The servicer must ensure the law firm thoroughly reviews the proposed reorganization plan for either a Chapter 11 or a Chapter 13 bankruptcy to determine whether the plan includes any objectionable terms.
An objection must be filed if either
a Chapter 11 reorganization plan modifies the terms of the mortgage loan to extend beyond the balloon maturity date, or
a Chapter 13 reorganization plan extends the mortgage loan beyond the balloon maturity date and does not call for the borrower to satisfy any additional obligations for accrued interest and escrow deposits beyond the balloon maturity date.
For more information please see: E-2.3-05: Bankruptcies Involving Balloon Mortgage Loans.