Important Note: If you are a borrower whose residential mortgage loan was serviced by the Debtors prior to or during the Chapter 11 proceedings and you timely filed a claim in those proceedings, it is highly likely that your questions are best directed to Peter S. Kravitz, as representative of the Borrower Claims Trust created under the Plan. The Borrower Claims Trust was established for the sole benefit of the holders of Allowed Borrower Claims and is administered by the Borrower Claims Trustee.
**If you are requesting a lien release or a corrected assignment on a loan liquidated prior to February 15, 2013, please note that the Joint Chapter 11 Plan (the “Plan”) approved and ordered by the bankruptcy court limits the Trust’s rights and obligations.
Pursuant to the Plan, the ResCap Liquidating Trust has been released from liability for pre-petition claims. Accordingly, Paragraph 40(G) of the Order confirming the Plan bars any claims against the Debtors or the Liquidating Trust (the “Plan Injunction”). A copy of the confirmation order can be found here.
To: Parties Holding Senior Liens on Properties Seeking Relief from the Automatic Stay to Foreclose on their Senior Liens and Parties Seeking to Clear or Quiet Title to Properties
Please be advised that on August 5, 2019, on Motion of the ResCap Liquidating Trust (the “Liquidating Trust”) dated July 29, 2019 (the “Modification Motion”), the United States Bankruptcy Court entered the following order (the “Modification Order”):
ORDER (I) MODIFYING THE COURT’S ORDER APPROVING PROCEDURES BY WHICH THIRD PARTIES MAY REQUEST AND OBTAIN STIPULATED RELIEF FROM THE AUTOMATIC STAY TO COMMENCE OR CONTINUE ACTIONS TO FORECLOSE ON SENIOR LIENS, (II) CLARIFYING THE SCOPE OF THE PLAN INJUNCTION PROVISIONS, (III) TO THE EXTENT NECESSARY, MODIFYING THE AUTOMATIC STAY AND PLAN INJUNCTION PROVISIONS TO PERMIT THIRD PARTIES TO COMMENCE AND COMPLETE ACTIONS TO FORECLOSE ON SENIOR LIENS AND NON-MONETARY CAUSES OF ACTION SEEKING TO CLEAR OR QUIET TITLE, AND (IV) MODIFYING THE COURT’S ORDER ESTABLISHING PROCEDURES ENFORCING INJUNCTIVE PROVISIONS OF THE PLAN AND CONFIRMATION ORDER
The Modification Order can be found here and the Modification Motion can be found here.
The Liquidating Trust recommends that any (i) party seeking relief from the Bankruptcy Court to (a) foreclose on a senior lien or (b) take any other action with respect to a senior lien (each of (a) or (b) a “Senior Lien Foreclosure Action”), and (ii) party seeking to clear or quiet title to a property (a “Quiet Title Action”), to carefully review the Modification Motion and Modification Order. In all circumstances the terms of the Modification Order will control and nothing set forth herein is intended to modify the express terms of the Modification Order.
Procedures for Parties Seeking Relief from the Automatic Stay to Initiate Foreclosure Actions on Senior Liens
The Modification Order provides that holders of senior liens or their representatives are relieved from compliance with the terms of the order entered by the Bankruptcy Court on October 15, 2012, Approving Procedures by Which Third Parties May Request and Obtain Stipulated Relief from the Automatic Stay to Commence or Continue Actions to Foreclose Senior
Liens (the “Senior Lien Stay Relief Order”); provided, however, if any such party seeks to initiate a Senior Lien Foreclosure Action on a property in which the Liquidating Trust maintains an interest (collectively, the “Mortgage Assets”), such party is still required to comply with the terms and conditions of the Senior Lien Stay Relief Order. A list of the Mortgage Assets can be found at Exhibit 2 to the Modification Motion. In all other circumstances, relief from the Bankruptcy Court will not be required in order for a party to commence a Senior Lien Foreclosure Action provided the party seeks only equitable and non-monetary relief with respect to the Liquidating Trust or any Debtor.
Procedures for Parties Seeking to Quiet or Clear Title
If you are requesting a lien release or a corrected assignment on a loan liquidated prior to February 15, 2013, please note that the Joint Chapter 11 Plan (the “Plan”) approved and ordered by the Bankruptcy Court limits the Liquidating Trust’s rights and obligations.
Pursuant to the Plan, the Liquidating Trust has been released from liability for pre-petition claims. Accordingly, Paragraph 40(G) of the Order confirming the Plan bars any claims against the Debtors or the Liquidating Trust (the “Plan Injunction”). A copy of the confirmation order can be found here.
In addition, on March 13, 2015, the Bankruptcy Court entered an Order Granting the Motion for Entry of an Order Establishing Procedures Enforcing Injunctive Provisions of Plan and Confirmation (“Procedures Order”). The Procedures Order (i) bars parties from continuing to prosecute actions against the Debtors that violate the injunction provisions of the Plan and Confirmation Order, and (ii) permits the Liquidating Trust to seek further relief from the Bankruptcy Court in the event a party refuses to dismiss such an action with respect to the Debtors. The Procedures Order can be found here.
In light of these court-approved orders, the Liquidating Trust is unable to assist with your request for a lien release or corrected assignment. However, the Modification Order provides for a modification of the automatic stay and Plan Injunction where a party seeks only equitable relief to clear or quiet title relating to a property in which the Liquidating Trust does not hold a current interest and where that party does not seek any monetary damages against any of the Debtors or the Liquidating Trust. Accordingly, subject to these provisions and provided the property in issue is not one of the Mortgage Assets, parties may commence Quiet Title Actions in appropriate forums and, to the extent required by applicable law, may name the Liquidating Trust or any Debtor as a nominal defendant in such Quiet Title Actions.
To the extent required by applicable law, parties to Senior Lien foreclosure Actions and Quiet Title Actions may effect service on the Debtors and the Liquidating Trust at Corporation Service Company, 2711 Centerville Road, Suite 400, Wilmington, DE 19808 and 8400 Normandale Lake Boulevard, Suite 920, Bloomington, MN 55437.