          United States Court of Appeals
                        For the First Circuit

No. 05-2510
                     IN RE: VITO ANTHONY LAFATA,

                               Debtor.


                      EASTERN SAVINGS BANK, FSB,

                              Appellant,

                                  v.

                         VITO ANTHONY LAFATA,

                              Appellee.


          APPEAL FROM THE UNITED STATES DISTRICT COURT
                FOR THE DISTRICT OF MASSACHUSETTS

           [Hon. Joseph L. Tauro, U.S. District Judge]


No. 06-9009
                     IN RE: VITO ANTHONY LAFATA,

                               Debtor.


                      EASTERN SAVINGS BANK, FSB,

                              Appellant,

                                  v.

       VITO ANTHONY LAFATA; DENISE M. PAPPALARDO, TRUSTEE,

                              Appellees.


              APPEAL FROM THE BANKRUPTCY APPELLATE PANEL
                         OF THE FIRST CIRCUIT
                             Before

                    Torruella, Circuit Judge,
                  Stahl, Senior Circuit Judge,
                    and Lipez, Circuit Judge.




     Howard M. Brown, with whom James M. Liston, Thomas M. Looney,
and Bartlett Hackett Feinberg P.C. were on brief, for appellant.
     Laurel E. Bretta, with whom Bretta & Grimaldi, P.A., was on
brief, for appellees.



                          April 3, 2007
           STAHL, Senior Circuit Judge.          At issue in this case of

first impression is whether the Bankruptcy Code's protection of

mortgage lenders against modification of claims secured by a

principal residence applies when the residence in fact lies mostly

on a lot abutting the mortgaged property.             This case arises out of

a bizarre set of facts.      The debtor in this case and his then-wife

mistakenly built a house on the property line between two lots

owned by the debtor's ex-wife, a fact which was not discovered

until after a mortgage on the lot believed to include the house had

already been granted.       Compounding this problem is the fact that

everyone -- the debtor, the bank, and the bankruptcy court -- was

mistaken   as   to   who   owned   what    property    when.    Despite   this

confusion, the bankruptcy court and the Bankruptcy Appellate Panel

thoroughly addressed the dispositive issues, and we affirm.

                               I. Background

           The issues here center around two contiguous pieces of

property: 26 Jasper St. (the "Jasper Lot")1 and 31 Enfield Ave.

(the "Enfield Lot") in Methuen, Massachusetts. Vito Anthony LaFata

(the "Debtor") resides in a house that straddles the property line

between the Jasper Lot and the Enfield Lot, with the majority of

the house on the Enfield Lot, but with a street address of 26




     1
      It appears from the record that the Jasper Lot is actually
two separate parcels, one of which is a five-foot-wide strip. For
simplicity, we will refer to them collectively as the "Jasper Lot."

                                     -3-
Jasper St.2       Both properties were originally owned by a realty

trust controlled by Gail Ness,3 formerly the wife of the Debtor.

As part of an earlier divorce settlement, Ness deeded the Jasper

Lot to the Debtor.      Importantly, both Ness and the Debtor had the

mistaken belief at the time of the deed that the house lay entirely

on the Jasper Lot.        This erroneous belief was the first of two

mistakes that resulted in this case being before us today.

               In July 2003, still with the mistaken belief that his

house was entirely on the Jasper Lot, the Debtor mortgaged the

property to Eastern Savings Bank, FSB ("Eastern"), the appellant

here.       Eastern's title work did not disclose that the majority of

the Debtor's residence actually lay on the Enfield Lot.4            In

connection with the mortgage, the Debtor executed a note for

$165,000, secured solely by the Jasper Lot.        It appears that he

never made any of the payments due on the note.

               Following the grant of the mortgage to Eastern, Ness

agreed to transfer the Enfield Lot to the Debtor in exchange for

money owed to Ness by the Debtor under their original divorce


     2
      The Enfield Lot also contains other structures, which are not
relevant to the issues here.
     3
      Gail Ness is also referred to in the record as Gail LaFata
and Gail Raulinaitis.     We will refer to her as "Ness" for
simplicity.
        4
      It is unclear what the source of the mistake was. There is
some indication in the record that an erroneous plot plan existed,
a fact which may have been discovered when the Debtor applied for
work permits from the city.

