Moving from Loss-Loss to Win-Win: Mortgage Loss-Mitigation

Moving from Loss‐Loss to Win‐Win: Mortgage Loss Mitigation Programs ABA Business Law Section – Business Bankruptcy Committee Fall Meeting

2010 National Conference of Bankruptcy Judges Hilton New Orleans Riverside Wednesday, October 13, 2010

3:00 p.m. – 5:00 p.m.

Panelists

Patricia Antonelli Partridge Snow & Hahn LLP 180 South Main Street Providence, Rhode Island 02903–7104 E‐mail: [email protected] Phone: (401) 861‐8200

Hon. Robert D. DrainUnited States Bankruptcy Court for the

Southern District of New York300 Quarropas Street

White Plains, NY 10601‐4140

Victor G. Milione Nixon Peabody LLP 100 Summer Street

Boston, MA 02110‐2131 E‐mail: [email protected]

Phone: (617) 345‐1215 Debra L. Miller Chapter 13 Trustee Northern District of Indiana P.O. Box 11550 South Bend, IN 46634‐0550

John RaoNational Consumer Law Center7 Winthrop Square, 4th Floor

Boston, MA 02110E‐mail: [email protected]

Phone: (617) 542‐8010

Moderator

Hon. Elizabeth S. Stong United States Bankruptcy Court for the Eastern District of New York

271 Cadman Plaza East Brooklyn, NY 11201

mailto:[email protected]



Program Materials Panelist Biographies United States Bankruptcy Court for the Southern District of New York General Order #M‐364 – Adoption of Loss Mitigation Program Procedures

Loss Mitigation Program Procedures

Loss‐Mitigation Request – By the Debtor

Loss‐Mitigation Request – By a Creditor

Loss‐Mitigation Order Instructions for Commencement of Loss Mitigation Notice of Loss Mitigation Request Loss Mitigation Order (Chapters 7 or 11) Loss Mitigation Order (Chapter 13) Sample Orders

Order Extending Loss Mitigation Period and Adjourning Status Conference

Order to Show Cause Directing HSBC Mortgage Corporation to Comply with Order Directing Loss Mitigation and to Appear at March 11, 2010 Conference

Order to Show Cause Directing a Representative of Household Finance Realty Corporation of New York (i) to Comply with Order Directing Loss Mitigation; (ii) to appear at a Hearing on August 18, 2010; (iii) to Pay Debtors’ Attorneys Fees and (iv) to Pay a Daily Penalty until it Complies Herewith

United States Bankruptcy Court for the Eastern District of New York General Order #543 – Adoption of Loss Mitigation Program Procedures

Loss Mitigation Program Procedures

Loss Mitigation Request – by the Debtor

Loss Mitigation Request – By a Creditor

Loss‐Mitigation Order Sample Orders

Loss Mitigation Order Directing Parties to Participate in Loss Mitigation Program

Order Extending Loss‐Mitigation Period and Scheduling Adjourned Loss‐Mitigation Status Conference

Stipulation and Order Approving Loan Modification

Order Terminating Loss Mitigation Period United States Bankruptcy Court for the District of Rhode Island General Order No. 09‐003: Order Adopting Loss Mitigation Program and Procedures

Loss Mitigation Program and Procedures

Form A to G.O. 09‐003: Notice and/or Request for Loss Mitigation – By the Debtor

Form B to G.O. 09‐003: Loss Mitigation request – By a Creditor

Form C to G.O. 09‐003: Loss Mitigation Order General Order No. 10‐001: General Order Adopting First Amended Loss Mitigation Program and Procedures

First Amended Loss Mitigation Program and Procedures

Amended Form A to G.O. 10‐001: Notice and/or Request for Loss Mitigation – By the Debtor

Instructions Re: Loss Mitigation Program and Procedures (General Order No. 10‐001)

General Order No. 10‐002: General Order Adopting Second Amended Loss Mitigation Program and Procedures

Second Amended Loss Mitigation Program and Procedures

Second Amended Form C to G.O. 10‐002: Loss Mitigation Order

Instructions Re: Loss Mitigation Program and Procedures Loss Mitigation Best Practices Loss Mitigation Frequently Asked Questions In re Sosa

Objection of PHH Mortgage Corporation d/b/a PHH Mortgage Service Center to Debtor’s Request for Entry of a Loss Mitigation Order; Memorandum in Support of PHH Mortgage Corporation d/b/a PHH Mortgage Service Center to Debtor’s Request for Entry of a Loss Mitigation Order

Brief of Amicus Counsel John Rao and the National Consumer Law Center in Response to Objections to Debtors’ Request for Loss Mitigation Orders

National Consumer Law Center John Rao, Recent Developments in the Home Affordable Modification Program (HAMP) NCLC Notices

Getting a Second Look

Identifying Participating Servicers

What to Do When the Servicer Asks You to Re‐verify Income Documentation

What to Do When the Servicer Denies a HAMP Mod Because the Client Received a Discharge in a Chapter 7 Case and Did Not Reaffirm the Mortgage Debt?

What to Do When the Servicer Denies a HAMP Mod Because They Re‐ran the NPV Test

What to Do When the Servicer Refuses to Accept or Process a HAMP Application Because Client is in an Active Bankruptcy Case

What to Do When the Servicer Says the Investor Is Not Participating Other Making Home Affordable HAMP Supplemental Directive 10‐02 United States Bankruptcy Court for the District of New Jersey – General Order Clarifying that Participation in the New Jersey Foreclosure Mediation Program does not Violate the Automatic Stay

Patricia Antonelli Patricia Antonelli is a partner in the law firm of Partridge, Snow & Hahn LLP. In her practice, Ms. Antonelli advises creditors, lending institutions, banks and mortgage companies about creditors’ rights in foreclosures, bankruptcies and collection matters and works with clients to assist in and enforce compliance with Rhode Island and Massachusetts law. She has extensive experience in bankruptcy and insolvency matters and in handling commercial and residential foreclosures and workouts. Additionally, she advises clients on issues concerning licensing and consumer compliance. She frequently represents clients with respect to licensing issues before the Rhode Island Division of Banking and the Massachusetts Division of Banks. Ms. Antonelli is certified as a Creditors’ Rights Specialist by the American Board of Certification. She is a frequent lecturer on bankruptcy and insolvency topics and on mortgage regulatory compliance topics. EDUCATION Suffolk University Law School, J.D. Dean’s List, 1989 Florida State University Law Conference Oxford University, England, 1988 Boston College, B.A., 1986 PROFESSIONAL AFFILIATIONS Rhode Island Bar Association Boston Bar Association Bankruptcy Committee American Bankruptcy Institute Massachusetts Mortgage Bankers Association International Women’s Insolvency and Restructuring Confederation Rhode Island Mortgage Bankers Association USFN REPRESENTATIVE PUBLICATIONS "Recent Massachusetts Land Court Cases Delay Foreclosures", United Trustees Association's UTA Quarterly, Summer 2009 "Massachusetts Bankruptcy Court Issues Standing Order Addressing Borrower Contact for Loan Modifications and Escrow Issues" United Trustees Association's UTA Quarterly, Summer 2009 "Providence, Rhode Island Institutes New Foreclosure and Eviction Ordinances", Partridge Snow & Hahn LLP Take Note E-news, July 2009 "Rhode Island DBR Issues Press Release on Loan Modification Activity" Partridge Snow & Hahn LLP Take Note E-news, June 2009 ”Massachusetts Bankruptcy Court Issues Standing Order Addressing Borrower Contact

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for Loan Modifications and Escrow Issues” Partridge Snow & Hahn LLP Take Note E-news, May 2009 " Recent Massachusetts Land Court Cases Delay Foreclosures" Partridge Snow & Hahn LLP Take Note E-news, April 2009 "Loan Modifications: Key to Solving the Housing Crisis?", Banker & Tradesman March 2, 2009 "Regulation of Loan Modifications Limited" Providence Business News, March 2, 2009 ”Reminder: New Requirements for Foreclosure Sales Held On or After September 2, 2008” Partridge Snow & Hahn LLP Take Note E-news, September 2008. "RI Foreclosure Requirements Have Changed", Providence Business News, September 15, 2008 "RI Law Changes re Foreclosures, Condo Lien Priority, Escrow Accounts & More", USFN e-Update, July/August 2008 ”Changes to Rhode Island Law Affect Foreclosures, Priority of Condominium Liens for Assessments, Mortgage Escrow Accounts and Reverse Mortgages”, Partridge Snow & Hahn LLP Take Note E-news, July 2008 “Rhode Island Legislative Update” Partridge Snow & Hahn LLP Take Note E-news, July 15, 2008 “Rhode Island Legislative Update” USFN e-Update, July/August 2008 “Rhode Island Legislative Update” DSnews website, July 17, 2008 Rhode Island chapter, The American Bar Association Foreclosure Book 2008 “Recent Developments in Debtor/Creditor Law”, Recent Developments in Federal and Massachusetts Law 2008 "New 90-Day Right to Reinstate Notice Required for MA Residential Foreclosures Effective 5/1/08" Partridge Snow & Hahn LLP Client Alert, April 2008 “Foreclosure & Bankruptcies”, Banker & Tradesman Mass Market Trends Report, 2008 “Highlights of New Legislation Affecting Foreclosures in Massachusetts” USFN Report, Winter 2008 "Moratorium on Certain Foreclosures in Massachusetts" Partridge Snow & Hahn LLP Client Alert, May 2007 "Rhode Island Residential Update" Partridge Snow & Hahn LLP Client Alert, February 2007 "Massachusetts Foreclosure Procedures Threatened" Partridge Snow & Hahn LLP Client Alert, February 2007 RECENT SPEAKING ENGAGEMENTS “The Mortgage Meltdown”, Rhode Island Bar Association meetings, May 14, 2009 and June 13, 2009 Panelist: "Dangerous Document Issues - Standing and Evidence in the Courts" USFN Loan Management & Servicing Seminar, June 3 - 5, 2009 “Facing Foreclosure in 2009”, Citizens' Law School, May18, 2009 "Bankruptcy Law Overview", Mortgage Bankers of America's Legal Issues and Regulatory Compliance Conference, May 3 to May 6, 2009 "The Financial Crisis", Partridge Snow & Hahn LLP Seminar, January 27, 2009 “Federal and Rhode Island Law and Regulation” Rhode Island Mortgage Bankers Association, January 19, 2009






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Panelist: "New Regulations and Laws: Do You Need to Change the Way You Do Business Going Forward?", New England Mortgage Bankers Conference, September 25, 2008 Ms. Antonelli joined a panel of distinguished judges and attorneys from around the country to discuss “The New Challenges of Chapter 13: Being Eligible, Administering Cases and Confirming Feasible Plans,” National Conference of Bankruptcy Judges, October 2007 BAR MEMBERSHIPS Rhode Island, 1991 Massachusetts, 1989

Hon. Robert D. Drain

Robert Drain is a United States Bankruptcy Judge for the Southern District of New York.

Judge Drain received his B.A. degree cum laude with honors from Yale University in 1979 and his J.D. degree in 1984 from the Columbia University School of Law, where he was a Harlan Fiske Stone Scholar for three years.

At the time of his appointment in 2002, he was a partner in the Bankruptcy Department of the New York law firm of Paul, Weiss, Rifkind, Wharton & Garrison, where he represented debtors, trustees, secured and unsecured creditors, official and unofficial creditors committees, and buyers of distressed businesses and distressed debt in chapter 11 cases, out-of-court restructurings and bankruptcy-related litigation. He also was actively involved in several transnational insolvency matters.

Judge Drain is a fellow of the American College of Bankruptcy and a member of the American Bankruptcy Institute, the International Insolvency Institute, and the National Conference of Bankruptcy Judges. He is a past member and secretary of the Bankruptcy and Reorganization Committee of the Association of the Bar of the City of New York. He is an adjunct professor at St. John's University School of Law and has lectured and written on numerous bankruptcy-related topics.

Since his appointment he has presided over such chapter 11 cases as Loral, RCN, Cornerstone, Refco, Allegiance Telecom, Delphi, Coudert Brothers, Frontier Airlines and Star Tribune. He also has presided over the ancillary or plenary cases, as the case may be, of Corporacion Durango, Satellites Mexicanas, Parmalat S. p. A. and its affiliated United States debtors, Varig S.A., Yukos (II), SphinX, and Galvex Steel.

Victor G. Milione Partner Practice Group Leader

[email protected] 617-345-1215 Fax: 866-947-1974 100 Summer Street Boston, MA 02110 437 Madison Avenue New York, NY 10022

Practice Areas Bankruptcy & Financial Restructuring Leveraged Finance Energy Subprime Task Force

Experience Victor G. Milione is a partner with Nixon Peabody LLP and serves as the practice group leader for the Financial Restructuring & Bankruptcy Group. He is also a member of the firm’s litigation, real estate, and business departments. Victor has more than twenty-two years of experience representing financial institutions, debtors, trustees, creditors’ committees, hedge funds, loan servicers, collateral agents, indenture trustees, and other interested parties in out-of-court workouts and bankruptcy proceedings domestically and internationally. He counsels clients primarily in the areas of bankruptcy reorganizations, asset sales, loan restructurings, modifications and forbearance agreements, receiverships, assignments for the benefit of creditors, and commercial loan transactions. He also works with private equity, hedge, and venture funds to structure bridge financings and create innovative solutions to the difficulties of troubled portfolio companies.

Victor's litigation practice concentrates on matters related to bankruptcy and commercial law, where he has tried a number of cases to successful jury verdicts. He has significant experience in representing lenders, executives, developers, investors, syndicators, landlords, and tenants in bankruptcy and commercial litigation, complex Chapter 11 cases, and non-bankruptcy restructurings, workouts, and state court proceedings. His clients participate in a broad range of industries including financial services, real estate, health and elder care, telecommunications, hospitality, and energy. Victor has extensive litigation and alternative dispute resolution experience in U.S. bankruptcy courts, U.S. federal district courts, and state and local courts throughout the United States and internationally.

Victor's insolvency practice encompasses all aspects of the bankruptcy process, including contested and competing plan confirmation hearings, asset sales and objections, contested relief from stay and cash collateral hearings, executive compensation and retention issues, dip financings and adversary proceedings, including avoidance actions involving fraudulent transfer and preference litigation, and Chapter 15 ancillary proceedings. Victor has represented federal court receivers, bankruptcy trustees, and defrauded investors in securities fraud insolvencies and hedge fund failures. In addition, he represents private equity investors in connection with acquiring, selling, and reorganizing distressed portfolio companies and fraudulent transfer and breach of duty litigation arising from investments in distressed companies and in claims relating to recharacterization and equitable subordination. In his litigation practice, Victor has handled a broad array of commercial disputes, including cases involving real estate, contract, business divorces, covenants not to compete, shareholder oppression, and fraud claims.

Victor works with various Nixon Peabody attorneys to counsel investors, collateral agents, warehousing banks ,and securitization trustees in subprime mortgage company cases. He counsels lead lenders, administrative agents, and members of syndicated loan participants, has a broad array of experience in drafting and negotiating forbearance agreements, loan modification agreements, and lending facilities (debtor-in-possession and otherwise), and has served as the lead attorney in deals in excess of a billion dollars to date. He advises lenders, investors and servicers in CMBS (commercial mortgage-backed securities) transactions, CDOs (collateralized debt obligations), CLOs (collateralized loan obligations), CBO (collateralized bond obligations), credit default swaps, interest rate swaps, and synthetic collateralized debt obligations. He has acted as special bankruptcy counsel in various transactions, and in that role he has crafted and issued true sale and non-consolidation and authority to file opinions in complex and varied deals involving billions of dollars to date, including TIC (tenant in common) and other 1031 tax-deferred exchange offerings. He is experienced in asset based lending as well as real estate lending, workouts, and foreclosures.

