Rule 9019-3 Mortgage Modification Mediation Program
(a) Program Description. The Mortgage Modification Mediation Program (“MMM Program”) is available to any chapter 13 debtor seeking to modify a mortgage obligation with respect to his or her principal residence. In order to qualify for the MMM Program, the debtor must meet the following criteria:
(1) Debtor has regular, verifiable income and is the owner/occupant of a residential property used as debtor’s primary residence.
(2) Debtor has a mortgage balance of less than $729,750.00, and the mortgage payment is unaffordable due to financial hardship.
(3) Debtor will make monthly post-petition mortgage payments of seventy-five percent (75%) of the debtor’s current mortgage payment starting with the next monthly scheduled due date (plus any grace period, after the Motion to Participate is filed and granted). Debtor agrees that in the event debtor misses one of the modified mortgage payments, the lender and/or servicer for the mortgagee of record (“mortgage creditor”) may file a motion for relief from the automatic stay and seek removal of the debtor from the MMM Program.
(4) Debtor has filed complete bankruptcy schedules and must supply mortgage creditor with the last two (2) years’ signed tax returns, last sixty (60) days’ payment advices, and any other document mortgage creditor requests. No mediation will be scheduled until all documents are provided. Failure to supply the documents within sixty (60) days of admission to the MMM Program is grounds for dismissal from the MMM Program.
(5) Debtor must pay a mediation fee of $125.00 to the mediator. Mortgage creditor must also pay $125.00 to the mediator. Neither fee is refundable under any circumstances and is unrecoverable. Mediation is to be completed within sixty (60) days, unless otherwise extended consistent with the paragraphs contained herein.
(b) Application to the MMM Program.
(1) Motion. To seek admission to the MMM Program, a debtor must file a Notice of Motion and Motion to Participate in the Mortgage Modification Mediation Program (“Motion to Participate”), L.B.F. 9019-3(a), and serve a copy of same on the mortgage creditor and any counsel of record.
(2) Response. Mortgage creditor will have twenty-one (21) days to file a response to the Motion to Participate. A response is required.
(A) Acceptance. If the mortgage creditor agrees to participation, mortgage creditor will file a Consent to Motion to Participate in Mortgage Modification Mediation Program (“Creditor Consent Form”), L.B.F. 9019-3(b).
(B) Objection. If the mortgage creditor objects to participation, a written response stating the basis for the objection must be filed with the court. Upon written objection, the Motion to Participate will be denied without prejudice to re-filing.
(C) Failure to respond. If the mortgage creditor fails to file the Creditor Consent Form or an objection to participation within twenty-one (21) days, the Motion to Participate will be dismissed without prejudice to re-filing.
(D) Re-filing the Motion to Participate. A Motion to Participate may only be re-filed after an objection by the mortgage creditor, if filed with written concurrence of the mortgage creditor.
(c) Proceeding in the MMM Program.
(1) After the filing of the Creditor Consent Form, an order admitting the debtor into the MMM Program will be entered by the court. Upon entry of an order admitting the debtor into the MMM Program, L.B.F. 9019-3(c), the mortgage creditor must provide the debtor with the required loss mitigation package and document checklist within twenty-one (21) days. Documents that may be requested include, but are not limited to, IRS Form 4506-T, utility bills, bank statements, payment advices, and federal tax returns.
(2) Within sixty (60) days of the order admitting the debtor into the MMM Program, the debtor must provide the last two (2) years’ signed tax returns, last sixty (60) days’ payment advices, and any other document mortgage creditor requests. Failure to do so may result in the debtor being removed from the MMM Program upon written request of the mortgage creditor. Debtor must file L.B.F. 9019-3(d), Debtor’s Certification of Readiness for Mediation, (“Debtor’s Certification”) as soon as the above documentation has been provided to the mortgage creditor.
(3) Upon filing of the Debtor’s Certification, the court will issue an order of referral to the mediator, all counsel, and any unrepresented party directing the mediator to establish the date, place, and time of the mediation session. The order will include the address, telephone number, email address, and facsimile number of the mediator, counsel, and unrepresented parties. The date of the mediation session will be a date within sixty (60) days from the date of the order of referral.
(4) The appointment is effective unless the mediator rejects the appointment within seven (7) days of the date of the order of referral.
(5) Upon docketing of the order of referral to mediation, the clerk must transmit to the mediator a copy of the docket sheet that reflects all filings to date. The mediator may identify to the clerk those filed documents which the mediator wishes to review for the mediation. Unless otherwise ordered by the court, the clerk will provide the mediator with electronic or paper copies of the requested documents.
(6) A mediator may change the date and time for the mediation session if the session takes place within seventy-five (75) days of the date of the order of referral. Any continuance of the session beyond seventy-five (75) days must be approved by the court.