                                    -4-
settlement, apparently unaware of the title issue.                  Pursuant to

this       agreement,   Ness   executed   a    deed,   dated    June   4,   2004,

purporting to transfer the Enfield Lot to the Debtor.                    However,

because the payments were never made, the deed was never actually

delivered to the Debtor for recording purposes.                  Instead it was

held in escrow by Ness's attorney pending the payment of the

additional funds owed by the Debtor to Ness.                   According to the

record, because of nonpayment of the agreed-upon amount, Ness

remains the owner of the Enfield Lot today.                Hence the second

mistake:       the   Debtor    seemed     to   misunderstand      this      escrow

arrangement, and during his bankruptcy proceedings operated with

the mistaken belief that he was the fee simple owner of the Enfield

Lot.

               On August 5, 2004, the Debtor filed for Chapter 13

bankruptcy protection, claiming as assets both the Jasper Lot and

the Enfield Lot.         At some point not clear from the record the

Debtor had become aware that his residence was not entirely on the

Jasper Lot, but was instead mostly on the Enfield Lot.5                       This

encroachment made the Jasper Lot noncompliant with zoning, which

essentially destroyed its value.          An appraisal commissioned by the

Debtor noted that, if compliant, the land would probably be worth

around $100,000, but in its current state the property was worth


       5
      According to the record, Eastern also became aware of this
fact as early as March 2004, when it first filed a claim with its
title insurance company.

                                        -5-
only "what the neighbor will pay for it" -- a value the appraiser

estimated at $18,500.

            Eastern filed a proof of claim for the full value of its

mortgage,   which   it    placed    at    $195,340,    including   delinquent

interest and collection fees. On August 18, 2004, the Debtor filed

an objection to this proof of claim, as well as a motion for

determination of secured status under 11 U.S.C. § 506 and a

proposed Chapter 13 plan.

            As part of his proposed Chapter 13 plan, the Debtor

sought to bifurcate Eastern Bank's claim into secured and unsecured

portions,   with    the   secured    portion     worth   only   $18,500,   the

appraised value of the collateral.            That left, according to the

Debtor, $131,500 in unsecured debt,6 for which the Debtor proposed

to pay 10 cents on the dollar.           Eastern thus stood to receive only

$31,650 on a claim that may have been worth as much as $195,340.

Eastern understandably objected to this.              On August 27, 2004, it

filed a response to the objection to the proof of claim, an

objection to the motion for determination of secured status, and an

objection to confirmation of the Chapter 13 plan.

            Further complicating matters, the City of Methuen also

filed an objection to the Debtor's motion for determination of

secured status on or around August 20, in which it stated that,


     6
      This would place the total value of Eastern's claim at
$150,000. It's not clear from the record how the Debtor arrived at
this figure, given that the face value of the note was $165,000.

                                     -6-
according to the registry of deeds, the Enfield Lot was actually

owned by Ness.         The Debtor responded on August 27 by providing the

court with a copy of the July 4, 2004, deed of the Enfield Lot from

Ness       to   the   Debtor   --   the   same   deed   that   was   subsequently

discovered to be still in escrow. The bankruptcy court and Eastern

appeared to believe the Debtor's assurances that he owned the

property and did not pursue the issue of ownership further.7

                The three objections raised by Eastern each depend on

whether 11 U.S.C. § 1322(b)(2) would allow Eastern's claim to be

bifurcated as proposed by the Debtor.              The bankruptcy court ruled

in favor of the Debtor on December 8, 2004, and allowed the

bifurcation of the claim into a secured claim of $18,500 and an

unsecured claim for the balance of the note.               Eastern appealed to

the U.S. District Court for the District of Massachusetts, which

affirmed the bankruptcy court on July 7, 2005, without opinion.

Eastern appeals from the district court's decision, and that appeal

is the first of the two appeals before us today.

