A Thought About Bankruptcy Petitions: Creditor ID

Upon finding that a portion of those payments should be applied to the subject loan, the declaration of default would be invalid because it would either be wrong inasmuch that the third party payments would at least be prepayments of future monthly payments, or wrong because the third party payments reflected an inaccurate accounting of the principal due.

OK let’s be clear that I don’t know bankruptcy well enough to even have an opinion, but I do have an idea and I would like this post forwarded to bankruptcy attorneys to get their reaction.

Here is the proposition: A Petitioner files for bankruptcy where one of the issues is a securitized loan. My idea is that the schedules NOT show the any of the known parties as creditors, because they are not. Especially if you have an expert opinion that describes the creditors as being unnamed but readily identifiable investors if the servicer will respond properly to the Qualified Written Request.

Upon reflection I don’t see why we would name the pretender lenders as creditors at all. I would leave them off the list of creditors (on any new cases filed) because they are not creditors. Maybe file amended schedules removing them. I would disclose the non-judicial foreclosure attempt wherever you can do that of course. Show the house as an asset with undetermined value. Wouldn’t that force them into being proactive? They would have to say “Hey! We are creditors secured by this property.” That would force the burden of proof onto them even as to standing, wouldn’t it?

Can someone who is not a creditor on the schedules file a proof of claim? What happens if you deny the claim and deny they are creditors? Do THEY have to file the adversary? Your position would be that you have this Expert Declaration that identifies the creditors, at least by description, and these would-be foreclosers don’t meet the description. So you disclosed the fact that they were claiming a default but you deny they are even creditors, much less secured.

It would seem that this would force them into proving to a bankruptcy court that they actually have authority which in turn would require them to produce all the documents granting them that authority. It also seems to me that they would have to come up with a full accounting for all payments from all parties, including from credit default swaps, insurance and Federal bailouts.

In the course of the proceedings, your allegation would be that they did in fact receive third party payments as has been widely reported by the press. They would probably answer something like those payments are irrelevant.

Your response to their assertion is to ask the court, who decides whether third party payments are relevant or not — the court or the creditor? The court would most likely order them to disclose all such third party payments along with documentation thereon so that the court could determine whether the payments should be applied to the pools in which the subject mortgage loan is Located” (assuming the assignments are valid), and then in turn determine what percentage of the payment should be allocated to the subject loan.

Upon finding that a portion of those payments should be applied to the subject loan, the declaration of default would be invalid because it would either be wrong inasmuch that the third party payments would at least be prepayments of future monthly payments, or wrong because the third party payments reflected an inaccurate accounting of the principal due.

Comments?

%d bloggers like this: