Battle On When Bank Back Tracks On Home Loan Balance


It’s war, after all.

Remember the office pool I  created following the lender’s statement under FRBP 3002.1 that the loan was fully current?

We were betting on how long after the Chapter 13 discharge it would take Wells Fargo would screw up the debtor’s home loan account.

Did anyone out there pick less than 30 days?

If so, you win.  And we hope Wells Fargo loses, big time.

The rules of this war

Bankruptcy Rule 3002.1 is supposed to bring both sides of a home loan transaction to the table at the end of a Chapter 13 plan to get agreement on whether the loan is fully current or not.  “Agreement” can be real, or imposed by the bankruptcy judge if there is a dispute.

I liken the process to call and response:  the trustee (or the debtor) says all the prepetition arrearages are paid.  The lender then is required to respond, either agreeing or not.  If the lender asserts an unpaid arrears, they must provide an accounting in support of that position.

If the debtor disagrees, he can file a motion for a determination of what, if anything, is then owed.

Mortgage back story

In this case, we have the lender’s filed Response to the trustee’s notice of final cure. Everything’s current, says the bank’s lawyer under penalty of perjury.

On the debtor’s side, we have admitted gaps in post petition payment.  We don’t think for a moment the borrower is really current.

A further review of the post petition payment history as we know it shows a dizzying pattern of crediting payments, reversing them, then repeating the entire drill.

For several years, the debtor got no 1098 tax statements, needed to deduct the mortgage interest she paid on her income taxes.

My legal opinion is that this is all screwed up.

Light dawns on Wells Fargo

But last month in response to a Notice of Final Cure Payment, Wells said things were copacetic:  The debtor was fully current.

Now, three weeks later, they say to her, you’re $50,000 in arrears.

In the mean time, however, the court has issued the debtor a discharge.

So, we may have a discharge violation; perjury on the part of the lawyer signing the Response; or a violation of Rule 3002.1.

So I’m no longer feeling like I’ve been stood up on a date.

This isn’t a date, it’s a battle.