Victor regularly counsels the nation’s leading real estate financing and investment firms with multifamily housing and commercial holdings throughout the world in defaulted tax credit, REIT (real estate investment trusts), and REMIC (real estate mortgage investment conduits) investments. He represents all aspects of such transactions including equity and debt positions for market rate multifamily housing developments and for affordable multifamily housing developments involving LIHTC (low income housing tax credits) partnerships and revenue bonds and/or contributions from sponsored investment funds. He regularly advises on bankruptcy issues involving HAP (housing assistance payment) contracts, RULPA (Revised Uniform Limited Partnership Act), ULPA (Uniform Limited Partnership Act), LURAs (land use restriction agreements), and partnership interests.

Victor consistently has been ranked as one of the top 25 bankruptcy lawyers in the country by The Deal. He has also been recognized as a “Super Lawyer” in Bankruptcy & Creditor/Debtor Rights based on a peer-review survey by Boston Magazine. Victor has frequently written and lectured to lawyer and non-lawyer groups on litigation and bankruptcy matters and is a contributing author for Massachusetts Continuing Legal Education. Victor is frequently quoted as an authority on bankruptcy and litigation issues in print media nationwide. He has taught courses on business law and bankruptcy law for area colleges and he is a frequent guest lecturer

on distressed real estate finance at Boston College. He regularly writes about and speaks on bankruptcy and commercial law subjects around the country.

Education Suffolk University Law School, J.D. University of Connecticut, B.S.

Admissions Victor is admitted to practice in New York, the United States District Court of New York, the State of New York Appellate Division, the Supreme Judicial Court of Massachusetts, the U.S. District Court for the District of Massachusetts, the Supreme Court for the United States, and the U.S. courts of appeals of the First and Second circuits.

Affiliations Victor is also actively engaged in charitable and community organizations. He has served as a prior past president and current board member of the Newton Schools Foundation. He is also a trustee for Hebrew Senior Life, Boston, MA, and volunteers his time on behalf of the United Way, the YMCA, and the Dana Farber Cancer Institute.

He is a member of the American, Massachusetts, and Boston bar associations, the American Trial Lawyers Association, the American Bankruptcy Institute, and the Risk Management Association.

© 2010 Nixon Peabody LLP

Debra Miller Chapter 13 Bankruptcy Trustee

Debra Miller is the appointed Standing Chapter 13 Bankruptcy Trustee for the Northern District of Indiana, Fort Wayne and South Bend Divisions. She is active in the National Association of Chapter Thirteen Trustees, serves as Vice President of the NACTT executive board and chairs the NACTT Mortgage Committee. Prior to her appointment in 2000, she served as the staff attorney for Gary D. Boyn, Chapter 7 panel Trustee at Warrick and Boyn LLP in Elkhart and as a Law Clerk for the Honorable Sanford Brook. She has two children and in a prior life, Debra served as a Special Agent for the United States Secret Service in the Cleveland Field Office where she specialized in Credit Card and White Collar Fraud.

John Rao National Consumer Law Center

John Rao is an attorney with the National Consumer Law Center, Inc. Mr. Rao focuses on consumer credit and bankruptcy issues and has served as a panelist and instructor at numerous bankruptcy and consumer law trainings and conferences. He is a contributing author and editor of NCLC's Consumer Bankruptcy Law and Practice; co-author of NCLC’s Foreclosures and Guide to Surviving Debt; and contributing author to NCLC’s Student Loan Law, Stop Predatory Lending, and NCLC Reports: Bankruptcy and Foreclosures Edition. He is also a contributing author to Collier on Bankruptcy and the Collier Bankruptcy Practice Guide. Mr. Rao serves as a member of the federal Judicial Conference Advisory Committee on Bankruptcy Rules, appointed by Chief Justice John Roberts in 2006. He is a member of the board of directors for the National Association of Consumer Bankruptcy Attorneys and the American Bankruptcy Institute.

Mr. Rao is a graduate of Boston University and received his J.D. in 1982 from the University of California (Hastings).

Hon. Elizabeth S. Stong Judge Elizabeth S. Stong was appointed as a U.S. Bankruptcy Judge for the Eastern District of New York on September 2, 2003. Before taking the bench, Judge Stong was an associate and partner at Willkie Farr & Gallagher in New York from 1987 and an associate at Cravath, Swaine & Moore in New York from 1983 to 1987, concentrating in complex federal and state civil litigation. She also was a mediator and arbitrator for the NASD, the Eastern District of New York, and New York Supreme Court’s Commercial Division. Judge Stong is Vice President of the Board of the Federal Bar Council and a trustee and member of the Executive Committee of the Practising Law Institute. She is a member of the Council of the American Law Institute and International Adviser to its joint project with the International Insolvency Institute on Transnational Insolvency. She is an advisor to the U.S. Department of Commerce Commercial Law Development Program and has trained judges in Algeria, Tunisia, Jordan, and the Arabian Peninsula in business reorganization and liquidation issues, business dispute adjudication, and alternative dispute resolution. Judge Stong is a member of the National Conference of Bankruptcy Judges, Chair of its International Judicial Relations Committee, and a member of its Liaison Committee to the American Bar Association, as well as a member of the American Bankruptcy Institute and International Insolvency Institute. She is a member of the ABA House of Delegates and Commission on Homelessness and Poverty, and was a member of the Commission on Women in the Profession. She is an officer of the ABA Business Law Section, chaired its Business and Corporate Litigation Committee, chairs its Business Law Advisors Committee, co‐chairs the ABA’s Judicial Division Bench‐Bar Bankruptcy Council, and serves on the National Conference of Federal Trial Judges Executive Committee. Judge Stong is a member of the New York City Bar’s Committee to Encourage Judicial Service, and chaired the City Bar’s Alternative Dispute Resolution Committee. She also served as Vice Chair and a member of the City Bar’s Judiciary Committee, and was a member of its Committee on Bankruptcy and Corporate Reorganization and Public Service and Education Committee. She is a member of the New York State and Brooklyn Bar Associations. Judge Stong previously served as President of the Harvard Law School Association, Vice President of the Board of Directors of New York City Bar Fund Inc. and the City Bar Justice Center, and was a member of the board of MFY Legal Services, Inc., one of the largest providers of free civil legal services to low‐income residents of New York City. Judge Stong is an adjunct professor of law at St. John’s University School of Law and Brooklyn Law School, and an occasional speaker at Harvard Law School. She has authored articles and contributed chapters to several practice manuals and treatises on bankruptcy law, securities law, trial strategy, and alternative dispute resolution. She is a frequent speaker on bankruptcy law and procedure, securities law, settlement strategy and damages assessment, discovery techniques, ADR, and public service. She is a fellow of the American and New York Bar Foundations. Judge Stong graduated from Harvard University magna cum laude with an A.B. in History and Science in 1978 and from Harvard Law School in 1982. She was a law clerk to Hon. A. David Mazzone of the U.S. District Court for the District of Massachusetts from 1982 to 1983. June 2009

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ---------------------------------------------------------------x In re: :

: GENERAL ORDER #M-364 Adoption of Loss Mitigation Program Procedures : : ---------------------------------------------------------------x

By resolution of the Board of Judges of the United States Bankruptcy Court for the Southern District of New York, it is decided that a uniform, comprehensive, court-supervised loss mitigation program will facilitate consensual resolutions for individual debtors whose residential real property is at risk of loss to foreclosure. A loss mitigation program will avoid the need for various types of bankruptcy litigation, reduce costs to debtors and secured creditors, and enable debtors to reorganize or otherwise address their most significant debts and assets under the United States Bankruptcy Code. Accordingly, the “Loss Mitigation Program Procedures” annexed to this order are adopted, pursuant to 11 U.S.C. § 105(a).

It is also decided that the Loss Mitigation Program Procedures and forms for requesting loss mitigation shall be available in the clerk’s office and on the court’s web site. The Court may modify the Loss Mitigation Program Procedures from time to time by duly adopted General Order, making the revised Loss Mitigation Program Procedures available in the clerk’s office and on the court’s web site immediately.

NOW, THEREFORE, IT IS ORDERED that the Loss Mitigation Program Procedures are adopted, effective January 5, 2009.

Dated: New York, New York December 18, 2008

/s/ Stuart M. Bernstein . STUART M. BERNSTEIN Chief Bankruptcy Judge

LOSS MITIGATION PROGRAM PROCEDURES

I. PURPOSE

The Loss Mitigation Program is designed to function as a forum for debtors and lenders to reach consensual resolution whenever a debtor’s residential property is at risk of foreclosure. The Loss Mitigation Program aims to facilitate resolution by opening the lines of communication between the debtors’ and lenders’ decision-makers. While the Loss Mitigation Program stays certain bankruptcy deadlines that might interfere with the negotiations or increase costs to the loss mitigation parties, the Loss Mitigation Program also encourages the parties to finalize any agreement under bankruptcy court protection, instead of seeking dismissal of the bankruptcy case.

II. LOSS MITIGATION DEFINED

The term “loss mitigation” is intended to describe the full range of solutions that may avert either the loss of a debtor’s property to foreclosure, increased costs to the lender, or both. Loss mitigation commonly consists of the following general types of agreements, or a combination of them: loan modification, loan refinance, forbearance, short sale, or surrender of the property in full satisfaction. The terms of a loss mitigation solution will vary in each case according to the particular needs and goals of the parties.

III. ELIGIBILITY

The following definitions are used to describe the types of parties, properties and loans that are eligible for participation in the Loss Mitigation Program:

A. DEBTOR

The term “Debtor” means any individual debtor in a case filed under Chapter 7, 11, 12 or 13 of the Bankruptcy Code, including joint debtors.

B. PROPERTY

The term “Property” means any real property or cooperative apartment used as a principal residence in which an eligible Debtor holds an interest.

C. LOAN

The term “Loan” means any mortgage, lien or extension of money or credit secured by eligible Property or stock shares in a residential cooperative, regardless of whether or not the Loan (1) is considered to be “subprime” or “non-traditional,” (2) was in foreclosure prior to the bankruptcy filing, (3) is the first or junior mortgage or lien on the Property, or (4) has been “pooled,” “securitized,” or assigned to a servicer or to a trustee.

D. CREDITOR

The term “Creditor” refers to any holder, mortgage servicer or trustee of an eligible Loan.

IV. ADDITIONAL PARTIES

A. OTHER CREDITORS

Where it may be necessary or desirable to obtain a global resolution, any party may request, or the bankruptcy court may direct, that multiple Creditors participate in loss mitigation.

B. CO-DEBTORS AND THIRD PARTIES

Where the participation of a co-debtor or other third party may be necessary or desirable, any party may request, or the bankruptcy court may direct, that such party participate in loss mitigation, to the extent that the bankruptcy court has jurisdiction over the party, or if the party consents to participation in loss mitigation.

C. CHAPTER 13 TRUSTEE

The Chapter 13 Trustee has the duty in Section 1302(b)(4) of the Bankruptcy Code to “advise, other than on legal matters, and assist the debtor in performance under the plan.” Any party may request, or the bankruptcy court may direct, the Chapter 13 Trustee to participate in loss mitigation to the extent that such participation would be consistent with the Chapter 13 Trustee’s duty under the Bankruptcy Code.

D. MEDIATOR

At any time, a Debtor or Creditor participating in the Loss Mitigation Program may request, or the bankruptcy court may order, the appointment of an independent mediator from the United States Bankruptcy Court for the Southern District of New York’s Register of Mediators, which may be viewed at http://www.nysb.uscourts.gov/mediators.html. A mediator will assist in loss mitigation in accordance with these Procedures and with the United States Bankruptcy Court of the Southern District of New York Amended General Order for the Adoption of Procedures Governing Mediation of Matters in Bankruptcy Cases and Adversary Proceedings dated January 17, 1995 (General Order M-143), as amended on October 20, 1999 (General Order M-211).

V. COMMENCEMENT OF LOSS MITIGATION

Parties are encouraged to request loss mitigation as early in the case as possible, but loss mitigation may be initiated at any time, by any of the following methods:

A. BY THE DEBTOR

1. In Section C of the Model Chapter 13 Plan, a Chapter 13 Debtor may indicate an interest in discussing loss mitigation with a particular Creditor The Creditor shall have 21 days to object. If no objection is filed, the bankruptcy court may enter an order (a “Loss Mitigation Order”).

2. A Debtor may file a request for loss mitigation with a particular Creditor. The Creditor shall have 14 days to object. If no objection is filed, the bankruptcy court may enter a Loss Mitigation Order.

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3. If a Creditor has filed a motion requesting relief from the automatic stay pursuant to Section 362 of the Bankruptcy Code (a “Lift-Stay Motion”), at any time prior to the conclusion of the hearing on the Lift-Stay Motion, the Debtor may file a request for loss mitigation. The Debtor and Creditor shall appear at the scheduled hearing on the Lift-Stay Motion, and the bankruptcy court will consider the loss mitigation request and any opposition by the Creditor.

B. BY A CREDITOR

A Creditor may file a request for loss mitigation. The Debtor shall have 7 days to object. If no objection is filed, the bankruptcy court may enter a Loss Mitigation Order.

C. BY THE BANKRUPTCY COURT

The bankruptcy court may enter a Loss Mitigation Order at any time, provided that the parties that will be bound by the Loss Mitigation Order (the “Loss Mitigation Parties”) have had notice and an opportunity to object.

D. OPPORTUNITY TO OBJECT

Where any party files an objection, a Loss Mitigation Order shall not be entered until the bankruptcy court has held a hearing to consider the objection. At the hearing, a party objecting to loss mitigation must present specific reasons why it believes that loss mitigation would not be successful. If a party objects on the grounds that loss mitigation has been requested in bad faith, the assertion must be supported by objective reasons.

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VI. LOSS MITIGATION ORDER

A. DEADLINES

A Loss Mitigation Order shall contain deadlines for all of the following:

1. The date by which the Loss Mitigation Parties shall designate contact persons and disclose contact information, if this information has not been previously provided.

2. The date by which each Creditor must initially contact the Debtor.

3. The date by which each Creditor must transmit any information request to the Debtor.

4. The date by which the Debtor must transmit any information request to each Creditor.

5. The date by which a written report must be filed or the date and time set for a status conference at which a verbal report must be provided. Whenever possible, in a Chapter 13 case the status conference will coincide with the first date set for confirmation of the Chapter 13 plan, or an adjourned confirmation hearing. Where a written report is required, it should generally be filed not later than 7 days after the conclusion of the initial loss mitigation session.

6. The date when the loss mitigation period will terminate, unless extended.

B. EFFECT

Whenever a Loss Mitigation Order is entered, the following shall apply to the Loss Mitigation Parties:

1. Each Creditor is authorized to contact the Debtor directly. It shall be presumed that such communications do not violate the automatic stay.

2. Except where necessary to prevent irreparable injury, loss or damage, a Creditor shall not file a Lift-Stay Motion during the loss mitigation period. Any Lift-Stay Motion filed by the Creditor prior to the entry of the Loss Mitigation Order shall be adjourned to a date after the last day of the loss mitigation period, and the stay shall be extended pursuant to Section 362(e) of the Bankruptcy Code.

3. In a Chapter 13 case, the deadline by which a Creditor must object to confirmation of the Chapter 13 plan shall be extended to permit the Creditor an additional 14 days after the termination of loss mitigation, including any extension of the loss mitigation period.

4. All communications and information exchanged by the Loss Mitigation Parties during loss mitigation will be inadmissible in any subsequent proceeding pursuant to Federal Rule of Evidence 408.

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VII. DUTIES UPON COMMENCEMENT OF LOSS MITIGATION

Upon entry of a Loss Mitigation Order, the Loss Mitigation Parties shall have the following duties:

A. GOOD FAITH

The Loss Mitigation Parties shall negotiate in good faith. A party that fails to participate in loss mitigation in good faith may be subject to sanctions.

B. CONTACT INFORMATION

1. The Debtor: Unless the Debtor has already done so in the Chapter 13 plan or as part of a request for loss mitigation, the Debtor shall provide written notice to each Creditor, indicating the manner in which the Creditor should contact the Debtor.

