan. The Lender would send "change rate" letter to the Debtors to inform them of the interest rate change and projected principal balance. The Debtors' primary dispute was the discrepancy between the secured proof of claim filed by Lender and the projected balance in the rate change letters. The Debtors further asserted that the Lender was incorrectly applying their payments. The Bankruptcy Appellate Panel determined that Servicer advances are not "payments" made on behalf of or for the benefit of the borrower. Therefore, the Lender was correctly applying payments received. Because the servicer's advances are reimbursable, the Debtors' debt to the Trust is not satisfied by those advances.
- Kirscher, Taylor, Jury
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