**NOT FOR PUBLICATION**

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

__________________________________________

:

VERNA THOMAS and MOSELL THOMAS, :

:

Appellants, : Civil No. 11-3417 (FLW)

:

v. : MEMORANDUM

: OPINION

U.S. BANK NATIONAL ASSOCIATION, AS :

TRUSTEE FOR CSMC MORTGAGE-BACK- :

THROUGH CERTIFICATES, SERIES 2006-H, :

:

Appellee. :

__________________________________________:

WOLFSON, United States District Judge:

1. This appeal is brought by pro se Appellants Verna Thomas and Mosell Thomas

(“Appellants”). They seek reversal of the United States Bankruptcy Judge’s denial

of their motion for reconsideration of his grant of relief from the automatic

bankruptcy stay to Appellee U.S. BANK National Association, as Trustee for CSMC

Mortgage-back-through Certificates, Series 2006-H (“Appellee” or “U.S. Bank”). 

Appellee is the primary (first) mortgage holder on Appellants’ home at 43 Winston

Drive, Somerset, New Jersey (“the Property”).

2. Appellants filed for Chapter 13 bankruptcy protection on December 10, 2010 without

the assistance of counsel. In their Petition, Appellants listed as assets their home,

i.e., the Property, several rental properties, and unsecured debt. Their proposed

Chapter 13 Plan addressed only their unsecured debt and did not include any

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payments directed to the Property or their rental properties. Bankruptcy Docket No.

10-48206, Docket Entry No. 10 (“Chapter 13 Plan”) at 1. Instead, they sought to

obtain loan modifications for each of the mortgages on their various properties. 

Appellants indicated in their filings that they were currently involved in litigation on

each of these properties “in federal and state courts ....” Chapter 13 Plan at 2. 

2. Several months after their Plan was filed, U.S. Bank filed a motion for relief from the

automatic bankruptcy stay imposed by 11 U.S.C. § 362(d). Appellants did not

appear on the hearing date, and the Bankruptcy Judge granted U.S. Bank’s motion

for relief from the stay. Thereafter, Appellants filed a motion for reconsideration

which the Bankruptcy Judge denied. It is from this denial that Appellants appeal. 

This Court “review[s] the Bankruptcy Court's decision to lift the automatic stay for

abuse of discretion.” In re Myers, 491 F.3d 120, 128 (3d Cir. 2007).

3. Appellants argue that the Bankruptcy Judge erred in granting U.S. Bank relief from

the automatic stay for two reasons: (1) they did not receive notice of the April 19,

2011 hearing at which the Bankruptcy Judge initially granted U.S. Bank’s motion for

relief from the automatic stay; and (2) U.S. Bank is not entitled to relief because it

has not complied with the federal Helping Families Save Their Homes Act of 2009,

Pub.L. No. 111-22, 123 Stat. 1632 (the “Helping Families Act”).1

 It appears that, by

1 To be clear, Appellants cite to H.R. 1106—a House bill titled the Helping Families

Save Their Homes Act of 2009. That bill was never passed by the Senate and did not become law. 

However, S. 896, a related bill with the same title was passed by both houses and enacted. That bill

became the above-referenced Helping Families Act. In light of the Appellants’ pro se status, the

Court construes their challenge as relying upon the enacted bill as opposed to H.R. 1106. 

Regarding Appellants’ pro se status, the Court further notes that the Bankruptcy Judge

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referring to the Helping Families Act, Appellants mean to invoke the Home

Affordable Modification Program (“HAMP”) Guidelines requiring lenders to

consider borrowers for loan modifications and suspend foreclosure activities while

the borrower is being evaluated for a modification. Accordingly, I construe

Appellants’ argument as based on the HAMP Guidelines and program.2

4. As to Appellants’ first argument, the record indicates that U.S. Bank filed a

certificate of service indicating that they served Appellants with a Notice of Motion

for Relief from Stay on March 23, 2011. See Bankruptcy Docket No. 10-48206,

Docket Entry. No. 26-2. The certificate of service indicates that Appellants were

served by e-filing, certified, and regular mail. Accordingly, the Court rejects

Appellants’ argument that they did not receive notice. 

5. Moreover, even if Appellants did not receive notice of that hearing, they were able

to present their arguments at the motion for reconsideration hearing at which the

Bankruptcy Judge noted that he would “start[ ] fresh” and hear each of their

advised Appellants that they should retain counsel because their bankruptcy was not a “simple” one,

but was one that involved not only their home but several rental properties they operated for profit. 

See Tr. dated May 23, 2011 (“Tr.”) at 9:10 - 12:20. In addition, when Appellants expressed at the

reconsideration hearing that U.S. Bank counsel and the Trustee would not explain the law to them,

the Bankruptcy Judge responded by again advising Appellants to retain counsel because “[t]hat’s

why you need [your own] lawyer. That’s what lawyers are trained to do. Read the law and give

people advice.” Id. at 12:4-6. Appellants chose not to retain counsel but continued to proceed pro

se.

2 I reach this conclusion because Congressional findings under the Helping Families

Act indicated that it would be necessary to grant mortgage servicers authorization to enter into loan

modifications consistent with guidelines from the Secretary of the Treasury. After the Act was

passed, the Secretary of the Treasury issued the HAMP Guidelines. See generally Carter v. HSBC

Mortg. Corp., No. CV 10-1002-PHX-MHM, 2010 WL 4792638, *1 n. 3 (D.Ariz. Nov. 18, 2010).