2. The Creditor: Unless a Creditor has already done so as part of a request for loss mitigation, each Creditor shall provide written notice to the Debtor, identifying the name, address and direct telephone number of the contact person who has full settlement authority.

C. STATUS REPORT

The Loss Mitigation Parties shall provide either a written or verbal report to the bankruptcy court regarding the status of loss mitigation within the time set by the bankruptcy court in the Loss Mitigation Order. The status report shall state whether one or more loss mitigation sessions have been conducted, whether a resolution was reached, and whether one or more of the Loss Mitigation Parties believe that additional loss mitigation sessions would be likely to result in either a partial or complete resolution. A status report may include a request for an extension of the loss mitigation period.

D. BANKRUPTCY COURT APPROVAL

The Loss Mitigation Parties shall seek bankruptcy court approval of any resolution or settlement reached during loss mitigation.

VIII. LOSS MITIGATION PROCESS

A. INITIAL CONTACT

Following entry of a loss mitigation order, the contact person designated by each Creditor shall contact the Debtor and any other Loss Mitigation Party within the time set by the bankruptcy court. The Debtor may contact any other Loss Mitigation Party at any time. The purpose of the initial contact is to create a framework for the discussion at the loss mitigation session and to ensure that each of the Loss Mitigation Parties will be prepared to participate in the loss mitigation session – it is not intended to limit additional issues or proposals that may arise during the session. During the initial contact phase, the Loss Mitigation Parties should discuss the following:

1. The time and method for conducting the loss mitigation sessions.

2. The types of loss mitigation solutions under consideration by each party.

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3. A plan for the exchange of required information prior to the loss mitigation session, including the due date for the Debtor to complete and return any information request or other loss mitigation paperwork that each Creditor may require. All information should be provided at least 7 days prior to the loss mitigation session.

B. LOSS MITIGATION SESSIONS

Loss mitigation sessions may be conducted in person, telephonically or via video conference. At the conclusion of each loss mitigation session, the Loss Mitigation Parties should discuss whether additional sessions are necessary and set the time and method for conducting any additional sessions, including a schedule for the exchange of any further information or documentation that may be required.

C. BANKRUPTCY COURT ASSISTANCE

At any time during the loss-mitigation period, a Loss Mitigation Party may request a settlement conference or status conference with the bankruptcy court.

D. SETTLEMENT AUTHORITY

Each Loss Mitigation Party must have a person with full settlement authority present during a loss mitigation session. During a status conference or settlement conference with the bankruptcy court, the person with full settlement authority must either attend the conference in person or be available by telephone or video conference beginning 30 minutes prior to the start of the conference.

IX. DURATION, EXTENSION AND EARLY TERMINATION

A. INITIAL PERIOD

The initial loss mitigation period shall be set by the bankruptcy court in the Loss Mitigation Order.

B. EXTENSION

1. Agreement: The Loss Mitigation Parties may agree to an extension of the loss mitigation period. The Loss Mitigation Parties shall request an extension in writing, filed on the docket in the main bankruptcy case and served on all parties in interest, who shall have three days to object to a request for extension of the loss mitigation period. The bankruptcy court may grant a request for extension of the loss mitigation period for cause.

2. No Agreement: Where a Loss Mitigation Party does not consent to the request for an extension of the loss mitigation period, the bankruptcy court shall schedule a hearing to consider whether further loss mitigation sessions are likely to be successful. The bankruptcy court may order a reasonable extension if it appears that (1) a further loss mitigation session is likely to result in a complete or partial resolution that will provide a substantial benefit to a Loss Mitigation Party, (2) the party opposing the extension has not participated in good faith or has failed in a material way to comply with these Procedures, or (3) the party opposing the extension would not be prejudiced.

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C. EARLY TERMINATION

1. Upon Request of a Loss Mitigation Party: A Loss Mitigation Party may request that the loss mitigation period be terminated and shall state the reasons for the request. Except where immediate termination is necessary to prevent irreparable injury, loss or damage, the request shall be made on notice to all other Loss Mitigation Parties, and the bankruptcy court may schedule a hearing to consider the termination request.

2. Dismissal of the Bankruptcy Case:

a. Other than at the request of a Chapter 13 Debtor, or the motion of the United States Trustee or Trustee for failure to comply with requirements under the Bankruptcy Code: Except where a Chapter 13 Debtor requests voluntary dismissal, or upon motion, a case shall not be dismissed during the loss mitigation period unless the Loss Mitigation Parties have provided the bankruptcy court with a status report that is satisfactory to the court. The bankruptcy court may schedule a further status conference with the Loss Mitigation Parties prior to dismissal of the case.

b. Upon the request of a Chapter 13 Debtor: A Debtor is not required to request dismissal of the bankruptcy case as part of any resolution or settlement that is offered or agreed to during the loss mitigation period. Where a Chapter 13 Debtor requests voluntary dismissal of the bankruptcy case during the loss mitigation period, the Debtor’s dismissal request shall indicate whether the Debtor agreed to any settlement or resolution from a Loss Mitigation Party during the loss mitigation period or intends to accept an offer of settlement made by a Loss Mitigation Party during the loss mitigation period.

c. Notice: If a bankruptcy case is dismissed for any reason during the loss-mitigation period, the Clerk of the Court shall file a notice on the docket indicating that loss mitigation efforts were ongoing at the time the bankruptcy case was dismissed.

X. SETTLEMENT

The bankruptcy court will consider any agreement or resolution reached during loss mitigation (a “Settlement”) and may approve the Settlement, subject to the following provisions:

1. Implementation: A Settlement may be noticed and implemented in any manner permitted by the Bankruptcy Code and Federal Rules of Bankruptcy Procedure (“Bankruptcy Rules”), including, but not limited to, a stipulation, sale, plan of reorganization or amended plan of reorganization.

2. Fees, Costs or Charges: If a Settlement provides for a Creditor to receive payment or reimbursement of any fee, cost or charge that arose from loss mitigation, such fees, costs or charges shall be disclosed to the Debtor and to the bankruptcy court prior to approval of the Settlement.

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3. Signatures: Consent to the Settlement shall be acknowledged in writing by (1) the Creditor representative who participated in loss mitigation, (2) the Debtor, and (3) the Debtor’s attorney, if applicable.

4. Hearing: Where a Debtor is represented by counsel, a Settlement may be approved by the bankruptcy court without further notice, or upon such notice as the bankruptcy court directs, unless additional notice or a hearing is required by the Bankruptcy Code or Bankruptcy Rules. Where a Debtor is not represented by counsel, a Settlement shall not be approved until after the bankruptcy court has conducted a hearing at which the Debtor shall appear in person.

5. Dismissal Not Required: A Debtor is not required to request dismissal of the bankruptcy case in order to effectuate a Settlement. In order to ensure that the Settlement is enforceable, the Loss Mitigation Parties should seek bankruptcy court approval of the Settlement. Where the Debtor requests or consents to dismissal of the bankruptcy case as part of the Settlement, the bankruptcy court may approve the Settlement as a “structured dismissal,” if such relief complies with the Bankruptcy Code and Bankruptcy Rules.

XI. COORDINATION WITH OTHER PROGRAMS

[Provision may be added in the future to provide for coordination with other loss mitigation programs, including programs in the New York State Unified Court System.]

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ----------------------------------------------------------x In re: Chapter , Case No. - ( )

Debtor(s). ---------------------------------------------------------x

LOSS-MITIGATION REQUEST – BY THE DEBTOR

I am a Debtor in this case. I hereby request loss mitigation with respect to [Identify the property, loan and creditor(s) for which you are requesting loss mitigation]:

______________________________________________________________________________

______________________________________________________________________________

______________________________________________________________________________

______________________________________________________________________________

SIGNATURE

I understand that if the Court orders loss mitigation in this case, I will be expected to comply with the Loss Mitigation Procedures. I agree to comply with the Loss Mitigation Procedures, and I will participate in loss mitigation in good faith. I understand that loss mitigation is voluntary for all parties, and that I am not required to enter into any agreement or settlement with any other party as part of this loss mitigation. I also understand that no other party is required to enter into any agreement or settlement with me. I understand that I am not required to request dismissal of this case as part of any resolution or settlement that is offered or agreed to during the loss mitigation period.

Sign: . Date: __________________, 2008

Print Name: .

Telephone Number: .

E-mail address (if any): .


Debtor(s). ---------------------------------------------------------x

LOSS-MITIGATION REQUEST – BY A CREDITOR

I am a creditor (including a holder, servicer or trustee of a mortgage or lien secured by property used by the Debtor as a principal residence) of the Debtor in this case. I hereby request loss mitigation with respect to [Identify the property, loan and creditor(s) for which you are requesting loss mitigation]:

______________________________________________________________________________

______________________________________________________________________________

______________________________________________________________________________

SIGNATURE

I have reviewed the Loss Mitigation Procedures, and I understand that if the Court orders loss mitigation in this case, I will be bound by the Loss Mitigation Procedures. I agree to comply with the Loss Mitigation Procedures, and I will participate in loss mitigation in good faith. If loss mitigation is ordered, I agree to provide the Court with a written or verbal status report stating whether or not the parties participated in one or more loss mitigation sessions, whether or not a settlement was reached, and whether negotiations are ongoing. I agree that I will not require the Debtor to request or cause dismissal of this case as part of any resolution or settlement that is offered or agreed to during the loss mitigation period.

Sign: . Date: __________________, 2008

Print Name: .

Title: .

Firm or Company: .

Telephone Number: .

E-mail address (if any): .


Debtor(s). ---------------------------------------------------------x

LOSS-MITIGATION ORDER

A Loss Mitigation Request1 was filed by the debtor on [Date] , 2009.

A Loss Mitigation Request was filed by a creditor on [Date] , 2009.

The Court raised the possibility of loss mitigation, and the parties have had notice and an opportunity to object.

Upon the foregoing, it is hereby

ORDERED, that the following parties (collectively, the “Loss Mitigation Parties”) are directed to participate in loss mitigation:

1. The Debtor

2. , the Creditor with respect to [describe Loan and/or Property].

3. [Additional parties, if any]

It is further ORDERED, that the Loss Mitigation Parties shall comply with the Loss Mitigation Procedures annexed to this Order; and it is further

ORDERED, that the Loss Mitigation Parties shall observe the following deadlines:

1. Each Loss Mitigation Party shall designate contact persons and disclose contact information by [suggested time is 7 days], unless this information has been previously provided. As part of this obligation, a Creditor shall furnish each Loss Mitigation Party with written notice of the name, address and direct telephone number of the person who has full settlement authority.

2. Each Creditor that is a Loss Mitigation Party shall contact the Debtor within 14 days of the date of this Order.

3. Each Loss Mitigation Party must make their information request, if any, within 14 days of the date of this Order.

4. Each Loss Mitigation Party shall respond to an information request within 14 days after an information request is made, or 7 days prior to the Loss Mitigation Session, whichever is earlier.

1 All capitalized terms have the meanings defined in the Loss Mitigation Procedures.

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5. The Loss Mitigation Session shall be scheduled not later than [suggested time is within 35 days of the date of the order].

6. The loss mitigation period shall terminate on [suggested time is within 42 days of the date of the order], unless extended as provided in the Loss Mitigation Procedures.

It is further ORDERED, that a status conference will be held in this case on [suggested time is within 42 days of the date of the order] (the “Status Conference”). The Loss Mitigation Parties shall appear at the Status Conference and provide the Court with a verbal Status Report unless a written Status Report that is satisfactory to the Court has been filed not later than 7 days prior to the date of the Status Conference and requests that the Status Conference be adjourned or cancelled; and it is further

ORDERED, that at the Status Conference, the Court may consider a Settlement reached by the Loss Mitigation Parties, or may adjourn the Status Conference if necessary to allow for adequate notice of a request for approval of a Settlement; and it is further

ORDERED, that any matters that are currently pending between the Loss Mitigation Parties (such as motions or applications, and any objection, opposition or response thereto) are hereby adjourned to the date of the Status Conference to the extent those matters concern (1) relief from the automatic stay, (2) objection to the allowance of a proof of claim, (3) reduction, reclassification or avoidance of a lien, (4) valuation of a Loan or Property, or (5) objection to confirmation of a plan of reorganization; and it is further.

ORDERED, that the time for each Creditor that is a Loss Mitigation Party in this case to file an objection to a plan of reorganization in this case shall be extended until 14 days after the termination of the loss mitigation period, including any extension of the Loss Mitigation period.

Dated: Poughkeepsie, New York , 2009 BY THE COURT

. United States Bankruptcy Judge

INSTRUCTIONS FOR COMMENCEMENT OF LOSS MITIGATION

WHERE DEBTOR REQUESTS LOSS MITIGATION IN CHAPTER 13 PLAN:

The debtor must file and serve the Notice of Loss-Mitigation Request on the creditor and must filean affidavit of service (attorneys should do so electronically on the Court’s ECF system). The Notice ofLoss-Mitigation Request form is available on the Court’s website.

The creditor has 21 days to object from the date of mailing (service) of the notice.

If no objection is filed, the debtor shall submit an order as soon as possible. The order may besubmitted: 1) after the expiration of the 21 days or 2) with the Notice of Loss-Mitigation Request onNotice of Presentment on the 22nd day.

DEBTOR’S REQUEST FOR LOSS MITIGATION:

Where a debtor does not make the request in a chapter 13 plan but does so separately, the debtormust file and serve the request, Loss -Mitigation Request – By the Debtor, on the creditor and must file anaffidavit of service (attorneys should do so electronically on the Court’s ECF system). The form formaking the request is available on the Court’s website [please use the form, Loss -Mitigation Request –By the Debtor].

The creditor has 14 days to object from the date of mailing (service) of the notice.

If no objection is filed, the debtor shall submit an order as soon as possible. The order may besubmitted: 1) after the expiration of the 14 days or 2) with the request [Loss -Mitigation Request – By theDebtor] on Notice of Presentment on the 15th day.

WHERE DEBTOR REQUESTS LOSS MITIGATION DURING PENDENCY OF SECTION 362MOTION FOR RELIEF FROM THE AUTOMATIC STAY:

Where the debtor’s request for loss mitigation is related to a pending section 362 motion (forrelief from the automatic stay), the debtor must file and serve the request, Loss -Mitigation Request – Bythe Debtor, on the creditor and must file an affidavit of service (attorneys should do so electronically onthe Court’s ECF system). The form for making the request is available on the Court’s website [please usethe form, Loss -Mitigation Request – By the Debtor].

The debtor and creditor must appear at the hearing on the Lift-Stay Motion and the court willconsider the loss mitigation request and any opposition thereto by the creditor. If the court approves therequest, the debtor shall submit an order as soon as possible.

CREDITOR’S REQUEST FOR LOSS MITIGATION:

The creditor must file and serve the request, Loss -Mitigation Request – By the Creditor, on thedebtor and debtor’s attorney and must file an affidavit of service (attorneys and those with limited-accesspasswords to the Court’s ECF system should do so electronically). The form for making the request isavailable on the Court’s website [please use the form, Loss -Mitigation Request – By the Creditor].

The debtor has 7 days to object from the date of mailing (service) of the notice.

If no objection is filed, the creditor shall submit an order as soon as possible. The order may besubmitted: 1) after the expiration of the 7 days or 2) with the request [Loss -Mitigation Request – By theCreditor] on Notice of Presentment on the 8th day.

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ----------------------------------------------------------x In re: Chapter 13 Case No. - ( )

Debtor(s). ---------------------------------------------------------x

NOTICE OF LOSS-MITIGATION REQUEST

I am a Debtor in this case. On [date] I requested loss mitigation in my Chapter 13 Plan with respect to [Identify the property, loan and creditor(s) for which you are requesting loss mitigation]:

Date of this Notice:

DEBTOR INFORMATION

Name:

Mailing Address:

Telephone Number: .

E-mail address (if any):

Attorney Information (if any):

Name: .

