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6500 Cherrywood Ln - Greenbelt, MD 20770 - Main Tel: 301-344-8018 map
Baltimore
101 W Lombard St Room 8530 - Baltimore, MD 21201 - Main Tel: 410-962-2688
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Debtor and his co-heir, non-debtor sister, inherited his principal residence from their mother who had encumbered the residence with a reverse mortgage. Upon the mother’s death, the reverse mortgage accelerated and was due in full prior to the petition date. The Debtor, relying upon 11 U.S.C. § 1322(c)(2) which provides that a Chapter 13 plan may modify a claim secured by a debtor’s principal residence when “the last payment on the original payment schedule… is due before the date on which the final payment under the plan is due,” sought to repay the reverse mortgage in full over the life of his Chapter 13 plan. The mortgagee, Federal National Mortgage Association (FNMA), objected to confirmation of the plan and asserted that (1) Section 1322(b)(2) forbids modification of a claim secured by a debtor’s principal residence and therefore the reverse mortgage could not be decelerated and paid over time under the plan and (2) the modification could not be accomplished without the presence of the Debtor’s sister in the case. At issue was whether the acceleration of the reverse mortgage makes it a claim for which the last payment is due before the date on which the final payment under the plan is due and whether a co-owner need be a party in order for a mortgage’s payment terms to be modified. The Court held that (1) the provisions of Section 1322(c)(2) apply to the mortgage’s payment terms and it could be paid over time under the plan and (2) the Debtor’s sister is not a necessary party to the modification of the payment terms. FNMA’s objection to confirmation was overruled.

Entered: 
2013-03-18
Case: 
12-19863
Judge: 
Robert A. Gordon