                                 PUBLISHED

                    UNITED STATES COURT OF APPEALS
                        FOR THE FOURTH CIRCUIT


                                No. 15-1800


In Re:    GREGORY BIRMINGHAM,

                  Debtor.

--------------------------

GREGORY BIRMINGHAM,

                  Plaintiff - Appellant,

            v.

PNC BANK, N.A.,

                  Defendant - Appellee.



Appeal from the United States District Court for the District of
Maryland, at Greenbelt. Paul W. Grimm, District Judge. (8:15-
cv-00108-PWG; 14-18432; 14-00378)


Argued:    October 26, 2016                   Decided:   January 18, 2017

                      Amended:    January 20, 2017


Before THACKER and HARRIS, Circuit Judges, and Gerald Bruce LEE,
United States District Judge for the Eastern District of
Virginia, sitting by designation.


Affirmed by published opinion. Judge Lee wrote the opinion, in
which Judge Harris and Judge Thacker joined.
ARGUED: John Douglas Burns, THE BURNS LAW FIRM, LLC, Greenbelt,
Maryland, for Appellant.   Daniel J. Tobin, BALLARD SPAHR LLP,
Washington, D.C., for Appellee.   ON BRIEF: Bryan J. Harrison,
Matthew G. Summers, BALLARD SPAHR LLP, Baltimore, Maryland, for
Appellee.




                               2
LEE, District Judge:

     The anti-modification clause in 11 U.S.C. § 1322(b)(2) of

the Bankruptcy Code protects a mortgagee from having its claim

in a Chapter 13 bankruptcy proceeding modified, if the mortgage

is secured “only by a security interest in real property that is

the debtor’s principal residence.”                  11 U.S.C. § 1322(b)(2).               The

issue in this appeal is whether reference in the Deed of Trust

to escrow funds, insurance proceeds, or miscellaneous proceeds

constitute      additional    collateral            or    incidental       property       for

purposes of § 1322(b)(2).            We hold that these items constitute

incidental        property,       which     entitles           Appellee          to     anti-

modification       protection      under       §    1322(b)(2).            The        district

court’s determination is therefore affirmed.

                                           I.

     On     May    23,   2014,      Appellant             Gregory    John        Birmingham

(“Birmingham”)       filed    a    voluntary             petition    for    Chapter        13

bankruptcy.       J.A. 342-45.      One of the claims against Birmingham

is a mortgage in the amount of $343,101.87 held by Appellee PNC

Bank, N.A. (“PNC”), and secured by a deed of trust (“Deed of

Trust”)    on   Birmingham’s       primary         residence    at   11721        Chilcoate

Lane,     Beltsville,    Maryland         20705      (“Property”).               J.A.     329.

According to the District of Maryland Claims Register, there is

an arrearage on the mortgage of $93,386.58 as of June 23, 2015.

J.A. 329.

                                           3
        Birmingham filed his Original Chapter 13 Bankruptcy Plan on

June 4, 2014.       J.A. 378.           At that point in time, the Property

was valued at only $206,400.                  J.A. 362.        The Bankruptcy Plan

included a cram-down of PNC’s interest in the Property.                             J.A.

385-86.      After a series of objections and amendments to the

Bankruptcy Plan, Birmingham filed a Complaint for Declaratory

Action pursuant to 28 U.S.C. §§ 2201-2202; 11 U.S.C. §§ 105(a),

506(a), 2201 (11721 Chilcoate Ln Beltsville, MD 20705).                             J.A.

378-400.        Birmingham’s Complaint requested a declaration that

that    PNC’s    claim    be    treated      as    a   partially     unsecured     claim

subject to modification.           J.A. 399-400.

       Birmingham argued that certain provisions of the Deed of

Trust required collateral other than real property, which would

remove the claim from 11 U.S.C. § 1322(b)(2)’s anti-modification

protection.        J.A.       397-99.        Birmingham      cited   three    specific

provisions of the Deed of Trust, involving escrow items (Section

Three),     property       insurance         proceeds        (Section     Five),     and

miscellaneous proceeds (Section Eleven).                   J.A. 398.      PNC filed a

Motion to Dismiss the Adversary Complaint and an accompanying

memorandum, contending that the items referred to in the Deed of

Trust    provisions      cited    by     Birmingham      constituted      “incidental

property,”      which    is    part     of   a    debtor’s    principal    residence.

J.A. 674. Consequently, PNC argued that the additional items

would not expose the PNC mortgage to a cram-down.                            J.A. 674.

