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, 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 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 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.  Failure to supply the documents within thirty (30) days of admission to the MMM Program is grounds for dismissal from the MMM Program.

        (5)    If a mediator is used, 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.  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, debtor must file a Motion to Participate in the Mortgage Modification Mediation Program (“Motion to Participate”), together with the Notice of Filing of Motion to Participate in Mortgage Modification Mediation Program, L.B.F. 9019-3(a), and serve copies of same on Mortgage Creditor and any counsel of record.  In the Motion to Participate, debtor must state whether he wishes to utilize the DMM Portal, or such other portal as may be designated by the court, (the “Portal”) or to communicate directly with Mortgage Creditor and its counsel.  Additional information related to the Portal is posted on the court’s website at www.pamb.uscourts.gov and may be updated from time to time by the court.

        (2)    Response.  Mortgage Creditor will have twenty-one (21) days to file a response to the Motion to Participate.

                (A)    Acceptance.  If Mortgage Creditor agrees to participation, Mortgage Creditor will file a Consent to Participation in Mortgage Modification Mediation Program (“Creditor Consent Form”), L.B.F. 9019-3(b) and the court will enter an Order Granting Entry in MMM Program.  Prior to filing the Creditor Consent Form, the parties will confer as to whether they wish to utilize the Portal or to communicate directly with one another outside the Portal for the modification process.  The Creditor Consent Form will reflect the decision of the parties.  Should the Creditor Consent Form not contain a designation as to whether or not the Portal will be used, the preference stated by debtor in the Motion to Participate will govern.  Should both the Motion to Participate and the Creditor Consent Form fail to include a designation as to the Portal, the parties will be deemed to have opted not to use the Portal.

                (B)    Objection.  If Mortgage Creditor objects to participation, a written response stating the basis for the objection must be filed with the court. Upon filed written objection, the Motion to Participate will be denied without prejudice to re-filing.

                (C)    Failure to respond.  If Mortgage Creditor fails to file either the Creditor Consent Form or an objection to participation within twenty-one (21) days, Mortgage Creditor will be deemed to have waived any objection and the court may enter an Order Granting Entry in MMM Program (“Participation Order”) without further notice or hearing.  The preference elected by debtor as to the Portal in the Motion to Participate will govern.  Should the Motion to Participate fail to elect a preference, the parties will be deemed to have opted not to use the Portal.

                (D)    Re-filing the Motion to Participate.  A Motion to Participate may be re-filed after an objection by Mortgage Creditor, only with written concurrence of Mortgage Creditor unless the motion includes information demonstrating a material change in debtor’s circumstances that either renders Mortgage Creditor’s prior objection moot or otherwise rebuts the objection.  If Mortgage Creditor files an objection to the refiled Motion to Participate, the court may set a hearing thereon or rule on the refiled Motion to Participate without a hearing.

(c)    Proceeding in the MMM Program Using Portal.

        (1)    Within fourteen (14) days of entry of a Participation Order, unless not previously registered, Mortgage Creditor must, register with the Portal and  post on the Portal the required  loss mitigation application to be completed by debtor.

        (2)    Debtor must upload and submit a completed loss mitigation application on the Portal within thirty (30) days after Mortgage Creditor registers with the Portal.  If Mortgage Creditor is registered with the Portal at the time the Participation Order is entered, debtor will be required to upload and submit a completed loss mitigation application on the Portal within thirty (30) days after such Participation Order is entered.  Failure to do so may result in debtor being removed from the MMM Program upon written motion of Mortgage Creditor.

        (3)    Within fourteen (14) days after debtor’s submission of the loss mitigation application, Mortgage Creditor must designate, via the Portal, a specific individual who is the single point of contact for the loss mitigation process.  The designated representative will be responsible for all communications in the Portal with debtor.  Mortgage Creditor must provide the designated representative’s name, title, email address, and either a direct telephone number or direct extension.  At the same time, Mortgage Creditor must acknowledge, via the Portal, receipt of debtor’s loss mitigation application and advise debtor of any additional or missing information required for Mortgage Creditor to proceed with its review.

