Thomas Edward Holmes and Annette DaLonzo Holmes

OCR transcription for search; preserved printed pages are authoritative

The court incorporates by reference in this paragraph and adopts as the findings and orders
of this court the document set forth below.

Russ Kendig
United States Bankruptcy Judge

UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION

In re: )
CHAPTER 13
THOMAS EDWARD HOLMES &

ANNETTE DALONZO HOLMES, CASE NO. 10-61482

Debtors.
MEMORANDUM OF OPINION

)

)

)

)

) | JUDGE RUSS KENDIG
) (NOT FOR PUBLICATION)
)

On October 7, 2010, debtors Thomas Edward Holmes and Annette Dalonzo Holmes
objected to claim 9-1 filed by Ocwen Loan Servicing, as servicing agent for the Bank of New
York Mellon (“New York Mellon”). On November 12, 2010, New York Mellon objected to

debtors’ second amended chapter 13 plan.

The court held a hearing on these matters on December 22, 2010. At the hearing,
Christian Niklas represented New York Mellon and Nicole L. Rohr represented the debtors. At
the close of the hearing, the parties agreed to file briefs after which the court would take the
objection to confirmation under advisement. Briefs have been filed and this is the court’s

decision.

The court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334(b) and the
general order of reference entered in this district on July 16, 1984. This is a core proceeding

under 28 U.S.C. § 157(b)(2)(A), (B), (L) and (0).

This opinion is not intended for publication or citation. The availability of this opinion, in
electronic or printed form, is not the result of a direct submission by the court.

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BACKGROUND

On September 30, 1999, debtors signed a promissory note and mortgage in favor of Bank
One. The mortgage encumbers debtors’ residence at 4076 Bonnie Drive, Malvern, Ohio
44644.The promissory note (“note”) provides for monthly payments of $572.96 for fifteen years
followed by a balloon payment on December 5, 2014. New York Mellon is the current holder of

the note and mortgage.

Debtors filed their first chapter 13 plan on April 9, 2010, proposing plan payments for a
minimum of 36 months. The plan provided that debtors’ mortgage payments would be made
through the plan and that the debtors would repay a mortgage arrearage in the amount of $8,400.
New York Mellon objected to the plan on May 11, 2010, arguing that the plan would extend
beyond the maturity date of the note, and, as such, the debtors were required to pay the note off

in full in order to keep their residence.

Debtors filed an amended plan on September 8, 2010, followed by a second amended
plan on November 8, 2010. The second amended plan raised debtors’ payments to $905 per
month and provides that the debtors will surrender their residence if they are unable to refinance
their home before the balloon payment becomes due. The second amended plan is similar to the
amended plan in all other respects. The debtors’ brief explains that the plan payment was
increased so that the second amended plan could complete before the balloon payment due date.

On September 16, 2010, Ocwen Loan Servicing filed claim 9-1 as servicing agent for
New York Mellon in the amount of $97,867 at 9.13% interest. The claim indicates that it is fully
secured by the debtors’ residence. Consistent with New York Mellon’s assertion that the
debtors’ plan must pay the claim in full, the claim indicates an arrearage of zero dollars and
states that it is a “Total Debt” proof of claim. Consistent with the debtors’ desire to pay the
mortgage current through the plan, debtors’ objection states that the claim should not be a “Total

Debt” claim and should list an arrearage of $8,400.

STANDARD OF REVIEW

In an objection to confirmation based on 11 U.S.C. § 1322(b), the creditor bears the
initial burden of producing evidence that supports the objection. The burden then shifts to the
debtor who must come forward to rebut the evidence presented by the objecting creditor. In re
Barnes, 378 B.R. 774, 777 (Bankr. D.S.C. 2007); In re Coleman, 373 B.R. 907, 911 (Bankr.
W.D. Mo. 2007); In re McGilberry, 298 B.R. 258, 260 (2003).

LAW AND ANALYSIS

The central issue in this dispute is whether New York Mellon’s claim is a short term debt
(that is, the last payment on the debt will fall before the last plan payment) or a long term debt
(that is, the last payment on the debt will fall after the last plan payment).

2

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New York Mellon argues that its claim a short term debt. If New York Mellon is right, 11
U.S.C. § 1322(b)(2) requires that the second amended plan pay off its claim in full if debtors
intend to keep their house. Section 1322(b)(2) provides in relevant part that a plan may not
modify a “claim secured only by a security interest in real property that is the debtor’s principal

residence.”

Debtors argue that New York Mellon’s claim is a long term debt. According to the
debtors, the second amended plan will pay out approximately 10 months before the balloon
payment on the note is due. If the debtors are right, section 1322(b)(5) allows the debtors to pay
off their mortgage arrearage through the second amended plan. Section 1322(b)(5) provides in
relevant part that, notwithstanding section 1322(b)(2), a plan may “provide for the curing of any
default within a reasonable time and maintenance of payments while the case is pending on any
unsecured claim or secured claim on which the last payment is due after the date on which the
final payment under the plan is due... .” (emphasis added).

The courts finds in favor of the debtors. New York Mellon bears the initial burden of
producing evidence to support its objection and has produced no evidence or analysis that
suggests that debtors will be unable to pay off their plan before the balloon payment on the note

is due.

Accordingly, New York Mellon’s objection to confirmation is overruled, and, by
necessary implication, debtors’ objection to New York Mellon’s proof of claim is sustained. The
court will allow New York Mellon 30 days to file an amended proof of claim reflecting debtors’

mortgage arrearage.
An order will accompany this opinion.
# # #

Service List:

Thomas Edward Holmes
4076 Bonnie Drive
Malvern, OH 44644

Toby L Rosen

400 W Tuscarawas St
Charter One Bank Bldg
4th Floor

Canton, OH 44702

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Nicole L. Rohr
Thrush & Rohr LLC
4410 22nd Street NW
Canton, OH 44708

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