                                             4
After    Birmingham          filed    a    response      to   the    motion    to       dismiss,

Bankruptcy Judge Wendelin I. Lipp granted the motion, noting

that    “the        issues       raised    by    [Birmingham]        were     identical      to

arguments that repeatedly have been denied by the Bankruptcy

Court for this District.”                 J.A. 674.

       Birmingham then appealed the Bankruptcy Court’s decision to

the United States District Court for the District of Maryland.

J.A.    405.         Birmingham       raised       the    same    arguments        on   appeal,

namely       that    the     inclusion      of       miscellaneous     proceeds,         escrow

funds, and insurance proceeds in the Deed of Trust constitute a

waiver       of     the     anti-modification            provision     of     11    U.S.C.    §

1322(b)(2).               J.A.    422.       The      district      court     affirmed       the

bankruptcy          court’s       decision,      holding      that    the     miscellaneous

proceeds,         escrow         funds,    and       insurance      proceeds       provisions

describe “benefits which are merely incidental to an interest in

real property” and generally are not “additional security for

purposes       of    §     1322(b)(2).”          J.A.     679.       The    district       court

further noted that the items at issue do not “have any value of

their own separate and apart from the Property and the [PNC Deed

of Trust]; to the contrary, they all exist only to give effect

to     the    PNC’s        security       interest,       which     otherwise       could    be

frustrated by a superior lien or by destruction or condemnation

of the Property.”            J.A. 681.



                                                 5
      Birmingham filed a timely appeal before this circuit.                              J.A.

685-88.     This case was consolidated with a nearly identical case

that similarly originated in the District Court of Maryland,

Akwa v. Residential Credit Solutions, Inc., No. 14-cv-02703-GJH,

530 B.R. 309 (D. Md. 2015).                     The Akwa appeal was dismissed on

February    16,    2016.         ECF       No.       69-2.      Accordingly,      only    the

Birmingham appeal is currently before the Court.

                                                II.

      This dispute requires us to determine whether the district

court properly concluded that the bankruptcy court did not err

in    dismissing         the     adversary              proceedings       against        PNC.

Specifically,      we    are     to    analyze          whether    the   district      court

correctly affirmed the bankruptcy court’s finding that PNC is

entitled to the anti-modification protections of 11 U.S.C. §

1322 (b)(2).

      Because the district court sits as an appellate tribunal in

bankruptcy,    our      review        of    the       district    court’s      decision    is

plenary.      Bowers v. Atlanta Motors Speedway (In re Se. Hotel

Properties    Ltd.      P’ship),           99    F.3d    151,    154    (4th    Cir.   1996)

(citation omitted).            “We apply the same standard of review as

the district court applied to the bankruptcy court’s decision.”

Id.    “Findings        of     fact    are       reviewed       for    clear    error,    and

conclusions       of    law    are     reviewed         de   novo.”       Id.    (citation

omitted).

                                                 6
                                                   A.

     The       bankruptcy          court      granted           PNC’s    motion      to     dismiss

Birmingham’s         complaint       under         Federal       Rule    of   Civil       Procedure

12(b)(6).        J.A.       675.        The    district          court    applied     this       same

standard of review to the bankruptcy court’s decision.                                    Id.

     A motion to dismiss under Federal Rule of Civil Procedure

12(b)(6) tests the legal sufficiency of the complaint.                                      Papasan

v. Allain, 478 U.S. 265, 283 (1986).                                  The motion should be

granted       unless    the      complaint          “states       a     plausible     claim      for

relief.”       Walters v. McMahen, 684 F.3d 435, 439 (4th Cir. 2012)

(citing       Ashcroft      v.     Iqbal,      556       U.S.     662,    679   (2009)).          In

considering a Rule 12(b)(6) motion, the Court “must accept as

true all of the factual allegations contained in the complaint,”

drawing “all reasonable inferences” in the non-moving party’s

favor.     E.I. du Pont de Nemours and Co. v. Kolon Indus., Inc.,

637 F.3d 435, 440 (4th Cir. 2011) (citations omitted).                                           The

court    is    not     obligated        to    assume       the     veracity     of    the       legal

conclusions          drawn       from        the        facts     alleged.            Adcock      v.

Freightliner         LLC,    550    F.3d      369,       374     (4th    Cir.   2008)       (citing

Dist. 28, United Mine Workers of Am., Inc. v. Wellmore Coal

Corp., 609 F.2d 1083, 1085-86 (4th Cir. 1979)).