                Following the bankruptcy court orders, Eastern began an

adversarial action against the Debtor in bankruptcy court on

January 19, 2005, seeking to reform the mortgage so as to include

at least that portion of the Enfield Lot that included the Debtor's


       7
      Eastern justifies its reliance on what it knew to be an
unrecorded deed by pointing out that, even if the deed was not
recorded, it would still be valid as against the Debtor and Ness.
Of course, this assumes that the deed was at least validly
delivered, which it was not.

                                          -7-
residence.    During depositions for that proceeding, Ness and the

Debtor both testified that the Enfield Lot was actually still owned

by Ness.     At that point Eastern moved for relief from judgment

under Rule 60(b) of the Federal Rules of Civil Procedure.8      Eastern

asked that the bankruptcy court vacate the three orders it had

earlier decided in favor of the Debtor, citing newly discovered

evidence and fraud on the court.

            The bankruptcy court held a show cause hearing on October

7, 2005, to confirm whether the deed was in fact in escrow and

whether it could be delivered to the Debtor.       The court concluded

that it could not be delivered.         On October 21, the bankruptcy

court denied the Rule 60(b) motion, saying only that Eastern

"failed to meet its burden."

            Eastern appealed the denial of the Rule 60(b) motion to

the Bankruptcy Appellate Panel ("BAP") for the First Circuit, which

affirmed.    Eastern appealed to us, and that appeal makes up the

second of the two appeals before us.

                            II. Discussion

A. The Bankruptcy Court's Orders

            On appeal from a district court's review of a bankruptcy

court decision, we review the bankruptcy court's legal conclusions

de novo and its factual conclusions for clear error.          Brandt v.



     8
      Bankruptcy    Rule   9024   makes   Rule   60(b)   applicable   in
bankruptcy.

                                  -8-
Repco Printers & Lithographics, Inc. (In re Healthco Int'l Inc.),

132 F.3d 104, 107 (1st Cir. 1997).

               Eastern's       appeal      from    the    bankruptcy       court's        orders

raises       three     issues:      whether       the    bankruptcy      court          correctly

interpreted        §      1322(b)(2)      of   the      Bankruptcy      Code       as   allowing

bifurcation          here;    whether       Eastern       was    allowed       a    reasonable

opportunity          to    object    to     the    valuation       of    the       Jasper       Lot

collateral; and whether the bankruptcy court correctly applied the

burden of proof.9

               1. Section 1322(b)(2)

               Section 1322(b)(2) of the Bankruptcy Code states that a

Chapter 13 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, or of holders of
               unsecured claims, or leave unaffected the
               rights of holders of any class of claims.

11 U.S.C. § 1322(b)(2).                Prior to Nobelman v. American Savings

Bank, 508 U.S. 324 (1993), there was some disagreement among the

circuits as to whether § 1322(b)(2) allowed for bifurcation of

undersecured homestead mortgages, such as the one at issue here.

See,       e.g.,   Bellamy     v.    Fed.      Home     Loan    Mortgage       Corp.      (In    re


       9
      Eastern also raises a fourth issue: whether the bankruptcy
court properly relied on Eastern's failure to attempt to reform the
mortgage when it allowed the bifurcation. That rationale is only
relevant in the case where the Debtor owns the Enfield Lot -- which
he does not. Therefore, we do not consider the issue, nor do we
place any weight on it in our analysis of the bifurcation issue.

                                               -9-
Bellamy),     962   F.2d   176,   179   (2d    Cir.    1992)   (holding   that   §

1322(b)(2) only prohibits modification of the secured claim, but

that the existence and size of the secured claim must be determined

according to § 506(a)).       In Nobelman, the Supreme Court held that

§ 1322(b)(2) barred modification of the entire claim -- secured and

unsecured portions -- if the claim is secured by the debtor's

principal residence.10      508 U.S. at 332.          Therefore, in the instant

case, if Eastern's claim is secured by the Debtor's principal

residence, then the claim cannot be modified by bifurcating it into

secured and unsecured claims, even though the value of the security

is roughly one-tenth the value of the claim.

