A Mortgage Loan Servicer Is Prohibited By The Automatic Stay From Seeking Additional Amounts Post-petition For Future Escrow Cushion Not Included In The Servicer’s Proof Of Claim

At the time of filing their bankruptcy action the borrowers in In re Rodriguez , No. 09-2724 (3d Cir. Dec. 23, 2010) had an escrow account arrearage with the loan servicer of $5,657.60: $3,869.91 was the amount the servicer had paid for taxes and insurance and $1,787.69 was for 2 months escrow cushion as permitted under RESPA. In its proof of claim the servicer did not include the $1,787.69 escrow cushion which it sought to recoup through higher post-petition escrow payments. The borrowers contended that the payment increase violated the automatic stay. The Bankruptcy Court denied the motion and the District Court affirmed, concluding that the pre-petition claim was limited to the amounts the servicer already paid and had the right to retain, and not to the escrow cushion that it had the right to collect. The Third Circuit reversed holding that the language right to payment in 11 U.S.C. § 101(5)’s definition of claim meant nothing more nor less than an enforceable obligation’ and that Congress intended by this language to adopt the broadest available definition of claim. The court looked to the terms of the mortgage and concluded that the servicer had an enforceable right to the payment of the escrow cushion at the time of the borrowers’ bankruptcy filing and so it had a claim. To the Court’s reasoning, the fact that the right to payment was contingent on the servicer actually advancing its own funds to satisfy an escrow payment that would result in a deficiency does not change the fact that the right to payment exists, even if it is remote. Accordingly, the Third Circuit held that the escrow cushion should have been treated as a pre-petition claim and included in the proof of claim. The dissenting opinion agreed with the servicer’s argument that a pre-petition claim is limited to the amounts actually disbursed. The dissent adopted the Bankruptcy Court’s reasoning that the phrase right to payment, as incorporated in the statutory definition of a claim under § 101(5), implicitly encompasses a right of retention, which is not included in the servicer’s right to collect escrow items. The dissent further observed that the servicer acted in accordance with RESPA which authorizes it to recalculate future escrow fund payments at various junctures to avoid shortages. The dissent submitted that the majority sets up an irreconcilable conflict between RESPA and the Bankruptcy Code’s automatic stay provision that in effect abrogates RESPA for it is difficult to foresee how a servicer’s attempt to recalculate escrows due in accordance with RESPA will not be in violation of the automatic stay.