present i'm kathleen moran i represent daniel and marie alvarez who were the debtors in this matter and were the homeowners out of which this rule three thousand and two point one matter arose and how much time would you like to reserve for we bottom five minutes please proceed this is a request to the court to provide us with some guidance about the nature of the information that a holder of a claim secured by the debtors principal residence has to supply at the end of the case to support their contention that the loan is something other than fully current the the rule requires them over time to file notices of payment change notices of fees and expenses and then to respond at the end of the case to the notice of final cure payment and if they sink it's not current to itemize the reasons that they take that position and allow the debtor to know at the end of case where they stand with the mortgage and this case turns on the nature of the information that was provided in the servicers response which we contend was inaccurate incomplete and most importantly in comprehensible i think that's where you are really is it in comprehensible because at the end of the day  it wasn't an accurate or incomplete it just was hard to figure out which is often the case in these notices that we've all seen as bankruptcy judges so the question for you who has to pay for the cost of figuring that out that that's exactly my position and the experience in this case on the face of it the first couple of lines in the offered payment history failed to credit to payment the first two checks that the debtors made post petition copies of which were supplied in the motion they don't appear one of them appears and is is reversed out and the second doesn't appear anywhere with the with a date that can be traced to the check so we all agree that everybody including the lawyer representing the bank when you had that line hearing before a judge ten men and you went through painstakingly what was you know each line that it was difficult to figure out so the question is really under the under the rule you know why when it's really a discretionary right of the judge to award fees or not why we should do that and what the rules should be is there i don't see that there could be a bright line rule when who has to pay for what because you've got a situation where parties are negotiating going through through the process and often informally rather than in front of the judge and accurate is accurate but accessible you know i mean there's got to be it's a scale yeah it's not it's it's not going to be a hard and fast rule that we could say in this case yes or no always this never that and i think the judge applied the wrong rule when she said i can't find that it was in accurate and i thought it wasn't inaccurate it was accurate but hard to figure out but if it did it seems to me that if it doesn't post the canceled checks that we showed that it is inaccurate it came to the right number or a number that's close enough for government work at the end of the day but the it seems to me the purpose of the rule is for transparency in so the debtor knows and i can tell you that it took me about six hours to compare the notices of payment change with the payment history to try and track the checks for which i had the cancelled checks and couldn't find them in the in the entry so i don't believe that there is a single bright line but certainly on these facts i think both the the the the payment history was in accurate in that it didn't post invisible ways payments the debtor knew she'd made if it came to the well i mean i mean change drama but let's suppose you were you want guidance ok so let's suppose how would you write a rule to give people guidance mortgage servicers guidance about how clear  these statements have to be me putting aside the accuracy of point putting aside the completeness point just focus on the clarity of how would you articulate a rule well and it probably takes more than off the top of my head deep in the hours of the history was adjusting the entries that didn't reference the cancelled check but that got the number to something close to to the right number but there was no way entry really fixed at the lack of the the appearance of the check received on a given date so as shown to me want to aspect of the rule you're talking for is there ought to be an entry for every check tendered by the debtor every payment tendered by the debtor yes and what we see repeatedly is you see the check the receipt of it acknowledged and then it's reversed and there way often to find it if it's ever been reapplied you can't find it in a lot of the problems used in these demos from the practice of the suspense account you know if there's a short payment they put it in suspense until there's a full payment then they pull it out i actually looked at the no the do trust this case i'm not sure that's even authorized i'm not sure that's that's a legitimate practice sees me that's a  not just in this case but i've seen it in far worse instances where in the howard case we ended up with one hundred one thousand dollars in suspense that the servicer couldn't bother to to apply and they also i've seen other notes that specifically say if there's a short payment you put it in suspense until is enough and xian's to make a full payment so that wouldn't be a complete answer either you know and if this it seems to me that that the servicer has to provide something that the square up with a record it shouldn't have taken you know in the perfect world in compliance with everybody's responsibilities it shouldn't a taken an experienced lawyer as long as it took me to figure out where the two histories differed and this was complicated further by the fact that their notices a payment change didn't track the the amount they said was owed  in each given month or it's not that every month was out but but what they said in the payment history about what the