             Despite mistakenly believing that the Debtor owned the

Enfield Lot, the bankruptcy court did still rule on this question

under the correct set of facts. Ironically, this confusing case is

helped somewhat by confusion on a related issue: should a court

make the determination of what is the debtor's "primary residence"



     10
          Justice Stevens explained the policy behind § 1322(b)(2):

             At first blush it seems somewhat strange that
             the Bankruptcy Code should provide less
             protection to an individual's interest in
             retaining possession of his or her home than
             of other assets. The anomaly is, however,
             explained   by    the    legislative    history
             indicating   that   favorable    treatment   of
             residential   mortgagees    was   intended   to
             encourage the flow of capital into the home
             lending market.

Nobelman, 508 U.S. at 332 (Stevens, J., concurring).

                                        -10-
for purposes of § 1322(b)(2) at the time of the mortgage, the time

of the petition for bankruptcy protection, or some other time?

Compare In re Smart, 214 B.R. 63, 68 (Bankr. D. Conn. 1997)

(mortgage date), with In re Wetherbee, 164 B.R. 212, 215 (Bankr.

D.N.H. 1994) (petition date); see also GMAC Mortgage Corp. v.

Marenaro (In re Marenaro), 217 B.R. 358, 360 (B.A.P. 1st Cir. 1998)

(noting the uncertainty).      Because the issue is not settled, the

bankruptcy court analyzed the applicability of § 1322(b)(2) from

both the mortgage date and the petition date.11

             The un-transferred deed from Ness to the Debtor was dated

after the Debtor mortgaged the property to Eastern.       Therefore, at

the time of the mortgage, the Debtor owned the Jasper Lot and did

not claim to own the Enfield Lot.        In analyzing the applicability

of § 1322(b)(2) at that point in time, the bankruptcy court said

that:

             the Bank had and continues to have a mortgage
             on the [Jasper Lot] which is burdened with an
             encroachment. Assuming without deciding that
             the physical presence of a significant amount
             [of] the residence on the [Jasper Lot] would
             be sufficient to bring the [Jasper Lot] within
             the rubric of "primary residence," [Eastern]
             has failed to prove that an eight to ten foot
             encroachment is the main part, the principal
             part, or even an important part of the
             Debtor's residence. Indeed, from the pictures
             provided to the Court by the Debtor, it


        11
      Because in fact the ownership did not change between the time
of the mortgage and the time of the petition, the issue of what
point in time to determine the "principal residence" is not
relevant to this appeal.

                                  -11-
            appears that the encroachment may only be an
            unenclosed deck.    This is not a situation
            where a mortgagee has a lien on the primary
            residence that is comprised of two separately
            deeded parcels and the debtor is attempting to
            sell the unimproved lot. This is a case where
            the Bank did not take a mortgage on the
            improved lot.   To hold that the Bank has a
            mortgage on the primary residence when
            admittedly it does not hold a mortgage on the
            [Enfield Lot] is akin to the tail wagging the
            dog.

Eastern does not challenge the bankruptcy court's finding that the

encroachment is not "the main part, the principal part, or even an

important part" of the residence.           Therefore, the question before

us   is   whether   even   some   nominal    encroachment   by    a   debtor's

principal residence on a mortgaged property will trigger the anti-

modification protections of § 1322(b)(2).            We hold that it does

not.

            We begin with the language of the statute.           See Consumer

Prod. Safety Comm'n v. GTE Sylvania, Inc., 447 U.S. 102, 108 (1980)

("the starting point for interpreting a statute is the language of

the statute itself").       The key phrase in the statute is "secured

only by a security interest in real property that is the debtor's

principal residence." 11 U.S.C. § 1322(b)(2). Eastern argues that

the statute is satisfied as long as the debtor resides on the

mortgaged property.        But that simply begs the question of what

constitutes "residing" when a party actually resides mostly on the




                                    -12-
adjacent property.12       The text of the statute provides little help

in answering this question.            See Lomas Mortgage, Inc. v. Louis, 82

F.3d 1, 4 (1st Cir. 1996) (finding the text of the statute

ambiguous   as   to    whether     §   1322(b)(2)    bars    modification     of    a

mortgage secured by a multi-family dwelling).