Address:

Telephone Number:

Fax Number:

E-mail address:


Debtor(s). ---------------------------------------------------------x







1. The Debtor

2. , the Creditor with respect to

[describe Loan and/or Property].









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It is further ORDERED, that a status conference will be held in this case on at 10:00 a.m. [suggested time is within 42 days of the date of the order] before the undersigned at the United States Bankruptcy Court, Courtroom 610, One Bowling Green, New York, New York 10004, (the “Status Conference”). The Loss Mitigation Parties shall appear at the Status Conference and provide the Court with a verbal Status Report unless a written Status Report that is satisfactory to the Court has been filed not later than 7 days prior to the date of the Status Conference and requests that the Status Conference be adjourned or cancelled; and it is further




Dated: , New York , 2009



Debtor(s). ---------------------------------------------------------x







1. The Debtor











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It is further ORDERED, that a status conference will be held in this case on at AM [suggested time is within 42 days of the date of the order] before the undersigned at the United States Bankruptcy Court, 300 Quarropas Street, White Plains, New York 10601, Courtroom to be assigned (the “Status Conference”). The Loss Mitigation Parties shall appear at the Status Conference and provide the Court with a verbal Status Report unless a written Status Report that is satisfactory to the Court has been filed not later than 7 days prior to the date of the Status Conference and requests that the Status Conference be adjourned or cancelled; and it is further




Dated: , New York , 2009


UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK _____________________________________________ In re: Case No.: 09-24438-rdd (Chapter 13) LAMAR MCNABB, Debtor. _____________________________________________

ORDER EXTENDING LOSS MITIGATION PERIOD AND ADJOURNING STATUS CONFERENCE

It appearing that the above debtor, LAMAR MCNABB has requested Loss Mitigation; and it further

appearing that an order was entered by this Court on or about March 24, 2010 granting such request; and it further

appearing that the parties have been cooperating with respect to the Loss Mitigation request and, through their

counsel, have agreed to extend the Loss Mitigation period and adjourn the Status Conference originally scheduled

for July 14, 2010; and good cause appearing therefor, it is hereby

ORDERED, that the Loss Mitigation period is extended to September 9, 2010 and the Status Conference

will now be held on September 8, 2010 at 10:00 a.m.

DATED: White Plains, New York July 13, 2010

________________________________________ Hon. ROBERT D. DRAIN United States Bankruptcy Judge

1

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK -------------------------------------------------x Chapter 7 In re Jean Touzin and Marie Clotaire, Case No. 09-23953(RDD) Debtors -------------------------------------------------x

ORDER TO SHOW CAUSE DIRECTING HSBC MORTGAGE CORPORATION TO COMPLY WITH ORDER DIRECTING LOSS MITIGATION AND TO APPEAR AT MARCH 11, 2010 CONFERENCE

The above debtors (the “Debtors”) filed for relief under Chapter 7 of the

Bankruptcy Code on October 16, 2009. On November 11, 2009, the Debtors filed a

request to engage in loss mitigation with HSBC Mortgage Corporation under the

procedures established by the United States Bankruptcy Court for the Southern District of

New York pursuant to the Administrative Order signed by the Honorable Stuart M.

Bernstein, Chief Bankruptcy Judge on December 18, 2008 (“Loss Mitigation”). On

December 10, 2009, the Court entered an order directing Loss Mitigation and subjecting

the parties to the deadlines therein (the “Loss Mitigation Order”). On January 25, 2010 at

the regularly scheduled Loss Mitigation conference, Debtor’s counsel appeared; no

representative of HSBC Mortgage Corporation appeared. Debtor’s counsel represented

at the conference that HSBC Mortgage Corporation had not responded to any notice or

overtures made by or on behalf of the Debtors regarding the pending Loss Mitigation.

Such delay materially impairs the effectiveness of Loss Mitigation and the Loss

Mitigation Order. Accordingly, it is hereby

ORDERED that HSBC Mortgage Corporation promptly comply with the Loss

Mitigation Order; and it is further

ORDERED that, absent parties’ joint request for additional time in light of good

faith efforts to comply with the Loss Mitigation Order, a representative with authority on

behalf of HSBC Mortgage Corporation and counsel appear at the Loss Mitigation

conference to be held before the Honorable Robert D. Drain, United States Bankruptcy

Judge, on March 11, 2010 at 10:00 a.m. in Courtroom 118, at the United States

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Bankruptcy Court, 300 Quarropas Street, White Plains, New York 10601 to report on the

progress of the instant Loss Mitigation. Failure to appear may result in the imposition of

sanctions, including the Debtors’ costs and expenses, including reasonable attorneys’ fees

and expenses, relating to the adjourned conference; and it is further

ORDERED that the Loss Mitigation period is extended through May 11, 2010;

and it is further

ORDERED that counsel for the Debtors promptly serve a copy of this order on

HSBC, including at the address that appears on the Debtors’ most recent mortgage

statement.

Dated White Plains, New York February 1, 2010 ____________________ Honorable Robert D. Drain

United States Bankruptcy Judge

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK -----------------------------------------------------------x In re:

Chapter 7

Pablo Roberto Pazmino Case No. 09-24440(rdd)

Debtor. -----------------------------------------------------------x

ORDER TO SHOW CAUSE DIRECTING A REPRESENTATIVE OF

HOUSEHOLD FINANCE REALTY CORPORATION OF NEW YORK (i) TO COMPLY WITH ORDER DIRECTING LOSS MITIGATION; (ii) TO APPEAR AT A HEARING ON AUGUST 18,

2010; (iii) TO PAY DEBTORS’ ATTORNEYS FEES AND (iv) TO PAY A DAILY PENALTY UNTIL IT COMPLIES HEREWITH

The above-named debtor (the “Debtor”) filed for relief under Chapter 7 of the Bankruptcy Code on December 31, 2009. On January 18, 2010, the Debtor filed a request to engage in loss mitigation with Household Finance Realty Corporation of New York (“HFRC”) under the procedures established by the U.S. Bankruptcy Code for the Southern District of New York pursuant to the Administrative Order signed by the Honorable Stuart M. Bernstein, Chief Bankruptcy Judge on December 18, 2008. On February 9, 2010, the Court entered an Order directing loss mitigation and subjecting the parties to the deadlines therein (the “Loss Mitigation Order”). On March 23, 2010 at a regularly scheduled loss mitigation status conference, Debtor’s counsel represented that HFRC had been unresponsive to all overtures made by or on behalf of the Debtor regarding the pending loss mitigation. The failure to so respond violated the Loss Mitigation Order and adversely affected this Chapter 7 case. On March 26, 2010, by Order to Show Cause, this Court therefore directed (i) that HFRC comply with the directives of the Loss Mitigation Order; and (ii) that a representative with authority on behalf of HFRC and counsel appear at a hearing to be held before the Honorable Robert D. Drain, on May 4, 2010 at 10:00 a.m. to report on the progress of the instant loss mitigation. In conformity therewith, a hearing was held on May 4, 2010, at which Debtor’s counsel appeared and represented that HFRC has continued to be unresponsive to the Loss Mitigation Order and Order to Show Cause. No appearance was made on behalf of HFRC. On May 7, 2010, by Order to Show Cause, this Court directed (i) that HFRC comply with the directives of the Loss Mitigation Order; and (ii) that a representative with authority on behalf of HFRC and counsel appear at a hearing to be held before the Honorable Robert D. Drain, on July 1, 2010 at 10:00 a.m. to report on the progress of the instant loss mitigation and (iii) that HFRC pay Debtor’s attorneys fees in the amount of $553.00 as a sanction for failure to obey the Court’s Loss Mitigation Order and the March 26, 2010 Order to Show Cause. In accordance therewith, a hearing was held on July 1, 2010, at which Debtor’s counsel appeared and represented that HFRC has continued to be unresponsive to the Loss Mitigation Order and Orders to Show Cause. No appearance was made on behalf of HFRC. HFRC has wholly and contemptuously failed to comply with the Court’s Loss Mitigation Order, March 26, 2010 Order to Show Cause and May 7, 2010 Order to Show Cause. This prolonged failure has continued to adversely affect this Chapter 7 case. Accordingly, it is hereby

1

ORDERED that the Loss Mitigation Period is extended to August 19, 2010; and it is further

ORDERED that HFRC comply with the directives of the Loss Mitigation Order; and it is further ORDERED that a representative with authority on behalf of HFRC and counsel appear at a hearing to be held before the Honorable Robert D. Drain, United States Bankruptcy Judge, on August 18, 2010 at 10:00 a.m. in Courtroom 118, at the United States Bankruptcy Court, 300 Quarropas Street, White Plains, New York 10601 to report on the progress of the instant loss mitigation, unless (a) HFRC is participating in good faith in loss mitigation with the Debtor and has otherwise complied with this Order to Show Cause and (b) the August 18, 2010 status conference is adjourned by further Order of this Court. The failure of HFRC to comply with this Order and the Court’s prior Orders may result in the imposition of additional sanctions on HFRC; and it is further ORDERED that HFRC shall immediately pay the legal fees of Debtor’s counsel, Alter, Goldman & Brescia, LLP, from May 4, 2010 through the date of this Order, in the amount of $1,328.49, as set forth in the Affidavit of Dana P. Brescia, Esq., dated July 7, 2010; and it is further

ORDERED that HFRC shall incur a daily sanction in the amount of $57.82 (Monthly Principal and Interest Payment of $1,734.59 divided by 30), commencing July 1, 2010 until such time as HFRC complies with this Order and the Court’s prior Orders, which sum shall be deducted from the principal balance owed to HFRC by the Debtor in connection with account number ending 5299; and it is further

ORDERED that on or before July 12, 2010, counsel to Debtor serve this Order to Show

Cause on HFRC and the Chapter 7 trustee at the addresses listed below.

Dated: White Plains, New York July 7, 2010 ____________________________________ Honorable Robert D. Drain United States Bankruptcy Judge To: Household Finance Realty Corporation of New York

Attn: Bankruptcy Dept./Loss Mitigation 636 Grand Regency Blvd. Brandon, FL 33510

Dana P. Brescia, Esq. Alter, Goldman & Brescia, LLP 550 Mamaroneck Avenue, Suite 510 Harrison, New York 10528

Marianne T. O’Toole, LLC 20 Valley Road, Suite One Katonah, NY 10536

2

3

Attn: Marianne O’Toole, Esq.

UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF NEW YORK ----------------------------------------------------------------- x In re:

Adoption of Loss Mitigation Program Procedures

: : : :

GENERAL ORDER # 543

----------------------------------------------------------------- X

WHEREAS, a uniform, comprehensive, court-supervised loss mitigation program may facilitate consensual resolutions for individual debtors whose residential real property is at risk of loss to foreclosure; and

WHEREAS, a loss mitigation program may avoid the need for various types of bankruptcy litigation, reduce costs to debtors and secured creditors, and enable debtors to reorganize or otherwise address their most significant debts and assets under the United States Bankruptcy Code; now, therefore, it is hereby

ORDERED, that the “Loss Mitigation Program Procedures” annexed to this General Order and the “Loss Mitigation Program” described therein are adopted, pursuant to 11 U.S.C. § 105(a); and it is further

ORDERED, that effective immediately, the Loss Mitigation Program Procedures shall apply in all individual cases assigned under Chapter 7, 11, 12, or 13 of the Bankruptcy Code, to Chief Judge Carla E. Craig, Judge Dorothy T. Eisenberg, and Judge Elizabeth S. Stong, and any other Judge of this Court who may elect to participate in the Loss Mitigation Program; and it is further

ORDERED, that the Loss Mitigation Program Procedures and forms for requesting loss mitigation shall be available in the Clerk’s Office and on the Court’s web site. The Court may modify the Loss Mitigation Program Procedures from time to time by General Order, and in that event, shall make the revised Loss Mitigation Program Procedures available in the Clerk’s Office and on the Court’s web site immediately.

Dated: Brooklyn, New York December 8, 2009

/s/Carla E. Craig______________ _ CARLA E. CRAIG

Chief U.S. Bankruptcy Judge

LOSS MITIGATION PROGRAM PROCEDURES

I. PURPOSE

The Loss Mitigation Program is designed to function as a forum in individual bankruptcy cases for debtors and lenders to reach consensual resolution whenever a debtor’s residential property is at risk of foreclosure. The Loss Mitigation Program aims to facilitate resolution by opening the lines of communication between the debtors’ and lenders’ decision-makers. While the Loss Mitigation Program stays certain bankruptcy deadlines that might interfere with the negotiations or increase costs to the loss mitigation parties, the Loss Mitigation Program also encourages the parties to finalize any Settlement (as defined below) under bankruptcy court protection, instead of seeking dismissal of the bankruptcy case.


The term “loss mitigation” is intended to describe the full range of solutions that may avert the loss of a debtor’s property to foreclosure, increased costs to the lender, or both. Loss mitigation commonly consists of the following general types of agreements, or a combination of them: loan modification, loan refinance, forbearance, short sale, or surrender of the property in full satisfaction. The terms of a loss mitigation solution will vary in each case according to the particular needs, interests, and goals of the parties.

III. ELIGIBILITY

The following definitions are used to describe the types of parties, properties, and loans that are eligible for participation in the Loss Mitigation Program:

A. DEBTOR

The term “Debtor” means any individual debtor in a case filed any Chapter 7, 11, 12, or 13 of the Bankruptcy Code, including joint debtors, whose case is assigned to Chief Judge Carla E. Craig, Judge Dorothy T. Eisenberg, or Judge Elizabeth S. Stong, or any other judge who elects to participate in the Loss Mitigation Program.

B. PROPERTY

The term “Property” means any real property, including condominiums or cooperative apartments, used as the Debtor’s principal residence, in which the Debtor holds an interest.

C. LOAN

The term “Loan” means any mortgage, lien, or extension of money or credit secured by eligible Property or stock shares in a residential cooperative, regardless of whether the Loan (1) is considered to be “subprime” or “non-traditional;” (2) was in foreclosure prior to the bankruptcy filing; (3) is the first or junior mortgage or lien on the Property; or (4) has been “pooled,” “securitized,” or assigned to a servicer or to a trustee.

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D. CREDITOR

The term “Creditor” means any holder, mortgage servicer, or trustee of an eligible Loan.


A. OTHER CREDITORS

Any party may request, or the bankruptcy court may direct, more than one Creditor to participate in the Loss Mitigation Program, where it may be of assistance to obtain a global resolution.


Any party may request, or the bankruptcy court may direct, a co-debtor or other third party to participate in the Loss Mitigation Program, where the participation of such party may be of assistance, to the extent that the bankruptcy court has jurisdiction over the party or the party consents.


Any party may request, or the bankruptcy court may direct, the Chapter 13 Trustee to participate in the Loss Mitigation Program to the extent that such participation is consistent with the Chapter 13 Trustee’s duty under Bankruptcy Code Section 1302(b)(4) to “advise, other than on legal matters, and assist the debtor in performance under the Chapter 13 plan.”

D. MEDIATOR

Any party may request, or the bankruptcy court may direct, a mediator from the Mediation Register maintained by the United States Bankruptcy Court for the Eastern District of New York to participate in the Loss Mitigation Program.


Parties are encouraged to request to enter into the Loss Mitigation Program as early in the case as possible, but a request may be made at any time as follows.

A. BY THE DEBTOR (click here for printable form)

1. In a case under Chapter 13, the Debtor may request to enter into the Loss Mitigation Program with a particular Creditor in the Chapter 13 plan, and shall note the making of the request in the docket entry for the plan. The Creditor shall have 21 days to object. If no objection is filed, the bankruptcy court may enter an order referring the parties to the Loss Mitigation Program (a “Loss Mitigation Order”).