     The complaint must contain sufficient factual allegations,

taken as true, “to raise a right to relief above the speculative

level” and “nudge [the] claims across the line from conceivable

                                                   7
to plausible.”          Vitol, S.A. v. Primerose Shipping Co., 708 F.3d

527, 543 (4th Cir. 2013) (quoting Bell Atl. Corp. v. Twombly,

550    U.S.      544,     555,    570   (2007)).           The    facial         plausibility

standard requires pleading of “factual content that allows the

court to draw the reasonable inference that the defendant is

liable     for    the     misconduct     alleged.”          Clatterbuck              v.    City    of

Charlottesville,          708    F.3d   549,      554     (4th    Cir.       2013)        (quoting

Iqbal, 556 U.S. at 678).                The plausibility requirement imposes

not    a   probability       requirement          but    rather        a    mandate        that     a

plaintiff “demonstrate more than a ‘sheer possibility that a

defendant has acted unlawfully.’”                       Francis v. Giacomelli, 588

F.3d 186, 193 (4th Cir. 2009) (quoting Iqbal, 556 U.S. at 678).

Accordingly,        a   complaint       is   insufficient          if       it   relies         upon

“naked assertions” and “unadorned conclusory allegations” devoid

of     “factual     enhancement.”            Id.        (citations          omitted).             The

complaint        must   present     “‘enough       facts     to    raise         a    reasonable

expectation that discovery will reveal evidence’ of the alleged

activity.”         US Airline Pilots Ass’n v. Awappa, LLC, 615 F.3d

312, 317 (4th Cir. 2010) (quoting Twombly, 550 U.S. at 556).

       In addition to the complaint, the court will also examine

“documents       incorporated       into     the    complaint          by    reference,”           as

well    as    those     matters     properly        subject       to       judicial        notice.

Clatterbuck,        708    F.3d    at   557       (citations       omitted);              see   also

Matrix Capital Mgmt. Fund, LP v. BearingPoint, Inc., 576 F.3d

                                              8
172, 176 (4th Cir. 2009) (quoting Tellabs, Inc. v. Makor Issues

& Rights, Ltd., 551 U.S. 308, 322 (2007)).

                                          B.

       Certain provisions of the Bankruptcy Code are relevant to

this    appeal.        “Under       Chapter     13    of    the    Bankruptcy      Code,

individual debtors may obtain adjustment of their indebtedness

through    a    flexible      repayment       plan    approved       by   a   bankruptcy

court.”     Nobelman v. Am. Sav. Bank, 508 U.S. 324, 327 (1993).

The relationship between 11 U.S.C. § 506(a) and § 1322(b)(2) is

pertinent      to    this    circuit’s    review       of    the     district    court’s

decision       to    affirm     the     bankruptcy          court’s       dismissal    of

Birmingham’s complaint.             Section 506(a) is used in conjunction

with § 1322 to allow modification, or bifurcation, of a secured

creditor’s claim into secured and unsecured portions when the

claim exceeds the value of the secured property.                          Nobelman, 508

U.S. at 328.

       In Nobelman, the Supreme Court examined the nexus between

claim-bifurcation           under   §   506(a)       and    the      anti-modification

provision of § 1322(b)(2) to ascertain whether a debtor could

bifurcate      a    single,    under-secured         residential       mortgage    claim

into secured and unsecured components pursuant to § 506(a).                           Id.

at 326.     The debtor in Nobelman argued that § 1322(b)(2)’s anti-

modification provision applied only to the secured component of

her mortgage claim, as defined in § 506(a).                    Id.

                                          9
     Section 506(a) states that:

     (a)(1) An allowed claim of creditor secured by a lien
     on property in which the estate has an interest . . .
     is a secured claim to the extent of the value of such
     creditor’s interest in the estate’s interest in such
     property . . . and is an unsecured claim to the extent
     that the value of such creditor’s interest is less
     than the amount of such    allowed claim.   Such value
     shall be determined in light of the purpose of the
     valuation and of the proposed disposition or use of
     such property, and in conjunction with any hearing on
     such disposition or use or on a plan affecting such
     creditor’s interest.

11 U.S.C. § 506(a).        Accordingly, under § 506(a), “an allowed

claim secured by a lien on the debtor’s property is a secured

claim to the extent of the value of the property; to the extent

the claim exceeds the value of the property, it is an unsecured

claim.”     Nobelman, 508 U.S. at 328 (internal quotation marks

omitted).

