In re Field

604 B.R. 680

IN RE: Rex A. FIELD, Debtor(s).

C/A No. 18-06502-JW

United States Bankruptcy Court, D. South Carolina.

Signed August 8, 2019

Rex A. Field, St. Helena Is, SC, pro se.

ORDER

John E. Waites, US Bankruptcy Judge

This matter is before the Court on the Objection to Claim of Wilmington Savings Fund Society, FSB, DBA Christiana Trust, not in its Individual Capacity, But Solely as Owner Trustee for CSMC 2018-RPL6 Trust ("Wilmington SFS"), filed by Rex A. Field ("Debtor") on March 8, 2019. Wilmington SFS filed a Response to the Objection to Claim on April 16, 2019, and an amended proof of claim on May 16, 2019. The Court held a hearing on the Objection to Claim, attended by Debtor, the Chapter 13 Trustee, and counsel for Wilmington SFS. The Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334. Pursuant to Fed. R. Civ. P. 52, made applicable to this proceeding by Fed. R. Bankr. P. 7052 and 9014, the Court makes the following findings of fact and conclusions of law:¹

FINDINGS OF FACT

1. On October 7, 2005, Debtor and Tracy L. Field purchased property located at 1 Dulamo Bluff Road, Saint Helena Island, South Carolina ("the Property"). To finance this purchase, Debtor and Tracy L. Field executed a promissory note in the amount of $359,000 to E*Trade Mortgage Corporation ("Note"). The Note was secured by a mortgage on the property ("Mortgage") in favor of Mortgage Electronic Registration Systems (MERS). The Note and Mortgage both provide that the "Lender" is E*Trade Mortgage Corporation.

2. By assignment dated October 20, 2010 and recorded November 22, 2010, MERS as nominee for E*Trade Mortgage Corporation assigned its interest in the Mortgage to CitiMortgage.

3. On December 13, 2013, Debtor filed his first Chapter 13 bankruptcy case, C/A No. 13-07371, with assistance of bankruptcy counsel. Debtor listed CitiMortgage as a secured creditor with a claim secured by an interest in the Property, but listed the claim as disputed. Debtor voluntarily dismissed the case on February 5, 2014, and thereafter pursued loss mitigation/mortgage modification with CitiMortgage outside of bankruptcy.

4. On August 11, 2014, Debtor and Tracy L. Field entered into a Home Affordable Modification Agreement with CitiMortgage regarding the Mortgage secured by the Property. The Modification Agreement provided for the waiver of all unpaid late charges, reduction of the interest rate on the Note from 4.990% to 2.000% for a five-year period (with interest rate changes occurring thereafter in years 6 (3.000%), 7 (4.000%), and 8 (4.125%)), and a new principal balance of $386,272.11, with $69,267.91 of the new principal balance being deferred such that Debtor was not obligated to pay interest or make monthly payments on that amount. As part of the Modification Agreement, Debtor agreed that "the Loan Documents as modified by this Modification Agreement are duly valid, binding agreements, enforceable in accordance with their terms and are hereby reaffirmed."

5. On December 26, 2018, Debtor filed a second voluntary petition for relief under chapter 13 of the Bankruptcy Code, pro se . On that same date, the Court issued a notice setting March 6, 2019 as the deadline for filing proofs of claim. In the initial Schedules filed simultaneously with the petition, Debtor listed "WSFS/Christiana Trust, Trustee for CSMC 2018-RPL6 Trust" as the holder of a secured claim in the amount of $288,872.61. The claim is listed as disputed.²

6. On February 27, 2019, Wilmington SFS, through its servicer, NewRez LLC DBA Shellpoint Mortgage Servicing, filed its proof of claim ("Proof of Claim") asserting a secured claim in the amount of $358,536.24, secured by the Property. Page one of the Official Form 410, Proof of Claim, lists Wilmington SFS as the current creditor, but lists no "Other names the creditor used with the debtor" and states that the claim was not acquired from anyone else. Wilmington SFS attached the following documents to its proof of claim:

a. Mortgage Proof of Claim Attachment, Official Form 410A, which lists Wilmington SFS as "Creditor" and NewRez LLC DBA Shellpoint Mortgage Servicing as "Servicer." The total debt is listed as $358,536.24 and the total prepetition arrearage is listed as $0.

b. Annual Escrow Account Disclosure Statement, which appears to have been prepared by Shellpoint Mortgage Servicing.

c. Mortgage from Debtor and Tracy L. Field to E*Trade Mortgage Corporation, dated October 7, 2005 and recorded October 13, 2005. d. Second Home Rider indicating the agreement of Debtor and Tracy L. Field to occupy and only use the Property as a second home.

e. Note, dated October 7, 2005, in the amount of $359,000, executed by Debtor and Tracy L. Field to E*Trade Mortgage Corporation. No endorsements were shown on the Note.

f. Home Affordable Modification Agreement, dated August 11, 2014, between Debtor and Tracy L. Field and CitiMortgage, Inc. regarding the Mortgage and Note originally executed on October 7, 2005.

g. Document entitled "Collateral Assignments File Location R-SLDPLT" dated June 17, 2014, indicating Borrower Name of Rex Field.

h. Assignment of Mortgage from MERS as nominee for E*Trade Mortgage Corporation to CitiMortgage, dated October 20, 2010, recorded November 22, 2010, regarding the mortgage originally executed by Debtor and Tracy L. Field on October 7, 2005 regarding the Property.

i. Proof of Service of the Proof of Claim and attached documents on Debtor, the Chapter 13 Trustee and the Court, dated February 26, 2019.