            In Lomas, we also reviewed the legislative history of §

1322(b)(2), which we do not repeat here.             See id. at 4-6.      In that

case, we noted that the most that could be said of the legislative

history was that "Congress wanted to benefit the residential

mortgage market as opposed to the entire real estate mortgage

market."     Id.      at   5.      The   concern    was     that    without   these

protections, mortgage lenders would be too conservative in their

lending. Id. This dovetails with Justice Stevens's concurrence in

Nobelman,   where     he   notes    that   §    1322(b)(2)    was    "intended     to

encourage the flow of capital into the home lending market."                     508

U.S. at 332 (Stevens, J., concurring).

            This policy of preferring mortgage lenders to other

lenders in bankruptcy does not necessarily extend to those cases

where the lender has failed to exercise reasonable due diligence,


     12
      Eastern's argument here is that the Debtor should be estopped
from denying his "judicial admission" that he resides at, in the
Debtor's words, "26 Jasper St." This is without merit. First, the
record is clear that his residence has a street address of 26
Jasper St., even if the majority of the house actually lies on the
Enfield Lot.   Second, there is no dispute that this house is,
indeed, his principal residence.    The question is only whether
enough of that principal residence lies on the Jasper Lot to
trigger § 1322(b)(2).

                                         -13-
however.    Congress's concern is with a well-functioning home

lending market, and that market depends in part on mortgage lenders

working with due diligence to minimize risk for themselves, and the

mortgage market in general.       The problem Eastern faces here is as

a result of its own failure to properly examine the title to the

Jasper Lot before taking the mortgage from the Debtor.13            Had it

done so, it would have found the cloud on the title and dealt with

it accordingly.       We see no reason why § 1322(b)(2) should be used

to correct this error.

           We   and    other   courts   have   interpreted   §   1322(b)(2)

narrowly, even after the Nobelman decision. See, e.g., Scarborough

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

406, 411 (3d Cir. 2006) (§ 1322(b)(2) does not bar modification

where claim secured by multifamily dwelling, and noting policy of

reading § 1322(b)(2) "literally and narrowly"); Zimmer v. PSB

Lending Corp. (In re Zimmer), 313 F.3d 1220, 1226-27 (9th Cir.

2002) (§ 1322(b)(2) does not bar modification where claim is wholly

unsecured because of prior lien on primary residence); In re Mann,



     13
      We understand that the diligence is often delegated to other
parties, and that the risk of situations like this are usually
covered by title insurance policies. For whatever reason, those
systems broke down here. Regardless of whether Eastern may have
claims against other parties, it nonetheless must still bear the
primary loss for that breakdown. Cf. Focus Inv. Assocs., Inc. v.
Am. Title Ins. Co., 992 F.2d 1231, 1236 (1st Cir. 1993) (collecting
cases holding that mortgagees and other title insurance holders
cannot recover their loan losses from title insurance companies on
the basis of a negligent title search by the insurer).

                                   -14-
249 B.R. 831, 835-37 (B.A.P. 1st Cir. 2000) (same, and collecting

cases); Lomas, 82 F.3d at 4.           The policy of encouraging mortgage

lending     does    not   require      §    1322(b)(2)         to     be    interpreted

expansively.       Indeed, if we were to allow Eastern's more expansive

reading of § 1322(b)(2) here, we could face cases in the future of

lenders seeking its protection even when they had never intended to

lend against a debtor's principal residence.               For example, suppose

Eastern and the debtor had a different mistaken belief at the time

of the mortgage: that the residence was entirely on the un-

mortgaged    Enfield      Lot,   not       the   Jasper        Lot.         Under      such

circumstances, where Eastern intended to take a mortgage only on

the undeveloped lot, should it be allowed then to claim the

benefits of § 1322(b)(2) upon discovering that the residence

actually encroached on the mortgaged property?                      The policy behind

§ 1322(b)(2) would not be served, since Eastern would not have

taken the mortgage as a home lender.                 But the arguments that

Eastern has presented here would be equally as applicable in that

situation;    the    mortgaged   property        would    be    just       as   much   the

Debtor's "principal residence" as it is in the instant case.                           The

only difference we can see is that the parties had intended the

loan in this case to be a home mortgage loan when it was granted.