     Notwithstanding, § 1322(b)(2) provides:

            (b) Subject to subsections (a) and (c) of this
            section, the plan may—

            . . .

            Modify the rights of holders of secured claims,
            other than a claim secured only by a security
            interest in real property that is the debtor’s
            principal residence . . . .


11   U.S.C.    §    1322(b)(2).   This    “anti-modification”       provision

precludes     reduction   or   cramming   down   the   value   of    a   claim

secured by an interest in real property that is the debtor’s

principal residence.       In other words, a claimant’s interest in


                                    10
real property that is secured solely by the debtor’s principal

residence may not be bifurcated.

                                     C.

       Congress clarified the meaning of a key term in the anti-

modification    clause,   “debtor’s       principal     residence,”     in   the

Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCP

Act”) of 2005.     The Bankruptcy Code now defines the term as “a

residential structure if used as the principal residence by the

debtor, including incidental property, without regard to whether

that   structure   is   attached    to   real   property.”     11     U.S.C.   §

101(13A)(A)(emphasis      added).         The   BAPCP    Act   also    defined

“incidental property,” as it relates to a debtor’s principal

residence, as follows:

       (A) property commonly         conveyed with a principal
       residence in the area        where the real property is
       located;

       (B) all easements, rights, appurtenances, fixtures,
       rents, royalties, mineral rights, oil or gas rights or
       profits, water rights, escrow funds, or insurance
       proceeds;

       (C) all replacements or additions.

11 U.S.C. § 101(27B).      The Code defines a security interest as a

“lien created by an agreement.”           11 U.S.C. § 101(51).        Moreover,

a lien is defined as a “charge against or interest in property

to secure a payment of a debt or performance of an obligation.”

11 U.S.C. § 101(37).



                                     11
     With    this       framework     in    mind,    and    for    the    reasons      that

follow, we hold that the district court’s decision to affirm the

bankruptcy    court’s          dismissal     of     Birmingham’s         complaint      was

correct.      PNC’s        loan      was    secured     solely      by        Birmingham’s

principal    residence         and   not   any     additional      collateral.          The

Bankruptcy    Code’s       anti-modification           provision         precluded      the

bifurcation sought by Birmingham.                     Consequently, Birmingham’s

complaint was appropriately dismissed.

                                           III.

    The Birmingham Deed of Trust not only grants PNC a security

interest     in     the        Property,     but     also     provides         additional

protections        for     PNC.      However,       saliently,          the      auxiliary

protections       are    not    additional       collateral       and    do    not   remove

PNC’s claim from the protection of § 1322(b)(2).

                                            A.

    Of     particular          importance    to     this    Court’s       analysis      are

Sections 3, 5, and 11 of the Deed of Trust, all of which will be

analyzed in turn.          Section 3 of the Deed of Trust pertains to

escrow funds and states, in pertinent part, the following:

     Funds for Escrow Items. Borrower shall pay to Lender
     on the day Periodic Payments 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 and
     assessments and other items which can attain priority
     over this Security Instrument as a lien or encumbrance
     on the Property; (b) leasehold payments or ground

                                            12
    rents on the Property, if any; (c) premiums for any
    and all insurance required by Lender under Section 5;
    and (d) Mortgage Insurance Premiums, if any, or any
    sums payable by    Borrower to Lender in lieu of the
    payment   of  the   Mortgage   Insurance premiums   in
    accordance with the provisions of Section 10.    These
    items are called “Escrow Items.”

    . . .

    If there is a surplus of Funds held in escrow, as
    defined under [the Real Estate Settlement Procedures
    Act (“RESPA”)], Lender shall account to Borrower for
    the excess funds in accordance with RESPA.     If there
    is shortage of funds held in escrow, as defined under
    RESPA, Lender shall notify Borrower as requested by
    RESPA, and Borrower shall pay to Lender the amount
    necessary to make up the shortage in accordance with
    RESPA, but in no more than 12 monthly payments.

Deed of Trust § 3, J.A. 621-22.

    Section   5   of   the   Deed   of    Trust   addresses   the   topic   of

property insurance, and provides as follows:

    Borrower shall keep the improvements now existing or
    hereafter erected on the Property insured against loss
    by fire, hazards included within the term “Extended
    coverage,” and any other hazards including, but not
    limited to, earthquakes and floods, for which Lender
    requires insurance . . . .