monthly payment for a given month was didn't often didn't square with what the record said on the docket about notices of payment change and what the current payment was mentally they showed they adjusted to to correct the problem and they yeah they've made some they've made some problems and for pete's sake a footnote you know it doesn't have to be just a spreadsheet they could have made it accessible and comprehensible by an exhibit at a footnote a something or other but the attitude seems to be if we regurgitate what our accounting systems show that sufficient well they could have provided information in machine information machine code and it would have been information but it wouldn't have been information that humans could interpret so i think the purpose of the rule is perverted if it's sufficient to get to come to the right number but not show your work in a way that the debtor can say yeah i see that every payment i made was credited and i see where i missed a payment and it seems to me it's not unreasonable if they're in the business of collecting money and accounting for it that this rule this rule is instituted so that the debtor can know what it is they're dealing with and can and again to have some confidence in their assertion that x number of dollars is owed and the the first two in accuracies that we found destroyed any confidence that the number was correct and it wasn't until we'd filed the motion we got the response we had the hearing that the we've got some some kind of some oral history that helped you know how you will as trustee and you and i just want to begin with what is it you should be for discord before this court is in order to deny the motion for attorney's fees that came as a result of motion of the motion dealing with three thousand two point one  here the issue is whether the court or the lower court abuses discretion when he denied his attorneys fees the court here went through extensive hearings and a review of the file we've had some communication following the finding of the motion we did as counsel trying to figure out what issues remained and so the court never had a finding of any you know accuracy or any consistency with our payment history that we provided there's something fundamentally wrong when experience a bankruptcy judge and a couple of experienced attorneys have to spend that much time figuring out what's going on with these records isn't that a fundamental problem yes would that is an issue but this is a problem or that we're facing at least this case our client david all servicing did not service a loan from the time of the falling out of bankruptcy clear at least as far as the two payments in the beginning of the case but there was never a finding and i think ultimately it was all all parties agreed that there was nothing wrong in our accounting the two payments that they mentioned yes they were not reflected like might but ok so eve agreed but the number should be that's fine but it took time and effort to get there and the information was within your control not the debtors control so why should the debtor had to filed a motion s before the motion was filed there was zero attempts made by the debtor to try to reach out to us and get a clarification and that's what i indicated to the lower court as well i had no problem sitting on the phone for as long as it would take to go over the accounting and try to figure out a way where everything was clean if i had to make in a vision to the response it was from a cure or the post petition payment that was followed with the court we would have done as we would have no problem doing an amended response and also find a cure there is one argument in the in the opening brief that the debtor didn't have time to basically reach out to us and try to figure out the matter because these are twenty one day rule for them to file one of these motions now we would have had no problem to stipulate when extension of that deadline and i don't think there's anything that doesn't allow the parties to stipulate to an extension of the we would probably have no problem with it because i don't see why we would the idea is to avoid to deal tourney's fees by trying to resolve these matters and i think  still be a good attorney's fees if you're spending as you said as much time is there on the phone to fix these things i mean that the only way to avoid the attorneys to have the accountings clear to reasonably intelligent person i agree this is the other problem it leads me to another problem how does a lender control what's clear to the other party i understand the not you know the accounting here could have been a little clear i don't think there's any electronic payment histories that are very difficult to read and those are not filed with the courts because the debtors would have a lot of problems interpreted both payment are sent out so we don't use them because it's a lot easier for them for service or not the city it's a right thing to do it's a lot easier to just print one of these payment issues attacker's responsible sancho let the debtors deal with it that's not how it works this ledger was hand drafted by someone who sat there and made sure that everything everything is in columns everything shows date received date applied amount of payment suspense balance they did their best and so and so that's what we get through to the court the judge him and she had discretion after reviewing everything to determine if attorneys fees were appropriate here she went through everything as she said because she didn't find any in accuracies there was no reason to what were the tourney's fees and i read the statute again and again and again and i'm looking at at subsection ju requires a servicer to follow response and or find a cure timely response we did that there is no doubt about now the three thousand two point one allows two things if a creditor does not file their response or norse found a cure you is i mean how how little