- Case No. 14-11086
ISSUES: Whether the debtor is liable to claimant Residential Credit Solutions, Inc. ("RCS") for the sheriff's commission, fees and costs related to foreclosure despite (1) the debtor's 2010 chapter 7 discharge and (2) the 2011 loan modification entered into between the debtor and RCS and the fact that the foreclosure sale triggering the commission, fees and costs did not take place.
RULING: In 2007, Edward O'Hara mortgaged the home he still resides in to secure a loan from Assurance Financial Group, serviced by claimant RCS. He defaulted on that debt and foreclosure was initiated in June 2008. The debtor filed a chapter 13 case on October 21, 2008 which was converted to chapter 7 and from which he debtor received a discharge on March 12, 2010. O'Hara and RCS entered into a loan modification on March 30, 2011 and the foreclosure was put on hold. However, the debtor defaulted on the loan modification and the foreclosure suit was refiled as amended by the creditor. The state court issued writ of seizure and sale on July 10, 2013 and the sheriff's commission, fees and costs of the sale were paid by RCS in August 2013. No sale occurred as a result of the suit because the creditor dismissed the action. A new foreclosure suit was filed in February 2014, but O'Hara's filing of the instant case has stayed it. O'Hara objected to RCS's claim for $8342.58 in commission, fees and costs asserting that the loan modification superceded the original note and mortgage and rolled the sheriff's fees and costs into the new loan amount so that he is not liable for them. Issue #1 - the debtor's 2010 discharge has no effect upon the claim of RCS since, as noted in Johnson v. Home State Bank, 501 U.S. 78, 78-9, 111 S.Ct. 2150, 115 L.Ed.2d 66 (1991), the discharge relieved O'Hara of only his personal liability for the debt to RCS, but not the in rem liability and a "mortgage lien securing an obligation for which a debtor's personal liability has been discharged in a Chapter 7 liquidation is a 'claim' within the meaning of §101(5) and is subject to inclusion in an approved Chapter 13 reorganization plan." Issue #2 - the language of the original note and mortgage, when read together with the terms of the loan modification, indicate that the loan modification did not modify the debtor's obligation to pay any fees and costs associated with mortgage default. Under La. R.S. 13:5530(A)(13)(a), the sheriff was entitled to collect a commission, fees and costs as of the date he possessed the issued writ of seizure and sale on July 10, 2013, even though the sale scheduled for that time period did not occur. It was also as of July 10, 2013, not earlier when the loan modification was entered into, that the sheriff's entitlement to the commission, fees and costs was triggered. Thus, debtor is liable for the $8342.58 in commission, fees and costs paid by RCS, the objection is overruled and the claim of RCS allowed in full.