(d) The Mediation Process.
(1) Not later than seven (7) days before the conference, the mortgage creditor must deliver or send by facsimile or email to the mediator and debtor and/or debtor’s counsel, a mediation conference memorandum no longer than two (2) pages, summarizing the status of the loss mitigation process.
(2) Not later than seven (7) days before the conference, the debtor may deliver or send by facsimile or e-mail to the mediator and the mortgage creditor, a mediation conference memorandum no longer than two (2) pages, summarizing his or her position with respect to the loss mitigation process.
(3) The memoranda required by this subdivision are solely for use in the mediation process and are not to be filed with the clerk.
(e) The Mediation Session.
(1) The mediation session must take place on the date and at the time set forth by the mediator. The mediation session must take place at a neutral setting as designated by the mediator that may include the mediator’s office. A party must not contact or forward any document to the mediator unless the mediator requests the information or unless as otherwise provided under these rules.
(2) Counsel primarily responsible for the case and any unrepresented party must attend the mediation session. Debtor will appear in person at the mediation session. Counsel for the mortgage creditor will appear in person and a representative of the mortgage creditor will be available by phone for the mediation session. The participants must be prepared to discuss:
(A) the status of the loss mitigation process; and
(B) the position of the parties relative to settlement.
(3) Unless otherwise provided in this rule, and as may be necessary to the reporting or processing of complaints about unlawful or unethical conduct, nothing communicated during the mediation process - including any oral or written statement made by a party, attorney, or other participant, and any proposed settlement figure stated by the mediator or on behalf of any party - may be placed in evidence, made known to the trial court or jury, or construed for any purpose as an admission. No party may be bound by anything done or said during the mediation process except to enforce a settlement agreement or any other agreement achieved in that process.
(4) In the event the mediator determines that no settlement is likely to result from the mediation session, the mediator must terminate the session and promptly send a report to the court that there has been compliance with the requirements of L.B.R. 9019-3(e), but that no resolution has been reached. In the event that a settlement is achieved at the mediation session, the mediator must send a written report to the judge to whom the case is assigned stating that a settlement has been achieved.
(5) Notwithstanding the above paragraph, the mediator must submit a written report to the court advising the court of the status of the mediation no more than thirty (30) days after the completion of the mediation session.
(6) No one may have a recording or transcript made of the mediation session, including the mediator, unless otherwise agreed to by the parties.
(7) The mediator cannot be called as a witness at trial.
(f) Compensation and Expenses of Mediators. A mediator who accepts a case for mediation initially will receive a total of $250.00 from the parties for up three (3) hours’ of actual mediation services for time expended to prepare and conduct a mediation conference or conferences. After completion of three (3) hours’ service, the mediator may either
(1) continue to volunteer the mediator’s time; or
(2) give the mediation parties the option to agree to pay the mediator his prevailing hourly rate for bankruptcy services for the additional time spent on the mediation. The parties must each pay a pro rata share of the mediator’s compensation, unless they agree among themselves to a different allocation. A motion to enforce a party’s obligation to compensate a mediator is governed by F.R.B.P. 9014.
(g) Frequency of Service. An individual certified as a mediator will not be called upon more than four (4) times in a twelve (12) month period to serve as a mediator under this MMM Program without the prior approval of the mediator.
(h) MMM Program Results.
(1) If the MMM Program is successful, the mortgage creditor will file a motion to approve final modification which includes a copy of the modification agreement.
(2) In the event there is either no confirmed plan or, the confirmed plan does not provide for the vesting of property in the debtor upon confirmation, the debtor’s primary residence remains property of the estate. When a debtor’s primary residence remains property of the estate, notice of the filing of the motion to approve final modification must be provided to creditors and parties in interest. Such notice must be provided by either the mortgage creditor or the debtor. A passive notice, pursuant to LBR 2002-1(a), is required allowing a twenty-one (21) day objection period. A certificate of mailing evidencing compliance with this notice provision must be filed within seven (7) days following the date of the notice.
(3) If the MMM Program is unsuccessful, the debtor will file an amended chapter 13 plan within twenty-one (21) days to address the pre-petition mortgage arrears and any post-petition arrears that may have accrued as a result of the reduced monthly payments. If an amended chapter 13 plan is not filed, the mortgage creditor may file a motion for relief from the automatic stay.
(i) Relationship to Other Procedures. Nothing in this rule modifies the provisions of Fed. R. Civ. P. 16 and 26, or L.B.R. 7016-1 or any order of court, nor does it preclude the use of any kind of mediation outside of the mediation process established by this rule or the use of any other means of alternative dispute resolution.