Bankruptcy Rule on Mortgage Notices Excludes Penalties



The mortgage company persuaded the Second Circuit to drop the $ 300,000 sanction after successfully claiming that the Vermont bankruptcy judge was mistaken in imposing a fine for filing charges against bankrupt borrowers.

Bankruptcy court punished PHH Mortgage Corp. for statements she made to three separate Chapter 13 debtors. The company was fined $ 225,000 for violating previous court orders that defaulted debtors.

PHH was also fined $ 75,000 for violating federal bankruptcy rule 3002.1, which requires a mortgage lender to provide special notices to bankrupt borrowers when fees and charges are added or changed by …


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