May 16, 2012
Tentative Ruling:
This is the confirmation of the debtors’ Chapter 13 plan. The Bank of New York Mellon (“bank”) has filed an objection, primarily concerning the attachment of the optional Addendum promulgated by the Central District. The bank argues that the Addendum is superseded as inconsistent with revised FRBP 3002.1 which was adopted by the Supreme Court December 2011.
The bank’s argument is not persuasive on any of its points.
First, the bank argues that FRBP 3002.1(b) and (c) as amended is an Act of Congress. It is not, except insofar as it could be argued that 28 U.S.C. §2075, which requires that changed rules be submitted by the Supreme Court for Congressional review by May 1, becomes an “act of Congress” each year when Congress fails to respond (as here).
Second, it is equally true that no Local Rule can be enacted if it inconsistent with, or duplicative of, either an act of Congress or the Federal Rules of Bankruptcy Procedure. See FRBP 9029. But the court is not persuaded that the Addendum is inconsistent or duplicative of the Rules or any of them. Rule 3002.1 (b) and (c) governs proofs of claim, and the notices required there under are to be given as supplements to the proof of claim. The court is not sure this is quite the same thing as monthly mortgage statements particularly when the plan calls for monthly statements.
The entire purpose of the Addendum was to solve the problem of Chapter 13 debtors (who by definition are financially stretched as far as feasible to repay debt) getting behind on charges and expenses that were not made known to them. FRBP 3002.1 (c) requires service on debtor and counsel a list of all charges for fees and expenses “within 180 days after the date on which the fees, expenses or charges are incurred.” The Addendum merely requires that such statements be given “at least quarterly” and “upon reasonable written request of the debtor…” The bank complains of the difference between 180 days and quarterly or monthly statements. The court does not believe a requirement that a notice that is indeed “within 180 days” becomes necessarily duplicative or even inconsistent just because it becomes due more often, or closer in time to the date the charge is actually incurred. Indeed, since FRBP 3002.1(b) requires a notice no later than 21 days before a changed payment becomes due, the Addendum appears reasonable, appropriate and consistent for debtors attempting to manage their obligations on a monthly basis.
Third, the bank complains of the extra costs such a procedure will impose. The bank may be entitled to add reasonable charges to its loans under the instruments as written. The problem here is that no evidence is presented about what those charges really are beyond vague arguments of counsel. As held in Greenpoint Mortg. Funding, Inc. v. Herrera (In re Herrera), 422 B.R. 698, 704-06 (9th Cir BAP 2010) aff’d sub nom. Home Funds Direct v. Monroy (In re Monroy), 650 F.3d 1300 (9th Cir 2011) and in U.S.Bank. v Vu, et al (In re Vu), 2012 WL 1521635*8(9th Cir. BAP), without concrete evidence of the amount and applicable term of the charges, the court cannot view this as any insuperable obstacle to confirmation.
Overrule objection.
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