But the statute is silent as to intent and as to type of mortgage;

it asks only the objective question of whether the mortgaged

property "is the debtor's principal residence."                       Furthermore, we


                                       -15-
are loath to create a rule that would require courts in the future

to have to inquire into the parties' subjective beliefs as to

whether a particular mortgage of real property was intended to be

a home mortgage or not, especially when the costs of an alternative

rule are small and contained.

                Our ruling today does no more than say that the anti-

modification provisions of § 1322(b)(2) will not apply if the

debtor's principal residence only encroaches on the mortgaged

property.14 Lenders can easily avoid this if they do what they have

always had the responsibility to do: perform proper due diligence,

title examination, and, if necessary, a land survey. The result of

our holding is, of course, a windfall for the Debtor.      If the facts

were as he believed them to be when he took the mortgage loan, he

would not be able to strip the loan down by over $100,000.      But if

we held in Eastern's favor, there would instead be a windfall for

the bank.       This is not a case where a lender has watched the value

of its collateral go down gradually until it is worth less than the

loan.        Here, the property was never worth as much as Eastern's

loan.        If it had foreclosed the day after granting the loan, it

would have received roughly the same as it receives now: collateral

worth $18,500 and an unsecured claim for the balance of the loan.



        14
      We have no view on the question of how much of a residence
must be on the secured property for it to no longer be an
"encroachment," except to say that it is more than appears in this
case.

                                   -16-
Given its lack of due diligence, we see no reason why the result

should be otherwise.15

           2. Collateral Valuation

           Eastern also claims that it did not receive adequate

notice of an intent to value the collateral.       It raises this

argument because it failed to object during the valuation hearing,

and ordinarily that means that the Debtor's valuation is upheld by

default.   See Enewally v. Wash. Mut. Bank (In re Enewally), 368

F.3d 1165, 1173 (9th Cir. 2004); In re Brown, 244 B.R. 603, 611

(Bankr. W.D. Va. 2000); see also Campos-Orrego, 175 F.3d at 95

(issues raised for the first time on appeal are deemed waived).   It

justifies its lack of objection by saying that it never had the

notice due under Bankruptcy Rule 3012 that an evidentiary hearing

on valuation was going to take place.

           Bankruptcy Rule 3012 states:

           The court may determine the value of a claim
           secured by a lien on property in which the
           estate has an interest on motion of any party
           in interest and after a hearing on notice to
           the holder of the secured claim and any other
           entity as the court may direct.

Eastern cites the case of Piedmont Trust Bank v. Linkous (In re

Linkous), 990 F.2d 160 (4th Cir. 1993), for the proposition that,


     15
      Eastern also argues that the Debtor should be viewed as
holding an easement on so much of the Enfield Lot upon which the
Debtor's house sits. It says that this would essentially bring all
of the house under the mortgage on the Jasper Lot. Because Eastern
raises this argument for the first time on appeal, it is deemed
waived. Campos-Orrego v. Rivera, 175 F.3d 89, 95 (1st Cir. 1999).

                               -17-
in order to satisfy the rule, the court must provide creditors with

specific notice that a § 506 valuation hearing is to be held.   Id.

at 162-63.

          However, there is some split of authority, with courts in

this circuit and others holding that the filing of a Chapter 13

plan is sufficient notice of an intent to strip down and revalue

collateral, and no separate motion or hearing is required.      See

Curtis v. LaSalle Nat'l Bank (In re Curtis), 322 B.R. 470, 481

(Bankr. D. Mass. 2005); McDonough v. Plaistow Coop. Bank (In re

McDonough), 166 B.R. 9, 14 (Bankr. D. Mass. 1994); Lee Servicing

Co. v. Wolf (In re Wolf), 162 B.R. 98, 107-08 (Bankr. D.N.J. 1993).

