Robin Claude Randolph

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
In Re
ROBIN CLAUDE RANDOLPH
Debtor
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Case No. 05-11633
Chapter 13
Judge Hopkins
ORDER OVERRULING OBJECTION TO CONFIRMATION
FILED BY AMERICAN GENERAL FINANCIAL SERVICES, INC.
This matter is before the Court on the Motion Objecting To Confirmation Of Plan By
American General Financial Services, Inc. ("Objection") (Doc. 17). 	American General
Financial Services, Inc. ("AGFS") holds a second mortgage on the Debtor’s residence. The
issue before the Court is whether the Debtor is precluded, 	by virtue of 11 U.S.C. §
1322(b)(2), from stripping off the AGFS lien. An evidentiary hearing on the Objection was
held on August 23, 2005.
This document has been electronically entered in the records of the United
States Bankruptcy Court for the Southern District of Ohio.
IT IS SO ORDERED.
Dated: December 01, 2005
____________________________________________________________
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Countrywide Home Loans, Inc. (“CHL”) is the first mortgagee. CHL filed a proof of
claim in the amount of $85,501.48. 	Pursuant to LBR 3015-3(e)(3), the Debtor filed an
appraisal of her residence. See Doc. 7. The appraisal, performed by Christi Countryman-
Dick ("Countryman-Dick"), values the residence at $81,000. 	Consistent therewith, the
Debtor’s plan treats the entire claim of AGFS as unsecured pursuant to the provisions of
§ 506(a). By its Objection, AGFS disputes the Debtor's valuation of the residence.
LAW
Pursuant to § 1322(b)(2), debtors are precluded from stripping off the lien of a
second mortgagee if there exists any equity that attaches to the lien. See In re Lane, 280
F.3d 663 (6th Cir. 2002). 	Therefore, if the value of the Debtor's residence exceeds the
$85,501.48 claim of CHL, then the Debtor is precluded from stripping off the AGFS lien and
her plan cannot be confirmed.
ANALYSIS
The valuation issue in this case boils down to a classic battle of experts. 	At the
confirmation hearing, AGFS relied upon the testimony and the $95,000 appraisal of
Christopher L. Walker ("Walker"). The Debtor, on the other hand, relied upon the testimony
and the $81,000 appraisal of Countryman-Dick. 	The parties stipulate that Walker and
Countryman-Dick both qualify as experts pursuant to Fed. R. Evid. 702.
Both appraisers based their valuations upon the market approach, derived from
comparable sales data discoverable by each expert. All other things being equal, the real
distinction between the appraisals is the sales comparison analysis of each appraiser.
Although the Court found Walker to be credible and well-qualified, the Court finds the
analysis of Countryman-Dick to be more persuasive than that of Walker.
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Case No. 05-11633
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1. Adjustments as Percentage of Comparable's Sale Price
Countryman-Dick testified that Walker's sales comparison analysis does not fall
within industry guidelines, which provide that net adjustments to a comparable sale should
not exceed 15% of the comparable sale price and gross adjustments to a comparable sale
should not exceed 25% of the comparable sale price. 	AGFS did not impeach this
testimony. 	Walker's appraisal expressly provides that the adjustments on his: (1) first
comparable are 40% of net and 40% of gross; and (2) third comparable are 26.45% of net
and 26.45% of gross. On the face of the appraisal, the adjustments to Walker's second
comparable appear to be within guidelines. This is not the case, however, as noted below.
2. Walker's Second Comparable
Walker's appraisal reflects that his second comparable, 1155 Tobe Lewis Road, sold
for $85,000 on November 29, 2004. 	The Multiple Listing Service ("MLS"), from which
Walker obtained his information, reflects the same information. However, the MLS listing
reveals that the property was listed for $68,000. 	See Joint Ex. 5. 	Finding this to be
unusual, Countryman-Dick performed some additional research and discovered that the
property actually sold for $65,000. The county auditor's records corroborate Countryman-
Dick’s testimony. See Joint Ex. 5.
Given that the property sold for $65,000 instead of $85,000, Walker's net
adjustments are 17.07% of the actual sale price. This exceeds the 15% guideline for net
adjustments.
More problematic for AGFS, however, is the effect of the actual sale price on
Walker's adjusted sale price for the comparable. 	Applying Walker's adjustments to the
actual sale price yields an adjusted sales price of $76,100. Thus, Walker's own numbers
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lead to the conclusion that the Debtor's home is worth only $76,100 when it is compared
to the sale of 1155 Tobe Lewis Road.
CONCLUSION
Based on the expert testimony and exhibits admitted in the proceedings, the Court
finds Countryman-Dick’s valuation to be the more credible. Accordingly, the Objection is
hereby OVERRULED. The second mortgage held by AGFS is determined to have zero
value pursuant to § 506(a), and the claim of AGFS should be treated as general unsecured.
The Debtor's plan will be confirmed by separate order.
Copies to:
Robin Claude Randolph
18600 St. Rt. 41
West Union, OH 45693
Harold Jarnicki, Esq.
jarnickihsd9@earthlink.net
Stephen D. Miles, Esq.
mmiles@mileslaw.com
sdm@mileslaw.com
Margaret A. Burks, Esq.
Cincinnati@cinn13.org
U.S. Trustee
ustpregion09.ci.ecf@usdoj.gov
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