Proof of Insurance and a completed B

[Sandy Uhlmann]

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[Dion DePaoli]

Bankruptcy is not something you should be speculating with. Lender Placed Insurance communication is not something that you should be trying to DIY. You may have already overstepped your bounds and violated BK collections laws.

If the BK 7 discharged the loan then the entire obligation is removed from the borrower. This will include any obligations to advances made under the same note that was discharged. The security instrument still allows you to obtain LPI and that LPI can increase the amounts due paid out to release the lien. However, you can not try and collect those amounts from the borrower. If the BK was a 13 then you would have a better argument regarding post petition fees and advances since the future obligation remains but not so much with a BK 7. So the statement you made to the borrower that the LPI will be at her expense is false and if you press too hard and she turns to her BK attorney about it you could find yourself in hot water.  The phone call itself and any similar demand language in your letter would also be violations.

As far as contact goes, you can not contact the borrower for any portion of the debt or terms of debt which were discharged by the BK plan. Forever. It is gone. Doesn't exist anymore. Any attempt to contact the borrower for that debt obligation or terms under it are a violation of BK laws. If your debt was not discharged by the BK then collections on those obligations can continue as normal once the BK is finalized by discharge. A borrower is responsible for debts after their bankruptcy petition and for debts not included in bankruptcy. It's not clear how your loan was affected here.  You do not need to correspond with the BK attorney for any post petition obligations those are the responsibility of the borrower.  During the stay and after the discharge your only point of contact is the BK attorney but they probably won't be much help post discharge - there is nothing to talk about.  

If the BK discharged your loan and a modification was executed post BK discharge then the borrower per that modification agreement should have re-binded the borrower to the obligations under the note. I would look to the modification agreement and ensure it spells out obligations specifically and would cross check any references made back to the note if the note was discharged to ensure that obligation can with stand legal scrutiny and would not be a violation of BK laws. So a clause that says something to the tune of "..all other obligations under the note remain in affect." or something like that may not fly. That note's obligations are discharged and a reference to them may not be enforceable.

If the modification was executed prior to the BK petition then it would fall under the umbrella of the BK. It would have been claimed as a debt and discharged if claimed. So you should look into when that modification actually took place.

LPI falls under terms within Regulation X which was amended in 2014 under Dodd Frank. You are required to send no less than two notices. You are required to specifically quote the cost or a reasonable estimate. You are required to give at least 45 days to cure. You are obligated to inform the borrower LPI may not insure the borrower against loss. The text and font must be legible and certain verbiage needs to be in bold print. You may not send one letter alluding to LPI and then a phone call to the borrower and expect to include any amounts of LPI in the amount due under the loan.

Some post petition LPI letters have specific language which spells out the borrower's liability potential and that the lender's policy will not cover that liability. If a person is hurt on the property the borrower will still be liable even though the loan is discharged. While they own the property they still have those risks of being an owner of real property. Those letters will have amended language which deals with the cost being added to the amounts due but the correspondence is NOT an attempt to collect on any debt.

For the sake of mentioning it, if the borrower's loan was discharged then attempts to obtain a prepayment are also a violation of BK laws. You can not make any type of call regarding the discharged obligation at all, whatsoever.

These are the issues with DIY servicing. Newbies be warned.