2. A Debtor may serve and file a request to enter into the Loss Mitigation Program with a particular Creditor. The Creditor shall have 14 days to object. If no objection is filed, the bankruptcy court may enter a Loss Mitigation Order.

http://www.nyeb.uscourts.gov/forms/loss_mitigation_request_by_debtor.pdf

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3. If a Creditor has filed a motion for relief from the automatic stay pursuant to Bankruptcy Code Section 362 (a “Lift-Stay Motion”), the Debtor may serve and file a request to enter into the Loss Mitigation Program at any time before the conclusion of the hearing on the Lift-Stay Motion. The bankruptcy court will consider the Debtor’s request and any opposition by the Creditor at the hearing on the Lift-Stay Motion.

B. BY A CREDITOR (click here for printable form)

A Creditor may serve and file a request to enter into the Loss Mitigation Program. The Debtor shall have 14 days to object. If no objection is filed, the bankruptcy court may enter a Loss Mitigation Order.


The bankruptcy court may enter a Loss Mitigation Order at any time after notice to the parties to be bound (the “Loss Mitigation Parties”) and an opportunity to object.

D. HEARING ON OBJECTION

If any party files an objection, the bankruptcy court shall hold a hearing on the request to enter the Loss Mitigation Program and the objection, and shall not enter a Loss Mitigation Order until the objection has been heard.

VI. LOSS MITIGATION ORDER (click here for form)

A. DEADLINES

A Loss Mitigation Order shall contain:

1. The date by which contact persons and telephone contact information shall be provided by the Loss Mitigation Parties.

2. The date by which each Creditor shall initially contact the Debtor.

3. The date by which each Creditor shall transmit any request for information or documents to the Debtor.

4. The date by which the Debtor shall transmit any request for information or documents to each Creditor.

5. The date by which a written status report shall be filed, or the date and time for a status conference and oral status report (whether written or oral, a “Status Report”). In a Chapter 13 case, the status conference shall coincide, if possible, with a hearing on confirmation of the Chapter 13 plan. A date to file a written report shall be, if possible, not later than 7 days after the initial loss mitigation session.

6. The date when the loss mitigation process (the “Loss Mitigation Period”) shall terminate, unless extended.

http://www.nyeb.uscourts.gov/forms/loss_mitigation_request_by_creditor.pdf

http://www.nyeb.uscourts.gov/forms/loss_mitigation_order.pdf

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B. EFFECT

During the Loss Mitigation Period:

1. A Creditor may contact the Debtor directly, and it shall be presumed that such contact does not violate the automatic stay.

2. A Creditor may not file a Lift-Stay Motion, except where necessary to prevent irreparable injury. A Lift-Stay Motion filed by the Creditor before the entry of the Loss Mitigation Order shall be adjourned to a date following the Loss Mitigation Period, and the stay shall be extended pursuant to Bankruptcy Code Section 362(e).

3. In a Chapter 13 case, the date by which a Creditor must object to confirmation of the Chapter 13 plan shall be extended to a date that is at least 14 days following the Loss Mitigation Period.

4. Federal Rule of Evidence 408 shall apply to communications, information and documents exchanged by the Loss Mitigation Parties in connection with the Loss Mitigation Program.


A. GOOD FAITH

The Loss Mitigation Parties shall negotiate in good faith. A party that does not participate in the Loss Mitigation Program in good faith may be subject to sanctions.


1. The Debtor: The Debtor shall provide written notice to each Loss Mitigation Party of the manner in which the Creditor shall contact the Debtor or the Debtor’s attorney. This may be done in the request to enter the Loss Mitigation Program.

2. The Creditor: Each Creditor shall provide written notice to the Debtor of the name, address and direct telephone number of the contact person with authority to act on the Creditor’s behalf. This may be done in the request to enter the Loss Mitigation Program.

C. STATUS REPORT

The Loss Mitigation Parties shall provide a written or oral Status Report to the bankruptcy court within the period set in the Loss Mitigation Order. The Status Report shall indicate how many loss mitigation sessions have occurred, whether a resolution has been reached, and whether a Loss Mitigation Party believes that additional sessions may result in partial or complete resolution. A Status Report may include a request for an extension of the Loss Mitigation Period.

- 5 -


The Loss Mitigation Parties shall seek bankruptcy court approval of any Settlement reached during loss mitigation.

VIII. LOSS MITIGATION PROCESS

A. INITIAL CONTACT

Following entry of a Loss Mitigation Order, the contact person designated by each Creditor shall contact the Debtor and any other Loss Mitigation Party within the time set by the bankruptcy court. The Debtor may contact any Loss Mitigation Party at any time. The purpose of the initial contact is to create a framework for the loss mitigation session and to ensure that the Loss Mitigation Parties are prepared. The initial contact is not intended to limit the issues or proposals that may arise during the loss mitigation session.

During the initial contact, the Loss Mitigation Parties shall discuss:

1. The time and method for conducting the loss mitigation sessions.

2. The loss mitigation alternatives that each party is considering.

3. The exchange of information and documents before the loss mitigation session, including the date by when the Creditor shall request information and documents from the Debtor and the date by when the Debtor shall respond. All information and documents shall be provided at least seven days before the first loss mitigation session.


Loss mitigation sessions may be conducted in person, by telephone, or by video conference. At the conclusion of each loss mitigation session, the Loss Mitigation Parties shall discuss whether and when to hold a further session, and whether any additional information or documents should be exchanged.


At any time during the Loss Mitigation Period, a Loss Mitigation Party may request a settlement conference or status conference with the bankruptcy judge.


At a loss mitigation session, each Loss Mitigation Party shall have a person with full settlement authority present. At a status conference or settlement conference with the bankruptcy court, each Loss Mitigation Party shall have a person with full settlement authority present. If a Loss Mitigation Party is appearing by telephone or video conference, that party shall be available beginning thirty minutes before the conference.

- 6 -


A. INITIAL PERIOD

The initial Loss Mitigation Period shall be set by the bankruptcy court in the Loss Mitigation Order.

B. EXTENSION

1. By Agreement: The Loss Mitigation Parties may agree to extend the Loss Mitigation Period by stipulation to be filed not less than one business day before the Loss Mitigation Period ends.

2. In the Absence of Agreement: A Loss Mitigation Party may request to extend the Loss Mitigation Period in the absence of agreement by filing and serving a request to extend the Loss Mitigation Period on the other Loss Mitigation Parties, who shall have seven days to object. If the request to extend the Loss Mitigation Period is opposed, then the bankruptcy court shall schedule a hearing on the request. The bankruptcy court may consider whether (1) an extension of the Loss Mitigation Period may result in a complete or partial resolution that provides a substantial benefit to a Loss Mitigation Party; (2) the party opposing the extension has participated in good faith and complied with these Loss Mitigation Procedures; and (3) the Loss party opposing the extension will be prejudiced.


1. Upon Request of a Loss Mitigation Party: A Loss Mitigation Party may request to terminate the Loss Mitigation Period by filing and serving a request to terminate the Loss Mitigation Period on the other Loss Mitigation Parties, who shall have seven days to object. If the request to terminate the Loss Mitigation Period is opposed, then the bankruptcy court shall schedule a hearing on the request. Notice may be modified for cause if necessary to prevent irreparable injury.

2. Dismissal of the Bankruptcy Case: A Chapter 13 bankruptcy case shall not be dismissed during the pendency of a Loss Mitigation Period, except (1) upon motion of the Chapter 13 Trustee or the United States Trustee for failure to comply with the requirements of the Bankruptcy Code; or (2) upon the voluntary request of the Chapter 13 Debtor. A Chapter 13 Debtor may not be required to request dismissal of the bankruptcy case as part of a Settlement during the Loss Mitigation Period. If a Chapter 13 Debtor requests voluntary dismissal during the Loss Mitigation Period, the Debtor shall indicate whether the Debtor agreed or intends to enter into a Settlement with a Loss Mitigation Party.

D. DISCHARGE

The Clerk of the Court shall not enter a discharge during the pendency of a Loss Mitigation Period.

- 7 -

X. SETTLEMENT

The bankruptcy court shall consider any agreement or resolution (a “Settlement”) reached during loss mitigation and may approve the Settlement, subject to the following provisions:

1. Implementation: A Settlement may be noticed and implemented in any manner permitted by the Bankruptcy Code and Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), including but not limited to a stipulation, sale, Chapter 11 plan of reorganization, or Chapter 13 plan.

2. Fees, Costs, or Charges: If a Settlement provides for a Creditor to receive payment or reimbursement of any expense arising from the Creditor’s participation in the Loss Mitigation Program, that expense shall be disclosed to the Debtor and the bankruptcy court before the Settlement is approved.

3. Signatures: Consent to the Settlement shall be acknowledged in writing by the Creditor representative who participated in the loss mitigation session, the Debtor, and the Debtor’s attorney, if applicable.

4. Hearing: Where a Debtor is represented by an attorney, a Settlement may be approved by the bankruptcy court without further notice, or upon such notice as the bankruptcy court directs, unless additional notice or a hearing is required by the Bankruptcy Code or Bankruptcy Rules. Where a Debtor is not represented by counsel, a Settlement shall not be approved until the bankruptcy court conducts a hearing at which the Debtor shall appear in person.

5. Dismissal Not Required: A Debtor shall not be required to request dismissal of the bankruptcy case in order to effectuate a Settlement. In order to ensure that the Settlement is enforceable, the Loss Mitigation Parties shall seek bankruptcy court approval of the Settlement. Where the Debtor requests or consents to dismissal of the bankruptcy case as part of the Settlement, the bankruptcy court may approve the Settlement as a “structured dismissal,” if such relief complies with the Bankruptcy Code and Bankruptcy Rules.


[Provision may be added in the future to provide for coordination with other loss mitigation programs, including programs in the New York State Unified Court System.]


_______________________,

Debtor(s).

Chapter __ Case No. __-____ (___)

----------------------------------------------------------------- X

LOSS-MITIGATION REQUEST – BY THE DEBTOR

I am a Debtor in this case. I hereby request to enter into the Loss Mitigation Program with respect to [Identify the property, loan and creditor(s) for which you are requesting loss mitigation]:

SIGNATURE

I understand that if the Court orders loss mitigation in this case, I will be expected to comply with the Loss Mitigation Procedures. I agree to comply with the Loss Mitigation Procedures, and I will participate in the Loss Mitigation Program in good faith. I understand that loss mitigation is voluntary for all parties, and that I am not required to enter into any agreement or settlement with any other party as part of entry into the Loss Mitigation Program. I also understand that no other party is required to enter into any agreement or settlement with me. I understand that I am not required to request dismissal of this case as part of any resolution or settlement that is offered or agreed to during the Loss Mitigation Period.

Sign: Date: , 20__

Print Name:

Telephone Number:



_______________________,

Debtor(s).

Chapter __ Case No. __-____ (___)

----------------------------------------------------------------- X

LOSS-MITIGATION REQUEST – BY A CREDITOR

I am a creditor (including a holder, servicer or trustee of a mortgage or lien secured by property used by the Debtor as a principal residence) of the Debtor in this case. I hereby request to enter into the Loss Mitigation Program with respect to [Identify the property, loan and creditor(s) for which you are requesting loss mitigation]:

SIGNATURE

I have reviewed the Loss Mitigation Procedures, and I understand that if the Court orders loss mitigation in this case, I will be bound by the Loss Mitigation Procedures. I agree to comply with the Loss Mitigation Procedures, and I will participate in the Loss Mitigation Program in good faith. If loss mitigation is ordered, I agree to provide the Court with a written or oral Status Report stating whether the parties participated in one or more loss mitigation sessions, whether or not a settlement was reached, and whether negotiations are ongoing. I agree that I will not ask the Debtor to request or cause dismissal of this case as part of any resolution or settlement that is offered or agreed to during the Loss Mitigation Period.

Sign: Date: , 20__

Print Name:

Telephone Number:



_______________________,

Debtor(s).

Chapter __ Case No. __-____ (___)

----------------------------------------------------------------- X


A Loss Mitigation Request1 was filed by the debtor on [Date] ________, 2010.

A Loss Mitigation Request was filed by a creditor on [Date] _________, 2010.



ORDERED, that the following parties (the “Loss Mitigation Parties”) are directed to participate in the Loss Mitigation Program:

1. The Debtor

2. _______________, the Creditor with respect to _______________ [describe Loan and/or Property].







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3. Each Loss Mitigation Party shall make its request for information and documents, if any, within 14 days of the date of this Order.

4. Each Loss Mitigation Party shall respond to a request for information and documents within 14 days after a request is made, or 7 days prior to the Loss Mitigation Session, whichever is earlier.

5. The Loss Mitigation Session shall be scheduled not later than ____________________ [suggested time is within 35 days of the date of the order].

6. The Loss Mitigation Period shall terminate on ______________________ [suggested time is within 42 days of the date of the order], unless extended as provided in the Loss Mitigation Procedures.

It is further ORDERED, that a status conference will be held in this case on ______________________ [suggested time is within 42 days of the date of the order] (the “Status Conference”). The Loss Mitigation Parties shall appear at the Status Conference and provide the Court with an oral Status Report unless a written Status Report that is satisfactory to the Court has been filed not later than 7 days prior to the date of the Status Conference and requests that the Status Conference be adjourned or cancelled; and it is further



ORDERED, that the time for each Creditor that is a Loss Mitigation Party in this case to file an objection to a plan of reorganization in this case shall be extended until 14 days after the termination of the Loss Mitigation Period, including any extension of the Loss Mitigation Period.

Dated: Brooklyn, New York ______________, 2010

BY THE COURT

United States Bankruptcy Judge

UNITED STATES BANKRUPTCY COURTEASTERN DISTRICT OF NEW YORK----------------------------------------------------------------- xIn re: Chapter 13CELINA MOROCHO, Case No. 10-43892-ess

Debtor.----------------------------------------------------------------- X


X A Loss Mitigation Request was filed by the debtor on May 14, 2010.A Loss Mitigation Request was filed by a creditor on [Date] _________, 2010.The Court raised the possibility of loss mitigation, and the parties have had notice and an opportunity to object.


ORDERED, that the following parties (the “Loss Mitigation Parties”) aredirected to participate in the Loss Mitigation Program:

1. The Debtor

2. HSBC Mortgage Corp., the Creditor with respect totwo home equity lines of credit ending in numbers 1288 and 1342, secured by property located at 3122 104th Street, East Elmhurst, NY 11369.


It is further ORDERED, that the Loss Mitigation Parties shall comply with theLoss Mitigation Procedures annexed to this Order; and it is further

ORDERED, that the Loss Mitigation Parties shall observe the followingdeadlines:

1. Each Loss Mitigation Party shall designate contact persons and disclosecontact information by June 11, 2010, unless this information has beenpreviously provided. As part of this obligation, a Creditor shall furnish each LossMitigation Party with written notice of the name, address and direct telephonenumber of the person who has full settlement authority.

2. Each Creditor that is a Loss Mitigation Party shall contact the Debtorwithin 14 days of the date of this Order.1

3. Each Loss Mitigation Party shall make its request for information anddocuments, if any, within 14 days of the date of this Order.

4. Each Loss Mitigation Party shall respond to a request for information anddocuments within 14 days after a request is made, or 7 days prior to the Loss


Case 1-10-43892-ess Doc 20 Filed 06/08/10 Entered 06/08/10 11:36:22

Mitigation Session, whichever is earlier.

5. The Loss Mitigation Session shall be scheduled not later thanJuly 9, 2010.

6. The Loss Mitigation Period shall terminate on July 16, 2010, unless extended asprovided in the Loss Mitigation Procedures.

It is further ORDERED, that a status conference will be held in this case onJuly 16, 2010 at 10:00 AM (the “Status Conference”). The Loss Mitigation Parties shall appear at theStatus Conference and provide the Court with an oral Status Report unless a written StatusReport that is satisfactory to the Court has been filed not later than 7 days prior to thedate of the Status Conference and requests that the Status Conference be adjourned orcancelled; and it is further

ORDERED, that at the Status Conference, the Court may consider a Settlementreached by the Loss Mitigation Parties, or may adjourn the Status Conference ifnecessary to allow for adequate notice of a request for approval of a Settlement; and it isfurther

ORDERED, that any matters that are currently pending between the LossMitigation Parties (such as motions or applications, and any objection, opposition orresponse thereto) are hereby adjourned to the date of the Status Conference to the extentthose matters concern (1) relief from the automatic stay, (2) objection to the allowance ofa proof of claim, (3) reduction, reclassification or avoidance of a lien, (4) valuation of aLoan or Property, or (5) objection to confirmation of a plan of reorganization; and it isfurther.