7. No other creditors filed a proof of claim in this case.

8. On March 8, 2019, Debtor filed the Objection to Claim of Wilmington SFS.

9. On April 16, 2019, Wilmington SFS filed a Response to the Objection to Claim.

10. On May 16, 2019, Wilmington SFS filed an amended proof of claim. In addition to the documents attached to the original proof of claim, the amended proof of claim included a copy of the Note executed by Debtor and Ms. Field to E*Trade Mortgage Corporation with two additional pages: a page containing an undated stamped endorsement from E*Trade Mortgage Corporation to CitiMortgage, Inc. and an undated "Allonge to Note" with an endorsement in blank from CitiMortgage, Inc. The amount and nature of the claim as secured was not changed by the amendment.

11. On June 5, 2019, the Court conducted a hearing on the Debtor's Objection to Claim. In addition to the proof offered by each party, at the hearing, Wilmington SFS made an oral motion to allow the May 16, 2019 amendment of its proof of claim and to amend its claim to conform to the evidence presented during the hearing, which included the following documents:

a. Certified True Copy of the Mortgage, dated October 7, 2005 and recorded October 13, 2005.

b. The original note with undated endorsement from E*Trade Mortgage Corporation to CitiMortgage, Inc. and undated endorsement in blank from CitiMortgage, Inc.

c. Certified True Copy of Assignment of Mortgage recorded November 22, 2010, from MERS as nominee for E*Trade Mortgage Corporation to CitiMortgage, Inc.

d. Certified True Copy of Assignment of Mortgage recorded August 10, 2016, from CitiMortgage, Inc. to Nationstar Mortgage LLC.

e. Certified True Copy of Assignment of Mortgage recorded December 18, 2018, from Nationstar Mortgage LLC to Wilmington SFS.

f. Payoff statement, dated May 21, 2019, from Shellpoint Mortgage Servicing, indicating that the total payoff as of May 21, 2019 is $361,141.18. g. Loan History Summary dated May 21, 2019 from NewRez LLC DBA Shellpoint Mortgage Servicing.

h. Annual Escrow Account Disclosure Statement

CONCLUSIONS OF LAW

Debtor seeks disallowance of Wilmington SFS's claim under 11 U.S.C. § 502(b) on several grounds: (1) Wilmington SFS failed to serve its Proof of Claim; (2) Wilmington SFS did not timely file its amended proof of claim within the 120-day period set forth in Fed. R. Bankr. P. 3002(c)(7) ; (3) Wilmington SFS failed to file adequate supporting documentation to its Proof of Claim in compliance with Fed. R. Bankr. P. 3001(c) ; (4) the Proof of Claim fails to demonstrate that Wilmington SFS has a perfected security interest in the Debtor's Property; and (5) Wilmington SFS did not have standing to file the proof of claim.³ Wilmington SFS made an oral motion to allow the May 16, 2019 amendment of its Proof of Claim and allow amendment of its Proof of Claim to conform to the evidence presented at the hearing, which it asserts includes the necessary documentation to meet the requirements of Fed. R. Bankr. P. 3001.

During the hearing, the Court announced on the record that it was denying relief to Debtor based upon the allegation that Wilmington SFS failed to serve its Proof of Claim, finding that proof of service was attached to the Proof of Claim, Debtor failed to overcome the presumption that Wilmington had served the Proof of Claim as evidenced by the proof of service, and that there is no express requirement in the Federal Rules of Bankruptcy Procedure obligating Wilmington SFS to serve its Proof of Claim upon Debtor. The remaining grounds for relief were taken under advisement.

I. 11 U.S.C. § 502

The allowance and disallowance of claims in a bankruptcy case is governed by 11 U.S.C. § 502. Section 502(a) provides that a proof of claim is deemed allowed unless an objection is filed. 11 U.S.C. § 502(a). If an objection to claim is made, the Court, after notice and a hearing, shall determine the amount of the claim as of the date of the petition, and shall allow such claim in that amount, unless the claim is disallowed under one of the exceptions listed in the Bankruptcy Code. 11 U.S.C. § 502(b). "A proof of claim executed and filed in accordance with these rules shall constitute prima facie evidence of the validity and amount of the claim." Fed. R. Bankr. P. 3001(f). If there is a presumption of validity and amount of the claim, the debtor would bear the initial burden of presenting evidence sufficient to overcome the prima facie presumption. In re Washington, 581...