can you get away with and still be itemized right the way we get a lease is we follow payment history that tries to be as clear as possible because the other way to do it would be just put it in a sheet and say what payment histories and we don't see these motions come very often a lot of times they are resolved before motion is father a lot of times the parties agree on a numbers but you know i just i just want to go back to in re how would because that's something that was hammered on in the opening came to light this is were not the result of the motion and so really when you look down at the motion and you look to see what he did and i mean yes they got a year with clarification about it i could have my hasn't been resolved before t hearing but other than that there was no change to any of our responses the amount stayed the same we didn't admit to any fault there was not finding by judge hammond that we we actually faulted in drafting the response and payment history kathleen ran four minutes and fifty five seconds it would it's my position that the rule that we're talking about does not require in accuracy to entitle do to empower the court to to shift the cost of the expense it says if the the claim holder fails of supply any information the court may and then list the alternative choices so i think the judge erred in say in in basing her denial of some fee shifting here and the need to find that it was an in accurate and if she could read that payment history and the cancelled checks and not say that it was in accurate th then these words mean different things to different people i mean let me ask you this the rule i think the rule that comes closest to requiring a payment history is the sense of the statement you know itemize the required cure or post petition amounts if any that the holder contends remain unpaid as the date and does that really require a parent history or just a bottom line total of the amounts unpaid as of the effective date of this notice i think the  fact that they use the word itemize calls for details it doesn't say the bottom line it and let's go back to the purpose of the rule is for the debtor to assess whether that number bears any relationship to their records and the problem in this case was that maybe they came to the right number at the end of the day but they didn't provide they didn't itemize it in a way that the debtor could could have confidence and if it's sufficient if they can simply throw out information that is in comprehensible then the debtor has to make an economic decision about to roll the dice you know am i going to challenge this and insist on some explanation for what i'm looking at or or is it too expensive for me to insist on accuracy and transparency a question that's comes to my mind i think come to other panelists and is why this case you use i know this is an issue that you're concerned about but here we have a case in which the lender has been recently accommodating has responded to your inquiries and has made some adjustments based upon your complaints how does this become the vehicle for raising this issue i must commend my opponent they have been re they've they've been forthcoming they but it wasn't until we get to a hearing when i've teed it up and itemized all the discrepancies that we start to get some information that helps  and i'm sixty nine my my window for for solving these problems is narrow and if the judge believes that the accounting can be in comprehensible but as long as it's not been accurate then other people are other cases are going to experience the same thing that the alvarez's did when they get a bill that says that your story six thousand dollars behind but we don't show that you've we've credited your payments so that's why this case last year i had a case with two attorneys came to ask for like fifteen thousand dollars for producing the document that we're talking here today a senior partner to sign these two young lawyers the task of determining the principle balance on a real estate contract for which they had not maintained records for about ten years and so these two young lawyer set down and started doing the math and it took them one week working full time to produce the document and then they put in their people and he said well you know usually the bank produces this for about you know one hundred bucks so i don't know how i can give you fifteen thousand dollars for doing it but there's some decision making the it's involved in these in these preparation these documents we always think it's just mathematics but it's not just mathematics as judge for said put how do you make decisions about suspense accounts with when to apply when not to apply and it and it produces a different number  you know and it seems to me there has to be an incentive i mean the fact that my opponent is reasonable is you know the cherry on top of the sunday here but the bottom line is my client couldn't look at this at this payment history and have any confidence in it and i doesn't this cut both ways he might experience in these issues it's frequently the debtor who's got the problem with the accounting not the bank they're claiming payments that they didn't  you want do you want your clients exposed to attorney fees were misrepresenting their payment history if it's intentional i wouldn't feel like it was in just most of these people are are struggling to  manage their lives in general but that isn't the case here and it and it seems to me that there isn't a bright line in the end the court has clearly has discretion if that's what they found but the fact that judge hammond and presumably her staff labored as long as hard is the two of us did and we still left that courtroom having only the o counsel that that he had explained away the fact that we couldn't find the cancelled checks that we had in hand i just think there has to be your financial motivation we understand your position thank you for your submission to