20 Apr The Real Party in Interest and Motions for Relief From the Automatic Stay
A recent bench decision by Maryland Bankruptcy Court Judge Thomas J. Catliota was an important ruling regarding the real party in interest requirement of FRBP 7017.
Americredit Financial Services, Inc., an auto loan servicer, filed a MLS in its own name. Its name appears on the car title as the sole lienholder, it represented that it “has a validly perfected, first priority purchase money security interest in the Collateral…” and it was listed as a secured creditor in both the Schedules and the Chapter 13 Plan.
A response was filed to the MLS arguing that the car loan had been sold to a securitized trust, and that Americredit was therefore not the real party in interest. Americredit responded by agreeing that the note had been transferred to the securitized trust, but argued that the debtor’s failure to object to the POC waived this issue, and that its servicing agreement with the trust allowed it to file the MLS in its own name.
Judge Catliota ruled that since the loan was not owned by Americredit, it needed to file the MLS in the name of the actual noteholder, and denied the MLS (but allowed Americredit to amend to reflect the true owner of the loan).
With the vast majority of loans (home, car, computer, etc.) being securitized, this is an important defense to MLSs, particularly since in a number of these cases, the securitized trust is simply unable to produce the original note or demonstrate that the title records appropriately reflect that it is the proper secured party.
Latest posts by Brett Weiss, Esq. (see all)
- Sears, Payless and the Future of Retail - March 23, 2017
- Judge Neil Gorsuch on Bankruptcy - February 24, 2017
- Filing for Bankruptcy Without a Lawyer - January 3, 2017
- Monthly Statements in Chapter 13 Cases - December 16, 2016
- Chapter 7 Can Be a Disaster Without a Good Bankruptcy Attorney - July 16, 2016