    If Borrower fails to maintain any of the coverage
    described above, Lender may obtain insurance coverage,
    at Lender’s option and Borrower’s expense.   Lender is
    under no obligation to purchase any particular type or
    amount of coverage.    Therefore, such coverage shall
    cover Lender, but might or might not protect Borrower,
    Borrower’s equity in the Property, or the contents of
    the Property, against any risk, hazard or liability
    and might provide greater or lesser coverage than was
    previously in effect.

    . . . .

    Borrower hereby assigns to Lender (a) Borrower’s
    rights to any insurance proceeds in an amount not to
                                     13
    exceed the amounts unpaid under the Note or this
    Security Instrument, and (b) any other of Borrower’s
    rights (other than the right to any refund of unearned
    premiums  paid   by  Borrower)  under   all  insurance
    policies covering the Property, insofar as such rights
    are applicable to the coverage of the Property.
    Lender may use the insurance proceeds either to repair
    or restore the Property or to pay amounts unpaid under
    the Note or this Security Instrument, whether or not
    then due.

Deed of Trust § 5, J.A. 623-24.

    Lastly,   Section   11   of   the   Deed   of   Trust   discusses

miscellaneous proceeds and contains the following language:

    Assignment of Miscellaneous Proceeds; Forfeiture.        All
    Miscellaneous Proceeds are hereby assigned to            and
    shall be paid to Lender.

    . . . .

    In the event of a partial taking, destruction, or loss
    in value of the Property in which the fair market
    value of the Property immediately before the partial
    taking, destruction, or loss in value is less than the
    amount of the sums secured immediately before the
    partial taking, destruction, or loss in value, unless
    the Borrower and Lender otherwise agree in writing,
    the Miscellaneous Proceeds shall be applied to the
    sums secured by this Securing Instrument whether or
    not the sums are then due.

Deed of Trust § 11, J.A. 626.

    Miscellaneous Proceeds include:

    [A]ny compensation, settlement, award of damages, or
    proceeds paid by any third party (other than insurance
    proceeds paid under the coverages described in Section
    5) for: (i) damage to, or destruction of, the
    Property; (ii) condemnation or other taking of all or
    any part of the Property; (iii) conveyance in lieu of
    condemnation;  or   (iv)  misrepresentations  of,   or
    omission as to, the value and/or condition of the
    Property.

                                  14
Deed of Trust ¶ M.

        The issue presented is whether these provisions of the Deed

of Trust constitute sufficient collateral so that PNC’s interest

is secured by more than Birmingham’s principal residence.                       We

hold     that     the    aforementioned     provisions       do   not    entitle

Birmingham to the bifurcation sought.

                                       B.

        Birmingham argues that Sections 3, 5, and 11 of the Deed of

Trust provide additional security for PNC’s interest such that

it is no longer secured solely by an interest in real property.

Appellant Br. at 19-25.            These items, however, are incidental

property frequently conveyed in a deed of trust and defined in

11 U.S.C. §§ 101(27B) and 101(13A)(A) as part of a debtor’s

principal residence.

       The case Allied Credit Corp. v. Davis (In re Davis), 989

F.2d 208 (6th Cir. 1993) is illustrative.                    There, the Sixth

Circuit found that “[i]tems which are inextricably bound to the

real property itself as part of the possessory bundle of rights”

do not extend a lender’s security beyond the real property.                    Id.

at 213; see also Akwa, 530 B.R. at 313 (D. Md. 2015).                    On the

topic    of     insurance,   the   Davis    court    explained    that   “hazard

insurance is merely a contingent interest — an interest that is

irrelevant until the occurrence of some triggering event and not

an     additional       security   interest    for     the    purposes    of     §

                                       15
1322(b)(2).”      In re Davis, 989 F.2d at 211 (citation omitted)

(emphasis      added).          This          reasoning        similarly      applies    to

miscellaneous proceeds and escrow funds that are tied to the

real property at issue.              See In re Ferandos, 402 F.3d 147, 156

(3d Cir. 2005) (“[F]unds for taxes and insurance, paid over and

placed in escrow, exist precisely for the purpose of paying said

taxes   and     insurance       —    a        cost    incurred     by   the    debtor     in

connection     with    the   ownership           of     real   property.”);     see     also

Kreitzer v. Household Realty Corp. (In re Kreitzer), 489 B.R.

698, 703-06 (Bankr. S.D. Ohio 2013) (holding that a security

interest which residential mortgage lender took in miscellaneous

proceeds was not an additional security interest that the lender

possessed      other     than       in    the        residential    mortgage     property

itself).

