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In re Wilson

United States District Court, S.D. New York

June 5, 2015

In re: DENNIS WILSON and SHEILA WILSON, Debtors. GREEN TREE SERVICING, LLC, Appellant,
v.
DENNIS WILSON and SHEILA WILSON, Appellees

For Appellant: Jeffrey S. Greene, Law Offices of Jeffrey S. Greene, P.C., White Plains, New York.

For Appellees: Simon Haysom, Mark T. Starkman, Law Offices of Simon Haysom LLC, Goshen, New York.

Page 487

OPINION AND ORDER

CATHY SEIBEL, UNITED STATES DISTRICT JUDGE.

Before the Court is Green Tree Servicing LLC's appeal from the Bankruptcy Court's November 6, 2014 order denying its Motion to Expunge and/or Disallow Claim #18, (the " Claim #18 Order," Bk. Docs. 56, 59).[1] For the reasons tat follow, the Claim #18 Order is VACATED and the case is REMANDED to the Bankruptcy Court for further proceedings.

Page 488

I. Background

Dennis and Sheila Wilson (" Debtors" ) filed a Chapter 13 bankruptcy petition on March 4, 2014. (Bk. Doc. 1.) On Schedule D of their petition, Debtors stated that there were two secured claims on their primary residence at 23 Dekay Road, Warwick, New York: the senior mortgage held by Select Portfolio Servicing, Inc. (" SPS" ) and the junior mortgage held by Green Tree Servicing LLC (" Green Tree" ). ( Id. at 13.) On March 18, 2014, Green Tree filed a proof of claim for the junior mortgage, which was deemed Claim #1.

On May 16, 2014, Debtors filed a motion to reclassify the junior mortgage as unsecured (or " strip" it), pursuant to 11 U.S.C. § § 506(a), 1322(b), and In re Pond, 252 F.3d 122, 126 (2d Cir. 2001), (the " Pond motion," Bk. Doc. 22). Debtors attached to their motion exhibits showing that the appraised value of their residence was less than the balance owed to SPS on the senior mortgage. ( See Bk. Docs. 22, 23.) Green Tree opposed the motion on the ground that, because SPS had not filed a proof of claim for the senior mortgage, it did not have an " allowed claim" in the bankruptcy and Debtors thus could not use SPS's mortgage as a basis to strip Green Tree's mortgage. (Bk. Doc. 34.) In response, on July 16, 2014, pursuant to Bankruptcy Rule 3004,[2] Debtors filed a proof of claim for SPS's mortgage lien, which was deemed Claim #18. This proof consisted of only the three-page Official Form B10, (Proof of Claim 18-1). On August 14, 2014, the Bankruptcy Court granted Debtors' Pond motion, voided Green Tree's junior mortgage lien, and reclassified Green Tree's claim as unsecured. (Bk. Doc. 46.)

On August 21, 2014, Green Tree moved to expunge Claim #18, arguing that Debtors failed to provide Attachment A to Form B10 or any evidence substantiating SPS's claim or proving that its security interest was perfected. (Bk. Doc. 47 at 3.) Green Tree also argued that SPS lacked standing as the creditor for the senior mortgage because other documents filed by Debtors showed that the mortgage was actually held by Deutsche Bank National Trust Company as Trustee on behalf of the holders of the J.P. Morgan Acquisition Trust 2007-CHI Asset Backed Pass-Through Certificates Series 2007-CHI (" Deutsche Bank" ). ( Id. at 3.) In opposing Green Tree's motion, Debtors provided an affidavit from debtor Dennis Wilson in which he stated that " [t]here is absolutely no doubt in my mind . . . that SPS properly represents [my] original mortgage . . . . [b]ut who sold what mortgage to whom, I just don't have those documents." (Bk. Doc. 52 Ex. D at 2.)[3] Then, on September 29, 2014, Debtors filed an amended proof of claim (Proof of Claim 18-2) that, in addition to Official Form 10B, included:

o a copy of the senior mortgage between J.P. Morgan Chase Bank, N.A. (" Chase" ) and Debtors, dated December 27, 2005, including a cover sheet from the Orange County Clerk's Office showing that the mortgage was recorded on January 26, 2006;
o a copy of an assignment of the senior mortgage from Chase to Deutsche Bank, dated January 24, 2013; and

Page 489

o a letter from SPS attorney Jordan S. Katz, dated June 9, 2014, stating that SPS " is the servicing agent for the mortgage referenced in the attached Proof of Claim" and that SPS planned to file an additional amendment of the proof of claim " to reflect the actual ...

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