However, even assuming that the specific notice that Linkous calls

for is required in this circuit, it was provided.

          The hearing that was held on November 23, 2004, covered,

in part, the Debtor's motion for secured status under 11 U.S.C. §

506, and Eastern had notice that that was to be the subject.    The

hearing was described as "nonevidentiary," but, Eastern argues,

the hearing implicitly became evidentiary, without notice, because

the court expected Eastern to provide evidence to refute the

Debtor's valuation of the Jasper Lot.

          At the hearing in question, the bankruptcy judge made

very clear that, if valuation were in dispute, then an evidentiary

hearing would be necessary.     He said that the issue would be

decided as a matter of law, without a separate evidentiary hearing,


                               -18-
so long as the valuation was unopposed by Eastern.                 Eastern then

argued the legal issue of the interpretation of § 1322(b)(2), but

did not argue the actual valuation of the Jasper Lot.                  At the end

of the argument, the bankruptcy judge said, "So that's why you've

not raised and spent a lot of time on the valuation issue because

you say it doesn't matter."        Counsel for Eastern responded, "Yes,

Your Honor.      We don't think we ever get there.            They can't modify

the mortgage."

              Eastern was thus given several opportunities to request

an evidentiary hearing to challenge the valuation of the Jasper

Lot, and had sufficient notice that the valuation was likely to

stand if it lost on the § 1322(b)(2) issue.                  It appears to have

made a strategic decision not to argue valuation, or at least to

focus   all    of   its   energy   on    the   legal   issue.      Under      these

circumstances, we see no violation of Rule 3012.

              3. Burden of Proof

              Eastern's   final    argument     in     its    appeal   from    the

bankruptcy court's orders is that the court improperly applied the

burden of proof.      The court held that Eastern,

              as the party objecting to confirmation, must
              prove it is entitled to the protection it
              claims under section 1322(b)(2). The mortgage
              document as well as the deed conveying the
              [Enfield Lot] from Ms. Ness to the Debtor
              constitute sufficient evidence to call into
              doubt [Eastern's] proof of claim, in which it
              asserts a secured claim in the full amount of
              the note.     Thus the ultimate burden to
              establish its claim has been shifted back to

                                        -19-
            [Eastern]. The Court must now decide whether
            [Eastern] has met its burden.

This    holding,   the   bankruptcy   court    said,   followed   from   the

principle that,

            [a]lthough a properly executed and filed proof
            of claim is prima facie evidence of the
            validity and amount of the claim (Bankruptcy
            Rule 3001(f)), once the objecting party
            submits sufficient evidence to place the
            claimant's entitlement in issue, the ultimate
            burden of proof or persuasion is upon the
            creditor to establish its claim.

(quoting Brown, 244 B.R. at 608).              Eastern argues that this

principle is applicable only to situations where the issue is the

"value" or "extent" of a claim, but not to where the issue is one

of the applicability of a statute.16          It cites the case of In re

Ziegler, which held that, "in a § 1322(b) context, the initial

burden of production falls on the creditor, with the ultimate

burden of persuasion resting on the debtor."              88 B.R. 67, 69

(Bankr. E.D. Pa. 1988).

            Even assuming that Ziegler's burden-shifting approach

applies in this circuit, we do not see a conflict here.           The issue

in Ziegler was whether a pledge of proceeds from a contingent,

unliquidated state lawsuit could be sufficient to cure default on

a mortgage secured only by a debtor's residence.         The court in that

case held that the debtor had not met his burden to show that the


       16
      Bankruptcy Rule 3001(f) states: "A proof of claim executed
and filed in accordance with these rules shall constitute prima
facie evidence of the validity and amount of the claim."