ORDERED, that the time for each Creditor that is a Loss Mitigation Party in thiscase to file an objection to a plan of reorganization in this case shall be extended until 14days after the termination of the Loss Mitigation Period, including any extension of theLoss Mitigation Period.

____________________________Elizabeth S. Stong

United States Bankruptcy JudgeDated: Brooklyn, New York June 8, 2010


UNITED STATES BANKRUPTCY COURTEASTERN DISTRICT OF NEW YORK----------------------------------------------------------------- xIn re:

ATENOGENES BAEZ, Chapter 11Case No. 10-40241-ess

Debtor.----------------------------------------------------------------- x

ORDER EXTENDING LOSS-MITIGATION PERIOD AND SCHEDULINGADJOURNED LOSS-MITIGATION STATUS CONFERENCE

WHEREAS, by Order dated February 10, 2010, the Court scheduled a Loss-Mitigation

Status Conference in this Chapter 11 case on April 9, 2010, at 11:30 a.m. (the “Status

Conference”); and

WHEREAS, neither the Debtor nor Fairway Fund I LLC, the creditor with respect to the

real property located at 11-44 Welling Court, Astoria, NY (collectively, the “Loss Mitigation

Parties”), appeared at the Status Conference.

NOW, THEREFORE, it is hereby

ORDERED, that the Loss-Mitigation Period is extended until May 28, 2010; and it is

further

ORDERED, that an Adjourned Status Conference will be held in this case on May 28,

2010, at 11:30 a.m. The Loss Mitigation Parties shall appear at the Adjourned Status Conference

and provide the Court with an oral Status Report unless a written Status Report that is

satisfactory to the Court has been filed not later than 7 days prior to the date of the Adjourned

Status Conference and requests that the Adjourned Status Conference be further adjourned or

cancelled; and it is further

ORDERED, that at the Adjourned Status Conference, the Court may consider a

Settlement reached by the Loss Mitigation Parties, or may further adjourn the status conference


if necessary to allow for adequate notice of a request for approval of a Settlement; and it is

further

ORDERED, that any matters that are currently pending between the Loss

Mitigation Parties (such as motions or applications, and any objection, opposition or

response thereto) are hereby adjourned to the date of the Adjourned Status Conference to the

extent those matters concern (1) relief from the automatic stay, (2) objection to the allowance of

a proof of claim, (3) reduction, reclassification or avoidance of a lien, (4) valuation of a

Loan or Property, or (5) objection to confirmation of a plan of reorganization; and it is

further

ORDERED, that the time for each Creditor that is a Loss Mitigation Party in this

case to file an objection to a plan of reorganization in this case shall be extended until 14

days after the termination of the Loss Mitigation Period, including any extension of the

Loss Mitigation Period.


United States Bankruptcy JudgeDated: Brooklyn, New York April 9, 2010


SERVICE LIST:

Atenogenes Baez11-44 Welling CourtAstoria, NY 11102

Richard S Feinsilver, Esq.One Old Country RoadSuite 125Carle Place, NY 11514

Kenneth P. Horowitz, Esq.Kriss & Feuerstein LLP360 Lexington Avenue, 12th FloorNew York, NY 10017


UNITED STATES BANKRUPTCY COURT

EASTERN DISTRICT OF NEW YORK

IN RE

Jude Jacques

DEBTOR

CHAPTER 13

CASE NO. : 08-42279

JUDGE: Elizabeth S. Stong

STIPULATION AND ORDER APPROVING LOAN MODIFICATION

WHEREAS, Ocwen Loan Servicing LLC (“Secured Creditor”) is the loan servicing

agent for U.S. Bank National Association in its capacity as Trustee for the registered holders of

MASTR Asset Backed Securities Trust 2005-NC2, Mortgage Pass-Through Certificates, Series

2005-NC2 holder of a note and mortgage secured by real property owned by Jude Jacques (the

“Debtor”) known as 969 East 103rd

Street, Brooklyn, New York 11236 and

WHEREAS, on the 30th day of December, 2009, the Debtors filed a Loss Mitigation

Request; and

WHEREAS, on the 25th day of January, 2010, an Order Granting Loss Mitigation

Request was signed by the Court; and

WHEREAS, on the 11th day of January, 2010, counsel for the Secured Creditor sent a

letter to counsel for the Debtors disclosing Secured Creditor’s contact information and requesting

Debtor’s financial information; and

WHEREAS, Debtors and Secured Creditor have agreed to modify the existing loan

terms as outlined below, it is hereby

STIPULATED AND AGREED AS FOLLOWS:

1. Secured Creditor has agreed to modify the existing mortgage loan under the terms

outlined more fully on the Payment Agreement Plan letter, annexed hereto as Exhibit “A”.

2. The terms of the loan modification are as follows: the new principal balance is

$393,691.25 with an interest rate of 6.000% until May 1, 2013 when the interest rate will

increase to 7.5% until the maturity date of the loan on September 1, 2030; Debtor will make an

initial payment of $3,156.45 on or before May 6, 2010 after which the debtor will commence

new principal and interest payments in the amount of $2,796.62 commencing June 1, 2010.

3. The Stipulation and the Loan Modification Agreement shall be binding upon the

heirs, successors and assigns of Secured Creditor and of the Debtor.

4. The automatic stay shall be lifted for the sole purpose of modifying the Debtor’s

mortgage loan as outlined above and attached hereto, and said modification is approved by the

Bankruptcy Court upon the signature of the Court on this Stipulation and Order.

5. It is further agreed that a fully executed copy of this Stipulation shall be deemed

the original for the purposes of filing the same with the Court and that facsimile signatures shall

have the same force and effect as the original signatures.

6. The foregoing represents the entire agreement of the parties and no modification

amendment or extension thereof shall be valid, unless in writing, signed by all signatories to this

agreement.

Dated: July 8 , 2010

Attorney for Debtor

/s/ Joshua Bleichman

Joshua Bleichman, Esq.

268 Route 59

Spring Valley, NY 10097

Attorney for Ocwen Loan Servicing, LLC

/s/ Anne E. Miller Hulbert

Anne E. Miller-Hulbert

Shapiro & DiCaro, LLP

250 Mile Crossing Boulevard

Suite One

Rochester, NY 14624

(585) 247-9000

SO ORDERED:


United States Bankruptcy JudgeDated: Brooklyn, New York July 14, 2010

UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF NEW YORK _____________________________________________

ORDER

In Re: Case No.: 10-41445-ess (Chapter 13) DANNY A PALMER Assigned to: Debtor Hon. ELIZABETH S. STONG Bankruptcy Judge _____________________________________________

ORDER TERMINATING LOSS MITIGATION PERIOD

WHEREAS, on March 16, 2010, Danny A. Palmer, the Debtor in this Chapter 13 case,

requested to participate in the Loss Mitigation Program with Home Loan Services, Inc., with respect

to real property located at 179-26 142nd Street, Jamaica, NY, 11434; and

WHEREAS, on March 31, 2010, the Court entered an Order directing the parties to

participate in the Loss Mitigation Program (the “Loss Mitigation Order”); and

WHEREAS, on June 17, 2010, Home Loan Services, Inc. filed a status report requesting that

the Loss Mitigation period be terminated; and

WHEREAS, on June 18, 2010, the Debtor filed a letter stating that he had no objection to the

termination of the loss mitigation period; and

WHEREAS, on June 18, 2010, the Court held a Loss Mitigation Status Conference at which

Home Loan Services, Inc. appeared and was heard, and the Court terminated the loss mitigation

period, and marked the loss mitigation status conference off the calendar.

NOW, THEREFORE, it is hereby


ORDERED, that the loss mitigation period is terminated with respect to Home Loan Services,

Inc.

Danny A Palmer (the “Debtor”) having requested loss mitigation on March 16, 2010; pursuant to the

General Order; and

A Loss Mitigation Order having been granted by this Court on March 31, 2010; and

A Status Conference having been held on June 18, 2010 and due deliberation having been given to the

matters raised by the Parties; it is hereby

ORDERED, that the loss mitigation period is hereby terminated as to Home Loan Services.


United States Bankruptcy JudgeDated: Brooklyn, New York June 29, 2010


UNITED STATES BANKRUPTCY COURTFOR THE DISTRICT OF RHODE ISLAND- - - - - - - - - - - - - - - - - - - x

In re: : BANKRUPTCY GENERAL ORDER

Adoption of Loss Mitigation Program : No. 09-003 and Procedures

:- - - - - - - - - - - - - - - - - - - x

ORDER ADOPTING LOSS MITIGATION PROGRAM AND PROCEDURES

Pursuant to 11. U.S.C. §105(a), this Court deems itadvisable and in the public interest to provide a uniform,comprehensive, court-supervised Loss Mitigation Program in orderto facilitate and assist in the consensual resolution of issuesinvolving debtors and creditors with joint contractual interestsin residential real property at risk of loss to foreclosure. This loss mitigation program is intended to avoid or reduceunnecessary bankruptcy litigation and cost to debtors and securedcreditors, and to enable debtors to reorganize or otherwiseaddress their significant debt and asset structure under theBankruptcy Code. The need for such a program is evident in lightof the various government sponsored loss mitigation programs(Making Homes Affordable) introduced to address the systemicmortgage defaults and the decline in the current residentialhousing economy nationwide, including the District of RhodeIsland. Accordingly, the “Loss Mitigation Program” annexed tothis order is hereby adopted.

The Loss Mitigation Program (“LMP”) and forms for initiating loss mitigation shall be available at the clerk’s office and onthe court’s web site. The Court may modify the LMP from time totime by duly adopted General Orders, with any such revisionsavailable in the clerk’s office and on the court’s web site,immediately upon their adoption.

NOW, THEREFORE, IT IS ORDERED that this Court’s LossMitigation Program is adopted, effective November 1, 2009.

ORDER: ENTER:

Susan M. Thurston Arthur N. VotolatoClerk of Court U.S. Bankruptcy JudgeDated: October 22, 2009

UNITED STATES BANKRUPTCY COURTDISTRICT OF RHODE ISLAND

LOSS MITIGATION PROGRAM AND PROCEDURES

I. PURPOSE

The Loss Mitigation Program (LMP) is designed to function asa forum for debtors and lenders to reach consensual resolution whena debtor’s residential property is at risk of foreclosure. The LMPaims to facilitate such resolution by opening communicationsbetween the debtors’ and lenders’ decision-makers. While the LMPstays certain bankruptcy deadlines that may have the effect ofdelaying the normal progress of bankruptcy administration, moreimportantly, the LMP encourages the parties to finalize a feasibleand beneficial agreement under Bankruptcy Court protection, insteadof seeking dismissal of the bankruptcy case.


The “loss mitigation” process is intended to include the fullrange of solutions that may prevent either the loss of a debtor’sproperty to foreclosure, increased costs to the lender, or both. Loss mitigation commonly consists of several general types ofagreements, or a combination of them: loan modification, loanrefinance, forbearance, short sale, or surrender of the property infull satisfaction1. The terms of a loss mitigation solution willvary in each case according to the particular needs and goals ofthe parties.

III. ELIGIBILITY

The following definitions describe the types of parties,properties and loans that are eligible for participation in theLoss Mitigation Program:

A. DEBTOR

The term “Debtor” means any individual debtor in a case filedunder Chapter 7, 11, 12 or 13 of the Bankruptcy Code, includingjoint debtors. If the Debtor is represented by counsel, the term “Debtor” is to be interpreted to include both the Debtor and theDebtor’s attorney, unless the Debtor, with the approval of Debtor’s

1 This is not intended to be an exclusive list of lossmitigation solutions.

counsel, has expressly requested and authorized direct involvementwithout counsel.

B. PROPERTY

The term “Property” means any real property used as aprincipal residence in which an eligible Debtor holds an interest.

C. LOAN

The term “Loan” means any mortgage, lien or extension of moneyor credit secured by eligible Property, regardless of whether theLoan (1) is considered to be “subprime” or “non-traditional,” (2)was in foreclosure prior to the bankruptcy filing, (3) is the firstor junior mortgage or lien on the Property, or (4) has been“pooled,” “securitized,” or assigned to a servicer or to a trustee.

D. CREDITOR

The term “Creditor” refers to any mortgage holder, assignee,servicer or trustee of an eligible Loan.


A. OTHER CREDITORS

Where necessary or desirable to obtain a global (i.e. morethan a two party) resolution, any party may request, or thebankruptcy court may direct that multiple Creditors participate inthe loss mitigation process.


Where the participation of a co-debtor or other third party isnecessary or desirable, any party may request, or the BankruptcyCourt may direct that such party participate in loss mitigation, tothe extent that the Bankruptcy Court has jurisdiction over theparty, or if the party consents to such participation.


It is the duty of the Chapter 13 Trustee under Section1302(b)(4) of the Bankruptcy Code to “advise, other than on legalmatters, and assist the debtor in performance under the plan.” Anyparty may request, or the Bankruptcy Court may direct the Chapter13 Trustee to participate in loss mitigation to the extent that

2

such participation would be consistent with the Chapter 13Trustee’s duties under the Bankruptcy Code.


Parties are encouraged to request loss mitigation as early inthe case as possible, but loss mitigation may be initiated at anytime, by any of the following methods:

A. BY THE DEBTOR

1. In Section XIII of the Model Chapter 13 Plan(RI Local Form W.1), a Chapter 13 Debtor mayindicate an interest in discussing lossmitigation with a particular Creditor. If thebox in Section XIII is checked, within seven(7) days of filing the Plan, the Debtor shallserve on the Creditor and its counsel, ifknown, and file with the Court, a Noticeand/or Request for Loss Mitigation (Form A toG.O. 09-003), together with a Proposed LossMitigation Order with applicable datessupplied (Form C to G.O. 09-003). TheCreditor shall have fourteen (14) days toobject. If no objection is filed, theBankruptcy Court may enter the proposed order“Loss Mitigation Order”.

2. Alternatively, a Debtor may file with theCourt and serve on the Creditor and itscounsel, if known, a Notice and/or Request for Loss Mitigation (Form A to G.O. 09-003),together with a Proposed Loss Mitigation Orderwith applicable dates supplied (Form C to G.O.09-003). The Creditor shall have fourteen (14)days to object. If no objection is filed, theBankruptcy Court may enter a Loss MitigationOrder.

3. If a Creditor has filed a motion for relieffrom the automatic stay pursuant to Section362 of the Bankruptcy Code (a “Lift-StayMotion”), at any time prior to the conclusionof the hearing on the Lift-Stay Motion, theDebtor may file a Notice and/or Request forLoss Mitigation (Form A to G.O. 09-003). TheDebtor and Creditor shall appear at thescheduled hearing on the Lift-Stay Motion, at

3

which time the Bankruptcy Court will considerthe loss mitigation request and any oppositionby the Creditor.

B. BY A CREDITOR

A Creditor may file with the Court and serve on the Debtorand Debtor’s counsel, if any, a Request for Loss Mitigation (FormB to G.O. 09-003), together with a Proposed Loss Mitigation Orderwith applicable dates supplied (Form C to G.O. 09-003). The Debtorshall have seven (7) days to object. If no objection is filed, theBankruptcy Court may enter a Loss Mitigation Order.


The Bankruptcy Court may enter a Loss Mitigation Order at anytime, provided that the parties bound by said Order (the “LossMitigation Parties”) have had notice and opportunity to object andbe heard.

