Opinion ID: 63771
Heading Depth: 1
Heading Rank: 2

Heading: Discussion.(a) The contractual relationship between the Campbells and Countrywide

Text: We review a summary judgment entered by a bankruptcy court for genuine issues of material fact and for whether the movant was legally entitled to judgment. In re: Ark-La-Tex Timber Co., 482 F.3d 319, 328 (5th Cir.2007). To understand the relevant law, we begin with the relationship that the loan documents established between Countrywide and the Campbells. The promissory note set the principal and interest on the loan. These provisions in the mortgage documents required monthly escrow payments: 1. Payment of Principal, Interest, Escrow Items, and Late Charges. Borrower shall pay when due the principal of, and interest on, the debt evidenced by the Note and any late charges due under the Note. Borrower shall also pay funds for Escrow Items pursuant to Section 3. ... 3. Funds for Escrow Items. Borrower shall pay to Lender on the day Periodic Payments [defined as the regularly scheduled amount due for (i) principal and interest under the Note, plus (ii) any amounts under Section 3 [Escrow Items] of this Security Agreement] are due under the Note, until the Note is paid in full, a sum (the Funds) to provide for payment of amounts due for: (a) taxes ...; (c) premiums for any and all insurance required by Lender .... These items are called Escrow Items.... Borrower shall pay Lender the Funds for Escrow Items unless Lender waives Borrower's obligation to pay the Funds for any or all Escrow Items. ... Lender may, at any time, collect and hold Funds in an amount (a) sufficient to permit Lender to apply the Funds at the time specified under RESPA, and (b) not to exceed the maximum amount a lender can require under RESPA. Lender shall estimate the amount of Funds due on the basis of current data and reasonable estimates of expenditures of future Escrow items or otherwise in accordance with Applicable Law. ... 4. Charges; Liens. Borrower shall pay all taxes ... attributable to the Property which can attain priority over this Security Instrument .... To the extent that these items are Escrow Items, Borrower shall pay them in the manner provided in Section 3. Upon the Campbells' failure to make their monthly mortgage payment, the loan documents granted Countrywide the right to do and pay for whatever is appropriate to protect Lender's interest in the Property and rights under the Security Instrument.... Though Countrywide disputes that the unpaid escrow amounts were Bankruptcy Code claims, it concedes that it had the right under the just-quoted provision to proceed against the Campbells for unpaid monthly mortgage payments, including escrow sums. We find that under the loan documents, the Campbells had an obligation to pay, and Countrywide had a right to collect, past-due mortgage payments. Though Countrywide had contractual rights to collect the principal, interest, and escrow amounts, its argument for not having to file these unpaid amounts as a claim arises from additional rights under RESPA (which are expressly incorporated by the loan documents). RESPA arguably allowed Countrywide to recalculate monthly escrow payments if necessary to ensure that there would be a sufficient balance in the Campbells' escrow account to satisfy the escrow expenses as they became due. According to Countrywide, RESPA allows recalculation any time there are insufficient funds in the escrow account to cover escrow expenses in the ensuring year. Though that may be true, the issue is whether such a right overrides bankruptcy principles.