     The      district    court          in    Akwa,     which     involved     the     same

standard Fannie Mae/Freddie Mac deed of trust that is at issue

in this appeal, correctly noted:

    [T]he lender may collect funds for escrow to ensure
    that all property-related payments, like taxes and
    ground rents, are paid.    Likewise, the Deed of Trust
    also permits the lender to hold insurance proceeds if
    an insurer pays for repairs to the house to ensure
    that the lender’s investment — the real property — is
    repaired to lender’s satisfaction.    The same is true
    for miscellaneous proceeds paid by a third party,
    which the lender can use for repairs or restoration.

Akwa, 530 B.R. at 313-14.




                                                16
     PNC     accurately      states       that    this   perspective       has    been

recognized by a number of courts in analogous circumstances.

See Abdosh v. Ocwen Loan Servicing (In re Abdosh), 513 B.R. 882,

886 (Bankr. D. Md. 2014), aff’d sub nom. Abdosh v. Ocwen Loan

Servicing, LLC, No. CIV. PJM 14-2916, 2015 WL 4635103 (D. Md.

July 30, 2015) (noting that “[t]here is no need to re-visit in

detail this clear legal issue”); In re Kreitzer, 489 B.R. at

703-06 (discussing miscellaneous proceeds); In re Mullins, No.

11-11176C-13G, 2012 WL 2576625, at *2 (Bankr. M.D.N.C. July 3,

2012) (discussing escrow funds); In re Inglis, 481 B.R. 480,

482-83 (Bankr. S.D. Ind. 2012) (“[U]nder the express terms of

these provisions . . . a lender does not lose its § 1322(b)(2)

protection    by    taking    a     security     interest    in   escrow   funds    as

‘escrow    funds’     are    part    of   the    ‘incidental      property’      which

comprise ‘the debtor’s principal residence.’”); In re Leiferman,

No. BR 10-40718, 2011 WL 166170, at *2 (Bankr. D.S.D. Jan 19,

2011) (analyzing miscellaneous proceeds).

     In his opposition, Birmingham cites a series of cases where

courts    have     held   that    certain       additional    collateral     existed

beyond real property.            For instance, Birmingham cites the Third

Circuit’s decision Hammond v. Commonwealth Mortg. Corp. of Am.,

27 F.3d 52 (3d Cir. 1994) for the proposition that “supplemental

collateral in a deed of trust will cause a waiver of the anti-

modification rights of 11 U.S.C. § 1322(b).”                      Appellant Br. at

                                           17
43-44.     However, the lien in Hammond explicitly “covered more

than the real property.” See Abdosh, 513 B.R. at 886.

      The security contrivance in Hammond created “an additional

security     interest      in:     any        and    all        appliances,      machinery,

furniture and equipment (whether fixtures or not) of any nature

whatsoever.”       Hammond,       27     F.3d       at    53-54      (internal    quotation

marks omitted).         Here, the Deed of Trust does not expressly

attempt to take a security interest in additional collateral.

As   the   Akwa    court     concluded,            the     language     found     in   these

provisions      “explicitly       ties       the     funds      to   ensuring     that   the

lender’s collateral — the real property — is preserved.”                               Akwa,

530 B.R. at 313.        Accordingly, Birmingham’s reliance on Hammond

is misplaced.

      Relatedly, Birmingham’s arguments premised on the holdings

of other cases cited in his brief are inapposite for the same

reason: the security instruments at issue explicitly granted the

debtee an interest secured by more than just real property.                              For

example, In re Ennis – in which we found the anti-modification

clause of § 1322(b)(2) inapplicable to a security agreement for

personal   property,       i.e.     a       mobile       home   on    leased    property   –

provides   no     guidance    for       a    home     mortgage        that   includes    the

typical incidental benefits intended to protect the interest in

real property.       See Ennis v. Green Tree Servicing, LLC (In re

Ennis), 558 F.3d 343, 347 (4th Cir. 2009); see also Scarborough

                                              18
v. Chase Manhattan Mortg. Corp. (In re Scarborough), 461 F.3d

406, 412 (3d Cir. 2006) (holding that when a mortgage lender

takes      an    interest            in    real       property        that        includes      income

producing property, the lender’s interest is also secured by

property that is not the debtor’s principal residence, and its

claim may be modified); Lomas Mortg., Inc. v. Louis, 82 F.3d 1,

7   (1st    Cir.       1996)         (finding      that       §   1322(b)(2)        does     not   bar

modification          of    a    secured        claim       on    a   multi-unit        property    in

which one unit is debtor’s principal residence and the security

interest        extends         to     other      income-producing            units);      Sapos    v.