D. OPPORTUNITY TO OBJECT

Where any party files an objection, a Loss Mitigation Ordershall not be entered until the Bankruptcy Court, after adequatenotice, has held a hearing to consider the objection. At least 2days prior to the hearing, a party objecting to loss mitigationmust present to the Court and parties, specific reasons why itbelieves that loss mitigation would not be successful. If a partyobjects on the ground that loss mitigation has been requested inbad faith, the assertion must be supported by objective reasons,and by sworn testimony, if necessary.

VI. LOSS MITIGATION ORDER

A. DEADLINES

A Loss Mitigation Order shall contain deadlines for thefollowing:

1. The date by which the Loss Mitigation Partiesshall designate contact persons and disclosecontact information, if this information hasnot been previously provided.

2. The date by which each Creditor must initiallycontact the Debtor.

3. The date by which each Creditor must transmitinformation requests to the Debtor.

4

4. The date by which the Debtor must transmit information requests to each Creditor.

5. The date by which a written report must befiled, or the date and time set for a statusconference at which verbal reports must beprovided by the parties. Whenever possible,in Chapter 13 cases, the status conferencewill coincide with the first date set forconfirmation of the Chapter 13 plan, or anycontinued confirmation hearing. Where awritten report is required, it should be filednot later than 7 days after the conclusion ofthe initial loss mitigation session.

6. The date when the loss mitigation period willterminate, unless duly extended.

B. EFFECT

Upon the entry of a Loss Mitigation Order, the following shallapply to the Loss Mitigation Parties:

1. Except where necessary to prevent irreparableinjury, loss or damage, the LM Party Creditorshall not file a Lift-Stay Motion during theloss mitigation period. Any Lift-Stay Motionfiled by such LM Party Creditor prior to theentry of the Loss Mitigation Order shall becontinued to a date after the last day of theloss mitigation period, and the stay shall beextended pursuant to Section 362(e) of theBankruptcy Code.

2. In a Chapter 13 case, the hearing date forconfirmation of the plan shall be continued toa date after the last day of the lossmitigation period. The deadline by which aCreditor must object to confirmation shall beextended to permit the Creditor an additionalfourteen (14) days after the conclusion ortermination of loss mitigation.

3. During the Loss Mitigation period,Debtors must stay current with their Chapter13 plan payments in order to remain eligiblefor the program.

4. Pursuant to Federal Rule of Evidence 408, allcommunications and information exchanged bythe Loss Mitigation Parties during the lossmitigation procedure will be inadmissible inany subsequent proceeding.

5


Upon entry of a Loss Mitigation Order, the Loss Mitigationparties shall have the following obligations:

A. GOOD FAITH

The Loss Mitigation Parties shall negotiate in good faith. Aparty failing or refusing to participate in loss mitigation in goodfaith may be subject to sanctions.


1. The Debtor: The Debtor shall provide writtennotice to each Creditor, indicating the mannerin which the Creditor should contact theDebtor, unless the Debtor has already done soin the Chapter 13 plan or as part of a requestfor loss mitigation,

2. The Creditor: Each Creditor shall providewritten notice to the Debtor, identifying thename, address, and direct telephone number ofthe contact person with settlement authority,unless a Creditor has already done so as partof a prior request for loss mitigation.

C. STATUS REPORT

The Loss Mitigation Parties shall provide either a written orverbal report to the Bankruptcy Court regarding the status of theloss mitigation, within the time set by the Bankruptcy Court in theLoss Mitigation Order. The status report shall include whether oneor more loss mitigation sessions have been conducted, whether aresolution was reached, and whether one or more of the LossMitigation Parties believe that additional loss mitigation sessionswould be likely to result in either a partial or completeresolution. A status report may include a request for an extensionof the loss mitigation period.


The Loss Mitigation Parties shall file a written request forBankruptcy Court approval of any resolution or settlement reachedduring loss mitigation.

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VIII. THE LOSS MITIGATION PROCESS

A. INITIAL CONTACT

Within seven (7) days following entry of a Loss MitigationOrder, the contact person designated by each Creditor shall contactthe Debtor’s attorney, or Debtor, if specifically authorized, andany other Loss Mitigation Party, unless a different deadline is setby the Bankruptcy Court. The Debtor may contact any LossMitigation Party at any time. The purpose of the initial contactis to create a framework for the discussion at the loss mitigationsession and to ensure that each of the Loss Mitigation Parties willbe prepared to participate meaningfully in the loss mitigationsession – it is not intended to limit additional issues orproposals that may arise during the session. During the initialcontact phase, the Loss Mitigation Parties should discuss thefollowing:

1. The time, place and method for conducting theloss mitigation sessions.

2. The types of loss mitigation solutions underconsideration by each party.

3. A plan for the exchange of requested information prior to the loss mitigationsession, including the due date for the Debtorto complete and return any information requestor other loss mitigation paperwork that eachCreditor may require. All information shallbe provided at least 7 days prior to the lossmitigation session.


Loss mitigation sessions may be conducted in person,telephonically, or via video conference. At the conclusion of eachloss mitigation session, the Loss Mitigation Parties should discusswhether additional sessions are necessary and set the time andmethod for conducting any additional sessions, including a schedulefor the exchange of any further information or documentation thatmay be required.


At any time during the loss mitigation period, a LossMitigation Party may request a settlement conference or statusconference with the Bankruptcy Court.

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Each Loss Mitigation Party must have a person with fullsettlement authority present during the loss mitigation session. During a status conference or settlement conference with theBankruptcy Court, a person with full settlement authority musteither attend the conference in person or be available by telephoneor video conference 30 minutes prior to the start of theconference.


A. INITIAL PERIODThe initial loss mitigation period shall be set by the

Bankruptcy Court in the Loss Mitigation Order.

B. EXTENSION

1. Agreement: The Loss Mitigation Parties mayagree to an extension of the loss mitigationperiod by filing an extension in writing onthe docket in the main bankruptcy case andserved on all parties in interest, who shallhave three (3) days to object to said extension.

2. No Agreement: Where a Loss Mitigation Partydoes not consent to the request for anextension of the loss mitigation period, theBankruptcy Court shall schedule a hearing toconsider whether further loss mitigationsessions are appropriate. The BankruptcyCourt may order an extension if it appearsthat (1) a further loss mitigation session islikely to provide a substantial benefit to aLoss Mitigation Party, (2) the party opposingthe extension has not participated in goodfaith or has failed in a material way tocomply with these Procedures, (3) the partyopposing the extension would not beprejudiced, or (4) for other cause shown.


1. Upon Request of a Loss Mitigation Party: ALoss Mitigation Party may request that theloss mitigation period be terminated, andshall state the reasons for the request.

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Except where immediate termination isnecessary to prevent irreparable injury, lossor damage, the request shall be made on noticeto all other Loss Mitigation Parties, and ifit is deemed appropriate or necessary, theBankruptcy Court may schedule a hearing toconsider said request.

2. Dismissal of the Bankruptcy Case:a. Other than at the request of a

Chapter 13 Debtor, or on the motionof the United States Trustee, casetrustee, or the Court acting suasponte, for failure to comply withrequirements under the BankruptcyCode, a case shall not be dismissedduring the loss mitigation periodunless the Loss Mitigation Partieshave provided the Bankruptcy Courtwith a status report that isapproved by the Court.

b. Upon the request of a Chapter 13Debtor: A Debtor shall not be required to request dismissal of thebankruptcy case as part of anyresolution or settlement that isoffered or agreed to during the lossmitigation period. Where a Chapter13 Debtor requests voluntarydismissal of the bankruptcy caseduring the loss mitigation period,the Debtor’s dismissal request shallindicate whether the Debtor agreedto any settlement or resolution froma Loss Mitigation Party during theloss mitigation period or intends toaccept an offer of settlement madeby a Loss Mitigation Party duringthe loss mitigation period.

c. Notice: If a bankruptcy case isdismissed for any reason during theloss mitigation period, the Clerk ofthe Court shall note on the docketthat loss mitigation efforts wereongoing at the time the bankruptcycase was dismissed.

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X. SETTLEMENT

The Bankruptcy Court will consider any agreement or resolutionreached during loss mitigation (a “Settlement”) and may approve theSettlement, subject to the following provisions:

1. Implementation: A Settlement may be noticedand implemented in any manner permitted by theBankruptcy Code and Federal Rules ofBankruptcy Procedure (“Bankruptcy Rules”),including, but not limited to, a stipulation,sale, plan of reorganization or amended planof reorganization.

2. Fees, Costs or Charges: If a Settlementprovides for a Creditor to receive payment orreimbursement of any fee, cost or charge thatarose from loss mitigation, all such fees,costs or charges shall be disclosed to theDebtor and to the Bankruptcy Court prior toapproval of the Settlement.

3. Signatures: Consent to the Settlement shall beacknowledged in writing by (1) an authorizedrepresentative of the Creditor, (2) theDebtor, and (3) the Debtor’s attorney, ifapplicable.

4. Hearing: Where a Debtor is represented bycounsel, a Settlement may be approved by theBankruptcy Court without further notice, orupon such notice as the Bankruptcy Courtdirects, unless additional notice or a hearingis required by the Bankruptcy Code orBankruptcy Rules. Where a Debtor is notrepresented by counsel, a Settlement shall notbe approved until after the Bankruptcy Courthas conducted a hearing at which the Debtorshall appear in person.

5. Amended Schedules I and J and Amended Chapter13 Plan, if applicable:Within fourteen (14) days after Court approvalof a Settlement, the Debtor shall file amendedSchedules I and J, and an amended Chapter 13Plan, if applicable.

6. Dismissal Not Required: A Debtor is notrequired to request dismissal of thebankruptcy case in order to effectuate a

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Settlement. To ensure that the Settlement isenforceable, the Loss Mitigation Parties mustrequest Bankruptcy Court approval of theSettlement. Where the Debtor requests orconsents to dismissal of the bankruptcy caseas part of the Settlement, the BankruptcyCourt may approve the Settlement as a“structured dismissal,” if such action complies with the Bankruptcy Code and theBankruptcy Rules, and does substantial justicebetween the parties.

XI. COORDINATION WITH OTHER PROGRAMS[Provision may be added in the future to provide for coordinationwith other loss mitigation programs.]

XII. EFFECTIVE DATE

Pursuant to General Order 09-003, this LMP shall become effectiveon November 1, 2009.

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UNITED STATES BANKRUPTCY COURT Form A to G.O. 09-003FOR THE DISTRICT OF RHODE ISLAND TWO PAGE DOCUMENT- - - - - - - - - - - - - - - - - - xIn re:

: BK No. Chapter

Debtor(s) :

- - - - - - - - - - - - - - - - - - x

NOTICE AND/OR REQUEST FOR LOSS MITIGATION – BY THE DEBTOR

I am a Debtor in this case, and hereby request loss mitigation withrespect to [Identify the property, loan and creditor(s) for whichloss mitigation is requested]:

NAME OF CREDITOR:

PROPERTY ADDRESS:

SIGNATUREI understand that if the Court orders loss mitigation in this case,I am required to comply with the Loss Mitigation Procedures, andwill participate in loss mitigation in good faith. I understandthat loss mitigation is voluntary, and that I am not required toenter into any agreement or settlement with any other party as partof this loss mitigation, and understand that no other party isrequired to enter into any agreement or settlement with me. I alsounderstand that I am not required to request dismissal of this caseas part of any resolution or settlement that is offered or agreedto during the loss mitigation period.

Sign: Date: , 2009

DEBTOR INFORMATION:

Print Full Name:

Mailing Address:

Telephone Number:

Email Address (if any)

1

In re: , Debtor Page Two Notice/Request for Loss Mitigation

BK No.

Attorney Information (if any):

Name:

Address:

Telephone Number: Fax Number:

Email Address (if any)

Preferred Method of Contact: Debtor’s Attorney Debtor

Pursuant to Section V of the Loss Mitigation Program, theabove named Creditor has fourteen (14) Days to file with theCourt and serve on the Debtor and Debtor’s attorney, anyobjection to this Request at:

U.S. Bankruptcy Court, District of Rhode Island The Federal Center, 380 Westminster Street,

Providence, Rhode Island 02903

2

UNITED STATES BANKRUPTCY COURT Form B to G.O. 09-003FOR THE DISTRICT OF RHODE ISLAND- - - - - - - - - - - - - - - - - -xIn re: :

BK No. : Chapter

Debtor(s)- - - - - - - - - - - - - - - - - -x

LOSS MITIGATION REQUEST – BY A CREDITOR

I am a creditor (including a holder, assignee, servicer or trustee ofa mortgage or lien secured by property used by the Debtor as aprincipal residence) of the Debtor. I hereby request loss mitigationwith respect to [Identify the property and loan for which you arerequesting loss mitigation]:

SIGNATUREI have reviewed the Loss Mitigation Procedures, and understand that if theCourt orders loss mitigation in this case, I will be bound by the LossMitigation Procedures, and will participate in loss mitigation in good faith. If loss mitigation is ordered, I agree to provide the Court with a written orverbal status report stating whether or not the parties participated in one ormore loss mitigation sessions, whether or not a settlement was reached, andwhether negotiations are ongoing, and I will not require the Debtor to requestor cause dismissal of this case as part of any resolution or settlement thatis offered or agreed to during the loss mitigation period.

Sign: Date: , 2009

Print Name:

Title:

Firm or Company:

Telephone Number:


Pursuant to Section V of the Loss Mitigation Program, the abovenamed Debtor has seven (7) Days to file any objection to thisRequest at:


Providence, Rhode Island 02903.

UNITED STATES BANKRUPTCY COURT Form C to G.O. 09-003FOR THE DISTRICT OF RHODE ISLAND- - - - - - - - - - - - - - - - - -x

In re: : BK No. Chapter :

Debtor(s)- - - - - - - - - - - - - - - - - -x

LOSS MITIGATION ORDER

G A Loss Mitigation Request2 was filed by the Debtor on , 200 .

G A Loss Mitigation Request was filed by a creditor on , 200 .

G The Court raised the possibility of loss mitigation, and theparties have had notice and an opportunity to object.

Accordingly, it is ORDERED, that the following parties

(collectively, the “Loss Mitigation Parties”) are directed to

participate in loss mitigation:1. The Debtor



3.

[Additional parties, if any.]

It is further ORDERED, that the Loss Mitigation Parties shall

comply with the Loss Mitigation Procedures annexed to this Order; and

it is further

2 All capitalized terms have the meanings defined in the sectionon Loss Mitigation Procedures.

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ORDERED, that the Loss Mitigation Parties shall observe the

following deadlines:

1. Each Loss Mitigation Party shall designate contactpersons and disclose contact information by [suggested time is 7 days], unless this informationhas been previously provided. As part of this obligation, Acreditor shall furnish each Loss Mitigation Party withwritten notice of the name, address, and direct telephonenumber of the person who has full settlement authority, andshall file such Loss Mitigation Contact Information with theCourt.

2. Each Creditor that is a Loss Mitigation Party shallcontact the Debtor’s Attorney, or Debtor, if pro se, withinfourteen (14) days of the date of this Order.

3. Each Loss Mitigation Party must make its informationrequest, if any, within fourteen (14) days of the date ofthis Order.

4. Each Loss Mitigation Party shall respond to aninformation request within fourteen (14) days after suchrequest is made, or seven (7) days prior to the LossMitigation Session, whichever is earlier.

5. The Loss Mitigation Session shall be scheduled not laterthan [suggested time iswithin 45 days of the date of the Order].

6. The loss mitigation period shall terminate on [suggested time is within 60days of the date of the Order], unless extended as providedin the Loss Mitigation Procedures.

