Judge Jack B. Schmetterer
CHAPTER 13
FINDINGS OF FACT
A. The Parties
1. The Plaintiffs Carlos Alonso and Maria Alonso.
2. The Defendant State Farm Bank, F.S.B.
B. Factual Background
1. On or about April 15, 2014, Plaintiffs filed a petition for relief under Chapter 13 of the Bankruptcy Code.
2. The Plaintiffs own the real estate commonly known as 1421 W 17 Street, Chicago, Illinois 60608.
3. Deutsche Bank National Trust Company, as Trustee for Long Beach Mortgage Trust 2006-2, holds a first mortgage lien on the real property commonly known as 1421 W 17 Street, Chicago, Illinois 60608 with a secured claim of $412,000.00, pursuant to the debtors' Schedule D.
4. The Defendant holds a second mortgage lien on the real property known as 1421 W 17 Street, Chicago, Illinois 60608 in the approximate amount of $49,858.00, pursuant to the debtors' Schedule D.5. That the Plaintiffs obtained a valuation of the property on 4/15/2014 indicating the value of 1421 W 17 Street, Chicago, Illinois 60608 as $238,388.00.
6. The first mortgage lien of Deutsche Bank National Trust Company, as Trustee for Long Beach Mortgage Trust 2006-2, is a secured claim based on the mortgage recorded on 1/18/2006 as document number 0601841170 with the Cook County Recorder of Deeds, Illinois.
7. The second mortgage lien of the Defendant is a claim based on the mortgage recorded 2/24/2005 as document number 0505511181 with the Cook County Recorder of Deeds, Illinois.
8. The current Chapter 13 plan provides that the Plaintiffs will make monthly payments to the Chapter 13 Trustee in the amount of $1,650.00 per month.
9. Under the Plan, general unsecured creditors will be paid a dividend of one hundred percent (100%) of their allowed claims.
10. On September 11, 2014. the Plaintiffs issued a summons and complaint pursuant to 11 U.S.C. § 506(a) and Bankruptcy Rule 3012 to determine the validity of Defendant's lien on Plaintiffs' property located at 1421 W 17Street, Chicago, Illinois 60608.
11. On September 11, 2014, a copy of the summons and complaint was served in accordance with the Federal Rules of the Bankruptcy Procedure by certified U.S. mail, postage prepaid, upon Ed Rust, Jr., CEO, State Farm Bank, F.S.B., One State Farm Plaza E-6, Bloomington, IL 61710. and by first-class U.S. mail, postage prepaid, upon State Farm Fncl Svcs F, State Farm Bank. Attention Bankruptcy, P.O.Box 2328, Bloomington, IL 61702.
12. The summons indicated that a motion or answer was required within 30 days of issuance; to date, no responsive pleading has been filed.
13. No evidence has been presented to challenge the validity of the secured claim that holds priority over the second mortgage lien.
14. No evidence has been presented to challenge the appraised value of $238,388.00
15. The first secured claim of Deutsche Bank National Trust Company, as Trustee for Long Beach Mortgage Trust 2006-2, in the amount of $412,000.00 exhausts the value and equity in Plaintiffs' residence.
16. There is no value and equity to support the claim of the Defendant.
CONCLUSIONS OF LAW
A. Jurisdiction
1. This contested matter is a core proceeding pursuant to
28 U.S.C. § 157(b)(2)(K). This court has jurisdiction over this matter pursuant to
28 U.S.C. §§ 157(a) and 1334(b).
2. Venue is proper in this district pursuant to U.S.C. § 1409.
B. Argument
1. This action was initiated under
11 U.S.C. § 506(a) and F.R. Bankr. P. 3012.
2. The Debtor scheduled the first secured claim of Deutsche Bank National Trust Company, as Trustee for Long Beach Mortgage Trust 2006-2, in the amount of $412,000.00 and the second secured claim of the Defendant in the amount of$49,858.00.
3. Deutsche Bank National Trust Company, as Trustee for Long Beach Mortgage Trust 2006-2, has not filed a proof of claim secured by a first mortgage on the Plaintiffs' property at 1421 W 17 Street, Chicago, Illinois 60608.
4. The Defendants have not filed a proof of claim secured by a mortgage second in priority to the first mortgage lien.
5. The value of Plaintiffs' property is $238,388.00.
6. As there is no value or equity to support the second priority lien of the Defendant, its claim is not a claim secured at all by a security interest in the Debtors' residence, as the term is used in § 1322(b) of the Bankruptcy Code. The Chapter 13 Plan may value the collateral under F.R. Bankr. P. 3012, and determine the respective rights of secured creditors through the language used therein, contingent on confirmation thereof, completion of the Plan by the Debtors, and entry of the discharge. In re Meyer, 2009 B 20268, Docket Entry 69 (Bankr. N.D. Ill. January 29, 2010).
Dated:
11/4/14
Enter:
/s/_________
United States Bankruptcy Judge Orlando Velazquez #6210326
Ledford & Wu
200 S. Michigan, Ste 209
Chicago, IL 60657
(312)294-4400
(3120294-4410 fax