        (4)    Debtor must promptly submit any and all additional or missing information required for Mortgage Creditor to proceed with its review, but in no event may  the documents be submitted more than twenty-one (21) days after the date they are requested by Mortgage Creditor.  Mortgage Creditor must continue reviewing the loss mitigation application in good faith while awaiting submission of additional or missing information.

        (5)    Once the parties have opted to utilize the Portal, all material communications between debtor and Mortgage Creditor must be conducted exclusively through the Portal.

        (6)    In the event that the loan being reviewed under the MMM Program becomes subject to a transfer or the service rights are scheduled to be assigned to a new servicer, then no less than fourteen (14) days prior to the scheduled transfer/assignment, Mortgage Creditor must file a Proposed Order Substituting MMM Servicer, L.B.F. 9019-3(c), and update the Portal to identify the successor creditor (“Substituted Creditor”).  In addition to updating the Portal,  Mortgage Creditor must forthwith provide Substituted Creditor with all loss mitigation notes, applications, and correspondence related to the pending loss mitigation review.  Substituted Creditor is responsible for ensuring all such documents are received from Mortgage Creditor and must continue the loss mitigation review without requiring a new Motion to Participate or initial application from debtor.  Within thirty (30) days of the service transfer,  Substituted Creditor must designate a representative who is the single point of contact for the loss mitigation process on behalf of Substituted Creditor.  The designated representative is responsible for all communications in the Portal with debtor.  Substituted Creditor must provide the designated representative’s  name, title, email address, and either a direct telephone number or direct extension.  To the extent updated or additional documents are required by  Substituted Creditor in order to complete the loss mitigation review,  Substituted Creditor must request such information or documents contemporaneously with designating its single point of contact on the Portal.

(d)    Proceeding in the MMM Program Outside the Portal.

        (1)    Upon entry of a Participation Order, Mortgage Creditor must provide debtor with the required loss mitigation package and document checklist within fourteen (14) 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 thirty (30) days of the entry of the Participation Order, 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 debtor being removed from the MMM Program upon written  motion of Mortgage Creditor.

        (3)    Within fourteen (14) days after debtor’s submission of the loss mitigation application, Mortgage Creditor must designate, via written notice to debtor and debtor’s counsel, a specific individual who is the single point of contact for the loss mitigation process.  The designated representative is responsible for all communications with debtor with respect to the loss mitigation review.  Mortgage Creditor must provide the designated representative’s name, title, email address, and either a direct telephone number or direct extension.  At the same time, Mortgage Creditor must acknowledge receipt of debtor’s loss mitigation application and advise debtor of any additional or missing information required for Mortgage Creditor to proceed with its review.

        (4)    Debtor must promptly submit all additional or missing information required for Mortgage Creditor to proceed with its review, but in no event may the documents be submitted more than twenty-one (21) days after the date they are requested by Mortgage Creditor.  Mortgage Creditor must continue reviewing the loss mitigation application in good faith while awaiting submission of  additional or missing information.

        (5)    In the event that the loan being reviewed under the MMM Program becomes subject to a transfer or the service rights are scheduled to be assigned to a new servicer, then no less than fourteen (14) days prior to the scheduled transfer/assignment, Mortgage Creditor must file a Proposed Order Substituting MMM Servicer, L.B.F. 9019-3(c), identifying the successor creditor (“Substituted Creditor”).  Mortgage Creditor must forthwith provide Substituted Creditor with all loss mitigation notes, applications, and correspondence related to the pending loss mitigation review.  Substituted Creditor is responsible for ensuring all such documents are received from Mortgage Creditor and must  continue the loss mitigation review without requiring a new Motion to Participate or initial application from debtor.  Within thirty (30) days of the service transfer, Substituted Creditor must designate a representative who is the single point of contact for the loss mitigation process on behalf of Substituted Creditor and provide written notice thereof to debtor and debtor’s counsel of record.  The designated representative is responsible for all loss mitigation communications with debtor.  Substituted Creditor must provide the designated representative’s name, title, email address, and either a direct telephone number or direct extension.  To the extent updated or additional documents are required by Substituted Creditor in order to complete the loss mitigation review,  Substituted Creditor will request such information or documents contemporaneously with providing written notice of its single point of contact.