Provident Inst. of Sav. in Town of Boston, 967 F.2d 918, 921 (3d

Cir.    1992)        (holding          that     the    anti-modification             provision     is

inapplicable where the note was also secured by wall-to-wall

carpeting, rents, and profits), overruled on other grounds by

Nobelman        v.    Am.       Sav.      Bank,    508       U.S.     324    (1993);     Wilson     v.

Commonwealth          Mortg.         Corp.,     895        F.2d   123,      128   (3d   Cir.     1990)

(finding § 1322(b)(2) not applicable where a mortgage agreement

stated that the lender had “a security interest in appliances,

machinery,           furniture,           and     equipment”),           abrogated         on    other

grounds by Nobelman, 508 U.S. 324.

       Sections 3, 5, and 11 of the Deed of Trust do not create

‘‘separate or additional security interest[s], but [are] merely

[] provision[s] to protect the lender’s security interest in the

real property.’’            Akwa, 530 B.R. at 314 (quoting In re Kreitzer,

                                                      19
489 B.R. 698, 705-06).                  Accordingly, the district court properly

found,       as    a       matter      of    law,      that    escrow           funds,     insurance

proceeds,         and      miscellaneous        proceeds           are    incidental        property

that do not constitute separate security interests.

                                                  C.

       Birmingham           additionally        relies        on     a    line    of     cases     from

North Carolina bankruptcy courts that ostensibly found “where an

assignment of alternative collateral exists in a deed of trust

other    than          real      property,      the     lender           will    be      subject    to

modification of its secured debt.”                        Appellant Br. at 26 (citing

In re Bradsher, 427 B.R. 386 (Bankr. M.D.N.C. 2010); Bradshaw v.

Asset Ventures, LLC (In re Bradshaw), Nos. 13-06176-8-RDD, 14-

00023-8-RDD, 2014 WL 2532227 (Bankr. E.D.N.C. June 4, 2014); In

re Murray, No. 10-10125-8-JRL, 2011 WL 5909638 (Bankr. E.D.N.C.

May    31,    2011);        In    re    Martin,     444       B.R.       538    (Bankr.     M.D.N.C.

2011); In re Hughes, 333 B.R. 360 (Bankr. M.D.N.C. 2005)).                                          As

the district court in this case correctly stated, however, the

loan documents in both Bradsher and Hughes “expressly provided

that    escrow         payments        constituted       additional            security     for     the

loan.”       J.A. 680 (citing Bradsher, 427 B.R. at 388-89 (“[T]he

loan documents purport to provide a security interest for the

indebtedness secured by the deed of trust in escrow funds in

addition      to       a   security         interest    in     the       residential       land    and

housing structure.”); Hughes, 333 B.R. at 363 (noting that the

                                                  20
loan documents “require the borrower to pledge the escrow funds

as ‘additional security’”)). Hence, the language of the loan

documents      in     both    Bradsher      and      Hughes     is       unequivocally

distinguishable from the language present in the Birmingham Deed

of Trust.      The holdings of Bradsher and Hughes therefore do not

apply to this case.

     Moreover,       in   Mullins,    the     same   judge      who      presided    over

Bradsher held that nothing in the deed of trust “suggests that a

security interest is also being granted in escrow funds.                          Nor is

there any language in the escrow provisions [] purporting to

create a security interest in escrow funds to be paid by the

[debtors].”     In re Mullins, 2012 WL 2576625 at *2.                      Further, in

Bynum v. CitiMortgage, Inc. (In re Bynum), Nos. 12-10660, 12-

2031,   2012    WL    2974694     (Bankr.     M.D.N.C.      July     19,    2012),      the

bankruptcy judge found that a standard Fannie Mae/Freddie Mac

deed of trust “do[es] not contain elements required to create a

security interest in Escrow Funds.”               Id. at *3.

     To   the       extent   that    Birmingham      also     relies       upon    In   re

Daniels, No. 15-666-5-SWH, 2015 WL 9283153 (Bankr. E.D.N.C. Dec.

18, 2015), a case that addresses the district court decision

that is currently before us, the Court in Daniels stated that

“Birmingham     involved      a   deed   of    trust     that      did     not    contain

explicit language creating a security interest in escrow funds.”