                                  -20-
lawsuit proceeds were more than just speculative.              In discussing

the burden of proof, the court was referring to proof of the

debtor's ability to satisfy claims from particular income streams.17

This is a subset of the broader principle that the debtor bears the

burden of proving that a Chapter 13 plan is feasible                See First

Nat'l Bank of Boston v. Fantasia (In re Fantasia), 211 B.R. 420,

423 (B.A.P. 1st Cir. 1997).     This is not in conflict with the point

that a creditor bears the burden of persuasion as to its proofs of

claim.    See In re Durastone Co, Inc., 223 B.R. 396, 397-98 (Bankr.

D.R.I. 1998).      Furthermore, even if it were error to place the

burden of persuasion on Eastern with respect to the interpretation

of § 1322(b)(2), any error was harmless since the bankruptcy

court's interpretation was the correct one.

B. Rule 60(b) Motions

            We   review   decisions    granting     or   denying   Rule   60(b)

motions for abuse of discretion.             Roger Edwards, LLC v. Fiddes &

Son, Ltd., 427 F.3d 129, 132 (1st Cir. 2005).

            After discovering that the Debtor did not in fact own the

Enfield Lot, Eastern moved for reconsideration of the bankruptcy

court's orders under Rules 60(b)(2) (newly discovered evidence);

(b)(3) (fraud, misrepresentation, or other misconduct); and (b)(6)


     17
      In Ziegler, the court's principal authority in deciding the
burden of proof was In re Fries, 68 B.R. 676 (Bankr. E.D. Pa.
1986), which also dealt with the issue of whether certain income
streams were adequate to satisfy claims. Ziegler, 88 B.R. at 68-
69.

                                      -21-
(any other reason justifying relief).   The bankruptcy court denied

the motions without opinion, and Eastern appealed to the BAP.    The

BAP thoroughly addressed the arguments and affirmed the bankruptcy

court.   Eastern Sav. Bank, FSB v. Lafata (In re Lafata), 344 B.R.

715, 723-26 (B.A.P. 1st Cir. 2006).   We agree with the BAP, and add

the following additional reason for denying the motions.

          While Eastern is outraged over what it perceives to be

bad behavior by the Debtor, it has not articulated how it was

prejudiced.   The fact remains that the Debtor does not own the

Enfield Lot, and knowing this at the time of the trial would not

change the fact that Eastern has no claim on the property.      The

issue of whether § 1322(b)(2) applied to bar modification was fully

before the bankruptcy court, which examined both the case in which

the Debtor owned the Enfield Lot, and the case in which he did not.

The court's analysis, and ours today, would have applied just as

much if the court had known with certainty that the Debtor did not

own the Enfield Lot.    Indeed, Eastern would arguably have been

better off in the case where the Debtor owned both.   Then it could

-- as it did -- plausibly seek reformation of the mortgage, or

something similar.   With that option off the table, we do not see

how Eastern can now claim that it would be more likely to succeed.

          Under Rule 60(b)(2), a movant must show, inter alia, that

the newly discovered evidence "is of such a nature that it would

probably change the result were a new trial to be granted."     U.S.


                               -22-
Steel v. M. DeMatteo Const. Co., 315 F.3d 43, 52 (1st Cir. 2002).

Under Rule 60(b)(3), a movant must show, inter alia, that any

misconduct "foreclosed full and fair preparation or presentation of

his case."    Karak v. Bursaw Oil Corp., 288 F.3d 15, 21 (1st Cir.

2002)   (internal   quotation   marks,   citations,   and   alterations

omitted).    Since Eastern has not presented an argument, nor do we

see one, as to how the bankruptcy court would have reached a

different result, neither of these standards were met.         For the

same reason, Eastern has not shown the "exceptional circumstances

justifying extraordinary relief" that must obtain for Rule 60(b)(6)

relief to be granted.   Ahmed v. Rosenblatt, 118 F.3d 886, 891 (1st

Cir. 1997).    Therefore, the bankruptcy court and the BAP did not

abuse their discretion in denying the motions.

                           III. Conclusion

            For the forgoing reasons, the decision of the district

court affirming the bankruptcy court's orders and the decision of

the Bankruptcy Appellate Panel affirming the bankruptcy court's

denial of Eastern's Rule 60(b) motion are affirmed.           Costs to

appellees.




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