(e)    Request for Status Conference and/or Appointment of Mediator.

            (1)    Upon the motion of either party, the court may schedule a status conference concerning the loss mitigation process.  Such motion must include the grounds for requesting said conference  along with a description of the efforts made to resolve any differences prior to requesting the status conference.  The motion must be served upon the other party and his counsel.  The court may, on its own initiative, schedule a status conference.

            (2)    At the time of the status conference, both parties must be prepared to provide the court with sufficient detail as to the status of the loss mitigation review so that the court can assess whether further two-party negotiations are likely to be productive and/or whether the appointment of a mediator may be beneficial to the parties.

            (3)    After the status conference, if the court determines that the appointment of a mediator may be beneficial, 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 thirty (30) 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 specify those  documents in the case that 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)    Mediation must be completed within thirty (30) days, but the mediator may extend the time to complete the mediation for a period up to forty-five (45) days from the date of the order of referral. Any continuance of the session beyond forty-five (45) days must be approved by the court.

            (7)    Debtor must pay a mediation fee of $125.00 to the appointed mediator.  Mortgage Creditor (or, if applicable, Substituted Creditor) must also pay $125.00 to the appointed mediator.  Neither fee is refundable under any circumstances.

(f)    The Mediation Process.

            (1)    Not later than seven (7) days before the scheduled mediation session,  debtor and Mortgage Creditor (or, if applicable, Substituted Creditor) must each deliver or send by facsimile or email to the mediator and the opposing party a mediation conference memorandum no longer than two (2) pages, summarizing the status of the loss mitigation process.

            (2)    The memoranda required by this subdivision are solely for use in the mediation process and are not to be filed with the clerk.

(g)    The Mediation Session.

            (1)    The mediation session must take place on the date and at the time set  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)    Debtor must appear in person at the mediation session with counsel, unless unrepresented. Counsel for Mortgage Creditor (or, if applicable, Substituted Creditor) who is primarily responsible for the case must  appear in person.  A representative of Mortgage Creditor (or, if applicable, Substituted Creditor) must 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(g), 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 court stating that a settlement has been reached.

            (5)    Notwithstanding the above paragraph, the mediator must submit a written report to the court describing the status of the mediation no later 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.

(h)    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.

(i)    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 the MMM Program without the prior approval of the mediator.

(j)    MMM Program Results.

            (1)    If the MMM Program is successful, Mortgage Creditor (or, if applicable, Substituted Creditor)  will file a motion to approve final modification with a copy of the modification agreement.

            (2)    When 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 Mortgage Creditor (or, if applicable, Substituted Creditor).  A passive notice, pursuant to L.B.R. 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 and no loan modification is agreed to by the parties, debtor must file an amended/modified 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/modified chapter 13 plan is not timely filed, Mortgage Creditor (or, if applicable, Substituted Creditor)  may file a motion for relief from the automatic stay.

            (4)    If within one hundred and twenty (120) days from the entry of the Participation Order, neither a motion to approve loan modification nor an amended/modified chapter 13 plan to address Mortgage Creditor’s lien has been filed, debtor must file and serve a Loss Mitigation Status  Report with an attached printout of the current and complete account history from the Portal.  If the parties opted not to use the Portal, the Loss Mitigation Status Report must include a history of the loss mitigation review process along with the outcome of same.  Such Status  Report is to be filed on the bankruptcy docket and, if applicable, in the Portal.  The obligation to timely file a Loss Mitigation Status Report applies in all cases in the MMM Program unless the bankruptcy case has been dismissed or converted prior to the time for filing the Status Report, in which case no report is required.  Upon the motion of any party, or on its own initiative, the court may set a hearing on the Status Report.

(k)    Relationship to Other Procedures.  Nothing in this rule modifies the provisions of F.R.C.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.

COMMENTS:   L.B.R. 9019-3 was amended effective June 1, 2016, in part, to provide for optional use of a Portal to upload and exchange documents which will facilitate the mortgage modification process.
 

Part: 
-Part IX - General Provisions