Id. at *3 (citation omitted).            Highlighting this difference, the

                                         21
Court in Daniels found that “Birmingham’s rejection of Bradsher

and Murray is not instructive.”             Id.

      In short, the North Carolina bankruptcy courts agree that

the anti-modification clause applies to the Fannie Mae/Freddie

Mac Deed of Trust before us in this case.                              We thus have no

occasion   to     consider      the     effect    –   if    any       –     of       additional

language   in    a    deed    purporting    to     create       a     separate        security

interest in escrow funds, insurance proceeds, or miscellaneous

proceeds, in light of our interpretation of § 1322(b)(2).

                                          D.

      Birmingham also argues that both the bankruptcy court and

the   district       court    should     have     looked     to       Maryland         law   to

determine whether the Deed of Trust created additional security

interests in escrow funds, insurance proceeds, and miscellaneous

proceeds   as    “real       property.”     Appellant           Br.    at    21-24.          The

Bankruptcy       Code,       however,     explicitly            defines          “incidental

property” to a debtor’s principal residence, which includes both

escrow   funds    and    insurance       proceeds.         11    U.S.C.          §   101(27B).

State laws are suspended if they conflict with the Bankruptcy

laws.    Butner v. U.S., 440 U.S. 48, 54 n.9 (1979).                             Thus, it is

not necessary for us to examine Maryland law on this issue.

      Even if Maryland law were to apply, it is far from clear

that the resulting holding would be favorable for Birmingham.                                 A

security interest is created, under Maryland law, when there is

                                          22
language present in the security instrument that leads to the

logical conclusion that it was the intention of the parties to

create     a     security      interest.          Tilghman         Hardware,       Inc.    v.

Larrimore, 628 A.2d 215, 220 (Md. 1993) (citation omitted).                                We

have    already      found     that   the   Deed       of    Trust    did    not     contain

language       wherein     a   security     interest         was    granted     in    escrow

funds,         insurance       proceeds,         or      miscellaneous            proceeds.

Therefore, Birmingham’s argument with respect to the application

of Maryland law is unavailing.

        Finally, the policy arguments that Birmingham puts forth

are    similarly     ineffective.           Birmingham        asks    this    circuit      to

ignore various cases that characterize escrow funds, insurance

proceeds, and miscellaneous proceeds as “part and parcel” of

real property.        Appellant Br. at 44 (citing In re Kreitzer, 489

B.R. at 704; In re Ferandos, 402 F.3d at 151; Davis, 989 F.2d at

211;     In     re    Rosen,     208      B.R.        345,    354     (D.N.J.        1997)).

Additionally, Birmingham relies on In re Escue, 184 B.R. 287

(Bankr. M.D. Tenn. 1995) to contend that the bankruptcy court

erred    by    not   finding     that   the      pertinent         incidental      items   at

issue    constitute        supplemental       collateral,            in   light      of    the

legislative history of the Bankruptcy Code.                           Appellant Br. at

48-49.     The Escue decision came before §§ 101(13A)(A) and (27B)

were enacted, however.            Furthermore, as with many of the other

cases that Birmingham has cited, the deed of trust at issue in

                                            23
Escue expressly created a security interest in certain fixtures

with granting language that is wholly absent from the Birmingham

Deed of Trust.      Consequently, Birmingham’s reliance on Escue is

misplaced.

      Characterizing      escrow    funds,     insurance      proceeds,      and

miscellaneous proceeds as additional security for § 1322(b)(2)

“would completely eviscerate the anti-modification exception of

§ 1322(b)(2) because many deeds of trust which encumber improved

real property contain these provisions to protect the lender’s

investment    in   the   real   property.”      Akwa,   530     B.R.    at   313

(internal quotation marks omitted).            Moreover, as the district

court noted, Congress did not intend for Birmingham’s position

and “this principle cannot be squared with an interpretation

that would render the anti-modification provision inapplicable

to virtually all residential mortgages.”          J.A. 682.

                                     IV.

      The Deed of Trust on Birmingham’s residence is secured only

by real property that is also Birmingham’s principal residence.

Escrow funds, insurance proceeds, and miscellaneous proceeds do

not constitute additional collateral.           Accordingly, Birmingham’s

complaint fails to state a claim for relief that is plausible.

For   the   foregoing    reasons,   the    district   court’s    judgment     is

affirmed.

                                                                       AFFIRMED

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