If you are in a chapter 13 case right now, and you are buying a home, you will likely see a "Notice of Payment Change" come in the mail sometime soon, if you have not already. What the heck is a Notice of Mortgage Payment Change?
A New Rule of Procedure
A wonderful (I am serious!) new bankruptcy rule of procedure known as Bankruptcy Rule 3002.1 went into effect on December 1, 2011. This new rule requires, among other things, that mortgage companies (known as mortgage servicers) file with the Bankruptcy Court and serve on the debtor, debtor's counsel and the trustee, a notice of any change in the amount of the monthly mortgage payment, at least 21 days before the change is to take effect.
This includes any changes caused by an interest rate change (if you have an adjustable rate mortgage or ARM), changes caused by your escrow account, or any other changes that change the amount of your monthly payment. Why is this important to you?
Because in the old days (before this rule went into effect), the amount of your monthly mortgage payment could change for various reasons, and you may not know about it until the end of your case, or after the end of your case, when your mortgage company tried to collect additional money from you. Nowadays, that is not going to happen, at least is shouldn't, so long as you and your attorney carefully review these Notices of Mortgage Payment Change and make sure they are correct. What, do mortgage companies make mistakes?
Objecting to a Mortgage Company Notice
Yes, they make mistakes all the time! Since the new rule went into effect, my office has filed several objections to the Notices, when they are incorrect or fail to give adequate notice of payment changes. If the Notice is found to be incorrectly filed, untimely filed or doesn't include enough information, the Bankruptcy Judge can deny the mortgage company the right to present evidence about it, ever.
So you may not have to pay for a particular charge, unless they properly asked for it. In one case, we were able to have almost $9,000 in lender placed insurance denied, because it wasn't timely asked for. What can you do to keep control of your payment? Review the Notices of Mortgage Payment Change when they come in. If you see something that doesn't look right, notify your lawyer's office right away.
Your Bankruptcy Attorney Can Help
You can help keep your monthly mortgage payments as low as possible by: (1) calling to your lawyer's attention any discrepancies in the notices that you find; (2) protesting your tax valuation of your home to keep it as low as possible; (3) shopping your homeowner's insurance to make sure you are getting the best deal, while still maintaining the coverage required by your mortgage company (and appropriate coverage for your needs).