The Communicator - Volume 2, Issue 1 - (Page 12)

split into secured claims and unsecured claims. If a debtor owned a residence valued at $300,000.00 with a $280,000.00 first deed of trust and a $75,000.00 second deed of trust, the debtor could not Association Bank Services offers: modify the second deed of trust so that only $20,000.00 of it was secured and • Operating and Reserve Checking the remaining amount, $55,000.00, Competitive Interest Rates No Monthly Service Charges considered unsecured. In other words, • CD Placement Services (CDARS*) a creditor that was partially underseFDIC Insured Investments cured could not have its rights modified up to 50 million by a Chapter 13 debtor. • Automated Lockbox Services The issue that Nobelman did not • Automatic Assessment Payments address was whether a Chapter 13 • Association Loans debtor could modify the rights of a • Business On-Line Banking • Cash Management Services creditor whose claim was collateral• Remote Deposit ized only by the debtor’s residence but • Simpliﬁed Association Signature Cards which was totally undersecured. (Up • Exceptional Service until recently, this was not an issue due • Experienced Association Bankers to the rapid increase in value of most residences.) Though the United States Greater Bay Area Supreme Court has not addressed this Michael Kennedy or issue, many other courts have (includKatherine Young: 800-200-0013 ing the 9th District Federal Court which San Francisco/Marin covers California). Most of these courts Monterey/Santa Cruz (including the 9th District Federal Karl Lofthouse: 415-273-2011 Court) have held that a Chapter 13 South Bay/Peninsula debtor may modify the claims of a Contra Costa/Central Valley/Napa/Solano totally undersecured creditor. What Geri Kennedy: 866-493-8022 this means is that if a claim is wholly unsecured, the rights of the creditor Sacramento/Northern California Betina Schessow: 800-200-0013 holding such claim can be modified. The effect of this may best be CUSTOMER SERVICE illustrated by an example. A debtor All Locations: 800-200-0013 owns a residence that is now worth AssociationBankServices@fbol.com $280,000.00. If the fi rst deed of trust is $300,000.00 and the second deed of FirstBankHOA.com trust is $50,000.00, the second deed of trust is completely undersecured. As a result, the rights of the second deed *CDARS is a service mark of Promontory International Network, LLC of trust holder can by modified by the Chapter 13 debtor. How does the Chapter 13 debtor modify such rights? The Chapter 13 402583_first_bank.indd 1 10/8/08 8:32:15 AM debtor modifies such rights by treating the second deed of trust holder as an unsecured creditor and paying the secM & C Association Management Services provides community association management and develo ement ement d developer l ond deed of trust holder the same as services to Fremont, Santa Clara, Stockton, Modesto, Copperopolis and the surrounding foothills. Since other unsecured creditors. This usu1990, our sole focus has been to deliver performance that enriches communities and enhances the lives ally means the second deed of trust ® ® of the people we serve. M & C is proud to be an Accredited Association Management Company (AAMC ). holder will get nothing and its lien will 1341 W. Robinhood Drive, 1171 Homestead Road, 37161 Niles Blvd., 3505 Spangler Lane, 1209 Woodrow Ave., be effectively terminated. The proceSuite B7 Suite 280 #A Suite 310 Suite C6 dure that most Chapter 13 debtors use Stockton, CA 95207 Santa Clara, CA 95050 Fremont, CA 94536 Copperopolis, CA 95228 Modesto, CA 95350 Tel: 209.644.4900 Tel: 408.241.0023 Tel: 510.795.8308 Tel: 209.785.6700 Tel: 209.576.7800 is to contest the association’s assertion Fax: 209.644.4930 Fax: 408.241.0093 Fax: 510.795.8422 Fax: 209.785.6701 Fax: 209.576.2209 in its Proof of Claim that it is a secured For management proposal information, please visit www.mccommunities.com or email info@mccommunities.com creditor. This will then be followed up The nation’s leader in community association management with an adversary action (a bankruptcy SPECIALIZED BANKING SERVICES FOR COMMUNITY ASSOCIATIONS AND MANAGEMENT PROFESSIONALS 12 • The Communicator 372057_Associa.indd 1 3/3/08 8:09:55 PM http://www.firstbankhoa.com http://www.mccommunities.com

Table of Contents Feed for the Digital Edition of The Communicator - Volume 2, Issue 1

The Communicator - Volume 2, Issue 1 Contents President’s Message Does Your Insurance Agent Know Something You Don’t? Lien Stripping and Chapter 13 Bankruptcies Mortgage Crisis Impacts Directors Legislative Bill Status Report Annual Holiday Awards Banquet & Casino Night 2009 Events & Educational Calendar New Members Index to Advertisers

The Communicator - Volume 2, Issue 1

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