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challenges. Tr. dated May 23, 2011 (“Tr.”) at 6:3. Indeed, at the motion for

reconsideration hearing, Appellants argued their lack of notice and Helping Families

Act challenges to the Bankruptcy Judge.

6. As for Appellants’ second argument, courts have rejected the argument that debtorsborrowers may forestall foreclosure by relying on the HAMP Guidelines. This is

because “[r]ther than requiring mandatory modifications, the statute only

‘encourage[s]’ servicers to modify mortgages, providing that the Secretary should

‘encourage the servicers of the underlying mortgages ... to take advantage of ...

available programs to minimize foreclosures.” 12 U.S.C. § 5219(a)(1).” Edwards v.

Aurora Loan Services, LLC, 791 F.Supp.2d 144, 153 (D.D.C. 2011). Courts have

further held that “HAMP does not include a private right of action.” Wallace v.

Bank of America, No. 11–0038, 2011 WL 3859745, *2 n.3 (D.N.J. Aug. 30, 2011)

(collecting cases). And, there is no third-party beneficiary theory available to

borrowers through which they could seek to enforce the terms of any agreement

governed by the HAMP Guidelines. See Thomas v. JPMorgan Chase & Co., ---

F.Supp.2d ----, 2011 WL 3273477 (S.D.N.Y. 2011); Hoffman v. Bank of America,

N.A., No. 10-2171, 2010 WL 2635773 (N.D.Cal. Jun. 30, 2010). Thus, it was not

error for the Bankruptcy Judge to conclude that the HAMP Guidelines presented no

barrier to granting Appellee’s relief from the automatic stay.

7. Finally, the bankruptcy automatic stay provision and case law interpreting it make

clear that the Bankruptcy Judge correctly determined that a stay was warranted. 

“The scope of the automatic stay provision, 11 U.S.C. § 362(a), is broad and

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automatically stays all judicial actions against a debtor seeking recovery on a claim

that could have been brought before commencement of the bankruptcy.” Bartucci

v. O'Neil, 64 Fed.Appx. 344, 345 (3d Cir. 2003) (citing Maritime Elec. Co., Inc. v.

United Jersey Bank, 959 F.2d 1194 (3d Cir. 1991)). However, “[t]here are two

distinct grounds under which a bankruptcy court shall grant relief [from the stay]

upon request of a party.” Id. (citing 11 U.S.C. § 362(d)). In this regard, section

362(d) provides: 

On request of a party in interest and after notice and

a hearing, the court shall grant relief from the stay

provided under subsection (a) of this section, such as

by terminating, annulling, modifying, or conditioning

such stay-

(1) for cause, including the lack of adequate

protection of an interest in property of such party in

interest; or

(2) with respect to a stay of an act against property

under subsection (a) of this section, if-

(A) the debtor does not have an equity in such

property, and

(B) such property is not necessary to an

effective reorganization.

11 U.S.C. § 362(d) (emphasis added). 

8. At the motion for reconsideration hearing, the Bankruptcy Judge concluded that the

Appellants did not have any equity in their property, which falls under subsection (2)(A) of

the automatic stay provision. See Tr. at 16:14-19. He based this conclusion on the

Appellants concession in their bankruptcy schedules that their home was worth only

$300,000 and their mortgage to U.S. Bank was for $340,000. The Bankruptcy Judge further

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concluded that relief was appropriate under subsection (2)(B). According to the Bankruptcy

Court, the Property was not necessary to an effective reorganization because it was unlikely

that the Appellants’ Chapter 13 plan would be confirmed for lack of sufficient income to

support the Plan. Id. at 17:1-7. 

9. The Third Circuit has upheld a bankruptcy court’s granting of relief from a stay where the

debtor “conceded it had no equity in the property and did not contest the bankruptcy court's

finding that it failed to carry its burden of proving that the property in issue was necessary

to an effective reorganization.” Bartucci, 64 Fed.Appx. at 346 (discussing Nazareth Nat'l

Bank v. Trina-Dee, Inc., 731 F.2d 170, 171 (3d Cir. 1984)). Importantly, only one of these

elements need be proven for a stay to be granted because the elements “are stated

conjunctively and both requirements must be satisfied ....” Norton Bankruptcy Law and

Practice 3d § 43:47; see Nazareth, 731 F.2d at 171 (explaining that relief may be proper on

subsection (2)(B) alone). 

10. Here, as the Bankruptcy Judge noted, the Appellants have plainly conceded that they do not

own any equity in their home. See Schedule A (listing value of 43 Winston Dr. as $300,000

and amount of U.S. Bank’s secured claim as $340,000). Moreover, in their appeal to this

Court, they have not contested the Bankruptcy Judge’s conclusion that the property is

necessary to an effective reorganization. As this latter element is Appellants’ burden to

prove, see Nazareth, 731 F.2d at 171 (“[T]he debtor had the burden of proving that the

property in issue is necessary to an effective reorganization.”), they have failed to

demonstrate that the Bankruptcy Judge’s reasoning was erroneous. Accordingly, I conclude

that the Bankruptcy Judge did not abuse his discretion in denying Appellants’ motion for

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reconsideration.

11. For the foregoing reasons, Appellants’ appeal is DENIED and the Bankruptcy Court’s

decision dated April 19, 2011 is AFFIRMED.

Dated: February 28, 2012 /s/ Freda Wolfson 

Honorable Freda L. Wolfson

United States District Judge

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