It is further ORDERED, that a status conference will be held in

this proceeding on [within 60 days

unless extended by Court Order] (the “Status Conference”). The Loss

Mitigation Parties shall appear at the Status Conference and provide

the Court with a verbal Status Report, unless a detailed joint Status

Report has been filed at least seven (7) days prior to the date of the

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Status Conference with a request that the Status Conference be

dispensed with in lieu of the report; and it is further

ORDERED, that at the Status Conference, the Court may consider a

proposed Settlement by the Loss Mitigation Parties, or may continue

the Status Conference to allow more time to complete the loss

mitigation session, or for time to provide adequate notice of a

request for approval of a Settlement; and it is further

ORDERED, that any other pending matters between the Loss

Mitigation Parties are hereby continued to the date of the Status

Conference, to the extent those matters concern (1) relief from the

automatic stay, (2) objection to the allowance of a proof of claim,

(3) reduction, reclassification or avoidance of a lien, (4) valuation

of a Loan or Property, or (5) objection to confirmation of a plan of

reorganization; and it is further

ORDERED, that the time for each Loss Mitigation Creditor to file

an objection to a plan of reorganization in this case shall be

extended until fourteen (14) days after the termination of the loss

mitigation period, or any extension thereof.

Entered as an Order of this Court.

Dated at Providence, Rhode Island, this day of

, 2009.

Arthur N. Votolato U.S. Bankruptcy Judge

Entered on docket:

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UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF RHODE ISLAND - - - - - - - - - - - - - - - - - -x In re: : BANKRUPTCY GENERAL ORDER First Amended Loss Mitigation Program and Procedures : No. 10-001 Debtor(s) - - - - - - - - - - - - - - - - - -x

GENERAL ORDER ADOPTING FIRST AMENDED LOSS MITIGATION PROGRAM AND PROCEDURES

WHEREAS on October 22, 2009, this Court issued General Order 09-003, adopting Loss Mitigation Program and Procedures, effective November 1, 2009, and WHEREAS in the two months since the program has been in effect, better practices have been identified for improving the program procedures and its forms, NOW THEREFORE, it is hereby ORDERED that the First Amended Loss Mitigation Program and Procedures is adopted, and shall replace the October 22, 2009 version, effective January 15, 2010. The specific provisions and forms being amended include:

Sections V.(A)(2)-- amended to clarify that only one creditor/property may be included on each LM Request

Section V.(A)(3) -- amended to remove from hearing any unopposed loss mitigation requests

Section V.(D) -- amended to require that an objection to a loss mitigation request contain specific reasons why loss mitigation would not be successful, or the objection will be overruled without hearing

Section II.(D)-- amended to provide that whenever the Court or the parties jointly continue the status conference date, the loss mitigation period will automatically be extended to that date

Form A – amended to certify that the subject property of the request is real property used as a principal residence and to include an intended payment amount

Form C – amended to use number of days rather than

specific dates in the order

ORDER ENTER:

Susan M. Thurston Arthur N. Votolato Clerk of Court U.S. Bankruptcy Judge Dated: January 14, 2010

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UNITED STATES BANKRUPTCY COURT DISTRICT OF RHODE ISLAND

FIRST AMENDED LOSS MITIGATION PROGRAM AND PROCEDURES

I. PURPOSE The Loss Mitigation Program (LMP) is designed to function as a forum for debtors and lenders to reach consensual resolution when a debtor’s residential property is at risk of foreclosure. The LMP aims to facilitate such resolution by opening communications between the debtors’ and lenders’ decision-makers. While the LMP stays certain bankruptcy deadlines that may have the effect of delaying the normal progress of bankruptcy administration, more importantly, the LMP encourages the parties to finalize a feasible and beneficial agreement under Bankruptcy Court protection, instead of seeking dismissal of the bankruptcy case.


The “loss mitigation” process is intended to include the full range of solutions that may prevent either the loss of a debtor’s property to foreclosure, increased costs to the lender, or both. Loss mitigation commonly consists of several general types of agreements, or a combination of them: loan modification, loan refinance, forbearance, short sale, or surrender of the property in full satisfaction1. The terms of a loss mitigation solution will vary in each case according to the particular needs and goals of the parties.

III. ELIGIBILITY The following definitions describe the types of parties, properties and loans that are eligible for participation in the Loss Mitigation Program:

1 This is not intended to be an exclusive list of loss mitigation solutions.

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A. DEBTOR

The term “Debtor” means any individual debtor in a case filed under Chapter 7, 11, 12 or 13 of the Bankruptcy Code, including joint debtors. If the Debtor is represented by counsel, the term “Debtor” is to be interpreted to include both the Debtor and the Debtor’s attorney, unless the Debtor, with the approval of Debtor’s counsel, has expressly requested and authorized direct involvement without counsel. B. PROPERTY

The term “Property” means any real property used as a principal residence in which an eligible Debtor holds an interest. C. LOAN

The term “Loan” means any mortgage, lien or extension of money or credit secured by eligible Property, regardless of whether the Loan (1) is considered to be “subprime” or “non-traditional,” (2) was in foreclosure prior to the bankruptcy filing, (3) is the first or junior mortgage or lien on the Property, or (4) has been “pooled,” “securitized,” or assigned to a servicer or to a trustee. D. CREDITOR

The term “Creditor” refers to any mortgage holder, assignee, servicer or trustee of an eligible Loan.


A. OTHER CREDITORS Where necessary or desirable to obtain a global (i.e. more than a two party) resolution, any party may request, or the bankruptcy court may direct that multiple Creditors participate in the loss mitigation process. B. CO-DEBTORS AND THIRD PARTIES Where the participation of a co-debtor or other third party is necessary or desirable, any party may request, or the Bankruptcy Court may direct that such party participate in loss

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mitigation, to the extent that the Bankruptcy Court has jurisdiction over the party, or if the party consents to such participation. C.CHAPTER 13 TRUSTEE It is the duty of the Chapter 13 Trustee under Section 1302(b)(4) of the Bankruptcy Code to “advise, other than on legal matters, and assist the debtor in performance under the plan.” Any party may request, or the Bankruptcy Court may direct the Chapter 13 Trustee to participate in loss mitigation to the extent that such participation would be consistent with the Chapter 13 Trustee’s duties under the Bankruptcy Code.

V. COMMENCEMENT OF LOSS MITIGATION Parties are encouraged to request loss mitigation as early in the case as possible, but loss mitigation may be initiated at any time, by any of the following methods: A. BY THE DEBTOR 1. In Section XIII of the Model Chapter 13 Plan

(RI Local Form W.1), a Chapter 13 Debtor may indicate an interest in discussing loss mitigation with a particular Creditor. If the box in Section XIII is checked, within seven (7) days of filing the Plan, the Debtor shall serve on the Creditor and its counsel, if known, and file with the Court, a Notice and/or Request for Loss Mitigation (Amended Form A to G.O. 10-001), together with a Proposed Loss Mitigation Order with applicable deadlines supplied (Amended Form C to G.O. 10-001). The Creditor shall have fourteen (14) days to object. If no objection is filed, the Bankruptcy Court may enter the proposed order “Loss Mitigation Order”.

2. Alternatively, a Debtor may file with the

Court and serve on the Creditor and its counsel, if known, a Notice and/or Request for Loss Mitigation (Amended Form A to G.O. 10-001), together with a Proposed Loss

4

Mitigation Order with applicable deadlines supplied (Amended Form C to G.O. 10-001). The Creditor shall have fourteen (14) days to object. If no objection is filed, the Bankruptcy Court may enter a Loss Mitigation Order. Only one creditor/property may be included on a Request form. Use separate forms for additional creditors (liens).

3. If a Creditor has filed a motion for relief

from the automatic stay pursuant to Section 362 of the Bankruptcy Code (a “Lift-Stay Motion”), at any time prior to the conclusion of the hearing on the Lift-Stay Motion, the Debtor may file a Notice and/or Request for Loss Mitigation (Amended Form A to G.O. 10-001). The Debtor and Creditor shall appear at the scheduled hearing on the Lift-Stay Motion, at which time the Bankruptcy Court will consider the loss mitigation request and any opposition by the Creditor. If the objection deadline in the Loss Mitigation Request expires before the scheduled hearing and no objection is filed, the matter will be automatically removed from the calendar and the parties will be so notified and all pending matters will be continued to the status conference date.

B. BY A CREDITOR A Creditor may file with the Court and serve on the Debtor and Debtor’s counsel, if any, a Request for Loss Mitigation (Form B to G.O. 09-003), together with a Proposed Loss Mitigation Order with applicable dates supplied (Amended Form C to G.O. 10-003). The Debtor shall have seven (7) days to object. If no objection is filed, the Bankruptcy Court may enter a Loss Mitigation Order. C. BY THE BANKRUPTCY COURT The Bankruptcy Court may enter a Loss Mitigation Order at any time, provided that the parties bound by said Order (the “Loss Mitigation Parties”) have had notice and opportunity to object and be heard.

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D. OPPORTUNITY TO OBJECT Where any party files an objection, a Loss Mitigation Order shall not be entered until the Bankruptcy Court, after adequate notice, has held a hearing to consider the objection. An objection to the loss mitigation request must include specific reasons why loss mitigation would not be successful, or it will be overruled without hearing. If a party objects on the ground that loss mitigation has been requested in bad faith, the assertion must be supported by objective reasons, and by sworn testimony, if necessary.

VI. LOSS MITIGATION ORDER A. DEADLINES A Loss Mitigation Order shall contain deadlines for the following: 1. The date by which the Loss Mitigation

Parties shall designate contact persons and disclose contact information, if this information has not been previously provided.


3. The date by which each Creditor must transmit information requests to the Debtor.


5. The date by which a written report must be filed, or the date and time set for a status conference at which verbal reports must be provided by the parties. Whenever possible, in Chapter 13 cases, the status conference will coincide with the first date set for confirmation of the Chapter 13 plan, or any continued confirmation hearing. Where a written report is required, it should be filed not later than 7 days after the conclusion of the initial loss mitigation session.

6. The date when the loss mitigation period will terminate, unless duly extended.

6

B. EFFECT Upon the entry of a Loss Mitigation Order, the following shall apply to the Loss Mitigation Parties: 1. Except where necessary to prevent

irreparable injury, loss or damage, the LM Party Creditor shall not file a Lift-Stay Motion during the loss mitigation period. Any Lift-Stay Motion filed by such LM Party Creditor prior to the entry of the Loss Mitigation Order shall be continued to a date after the last day of the loss mitigation period, and the stay shall be extended pursuant to Section 362(e) of the Bankruptcy Code.

2. In a Chapter 13 case, the hearing date for confirmation of the plan shall be continued to a date after the last day of the loss mitigation period. The deadline by which a Creditor must object to confirmation shall be extended to permit the Creditor an additional fourteen (14) days after the conclusion or termination of loss mitigation.

3. During the Loss Mitigation period, Debtors must stay current with their Chapter 13 plan payments in order to remain eligible for the program.

4. Pursuant to Federal Rule of Evidence 408, all communications and information exchanged by the Loss Mitigation Parties during the loss mitigation procedure will be inadmissible in any subsequent proceeding.

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II. DUTIES UPON COMMENCEMENT OF LOSS MITIGATION

Upon entry of a Loss Mitigation Order, the Loss Mitigation parties shall have the following obligations:

A. GOOD FAITH The Loss Mitigation Parties shall negotiate in good faith. A party failing or refusing to participate in loss mitigation in good faith may be subject to sanctions. B. CONTACT INFORMATION 1. The Debtor: The Debtor shall provide written

notice to each Creditor, indicating the manner in which the Creditor should contact the Debtor, unless the Debtor has already done so in the Chapter 13 plan or as part of a request for loss mitigation,

2. The Creditor: Each Creditor shall provide

written notice to the Debtor, identifying the name, address, and direct telephone number of the contact person with settlement authority, unless a Creditor has already done so as part of a prior request for loss mitigation.

C. STATUS REPORT The Loss Mitigation Parties shall provide either a written or verbal report to the Bankruptcy Court regarding the status of the loss mitigation, within the time set by the Bankruptcy Court in the Loss Mitigation Order. The status report shall include whether one or more loss mitigation sessions have been conducted, whether a resolution was reached, and whether one or more of the Loss Mitigation Parties believe that additional loss mitigation sessions would be likely to result in either a partial or complete resolution. A status report may include a request for an extension of the loss mitigation period. Whenever the Court or the parties jointly continue the status conference date, the Loss Mitigation period will automatically be continued to that date.

8

D. BANKRUPTCY COURT APPROVAL The Loss Mitigation Parties shall file a written request for Bankruptcy Court approval of any resolution or settlement reached during loss mitigation.

VIII. THE LOSS MITIGATION PROCESS A. INITIAL CONTACT Within seven (7) days following entry of a Loss Mitigation Order, the contact person designated by each Creditor shall contact the Debtor’s attorney, or Debtor, if specifically authorized, and any other Loss Mitigation Party, unless a different deadline is set by the Bankruptcy Court. The Debtor may contact any Loss Mitigation Party at any time. The purpose of the initial contact is to create a framework for the discussion at the loss mitigation session and to ensure that each of the Loss Mitigation Parties will be prepared to participate meaningfully in the loss mitigation session – it is not intended to limit additional issues or proposals that may arise during the session. During the initial contact phase, the Loss Mitigation Parties should discuss the following: 1. The time, place and method for conducting

the loss mitigation sessions. 2. The types of loss mitigation solutions under

consideration by each party. 3. A plan for the exchange of requested

information prior to the loss mitigation session, including the due date for the Debtor to complete and return any information request or other loss mitigation paperwork that each Creditor may require. All information shall be provided at least 7 days prior to the loss mitigation session.

B. LOSS MITIGATION SESSIONS Loss mitigation sessions may be conducted in person, telephonically, or via video conference. At the conclusion of each loss mitigation session, the Loss Mitigation Parties should discuss whether additional sessions are necessary and set the time and method for conducting any additional sessions,

9

including a schedule for the exchange of any further information or documentation that may be required.


At any time during the loss mitigation period, a Loss Mitigation Party may request a settlement conference or status conference with the Bankruptcy Court. D. SETTLEMENT AUTHORITY Each Loss Mitigation Party must have a person with full settlement authority present during the loss mitigation session. During a status conference or settlement conference with the Bankruptcy Court, a person with full settlement authority must either attend the conference in person or be available by telephone or video conference 30 minutes prior to the start of the conference.

IX. DURATION, EXTENSION AND EARLY TERMINATION A. INITIAL PERIOD The initial loss mitigation period shall be set by the Bankruptcy Court in the Loss Mitigation Order. B. EXTENSION 1. Agreement: The Loss Mitigation Parties may

agree to an extension of the loss mitigation period by filing an extension in writing on the docket in the main bankruptcy case and served on all parties in interest, who shall have three (3) days to object to said extension.

2. No Agreement: Where a Loss Mitigation Party does not consent to the request for an extension of the loss mitigation period, the Bankruptcy Court shall schedule a hearing to consider whether further loss mitigation sessions are appropriate. The Bankruptcy Court may order an extension if it appears that (1) a further loss mitigation session is likely to provide a substantial benefit to a Loss Mitigation Party, (2) the party opposing the extension has not participated

10

in good faith or has failed in a material way to comply with these Procedures, (3) the party opposing the extension would not be prejudiced, or (4) for other cause shown.

C. EARLY TERMINATION 1. Upon Request of a Loss Mitigation Party: A

Loss Mitigation Party may request that the loss mitigation period be terminated, and shall state the reasons for the request. Except where immediate termination is necessary to prevent irreparable injury, loss or damage, the request shall be made on notice to all other Loss Mitigation Parties, and if it is deemed appropriate or necessary, the Bankruptcy Court may schedule a hearing to consider said request.

2. Dismissal of the Bankruptcy Case: a. Other than at the request of a

Chapter 13 Debtor, or on the motion of the United States Trustee, case trustee, or the Court acting sua sponte, for failure to comply with requirements under the Bankruptcy Code, a case shall not be dismissed during the loss mitigation period unless the Loss Mitigation Parties have provided the Bankruptcy Court with a status report that is approved by the Court.

b. Upon the request of a Chapter 13 Debtor: A Debtor shall not be required to request dismissal of the bankruptcy case as part of any resolution or settlement that is offered or agreed to during the loss mitigation period. Where a Chapter 13 Debtor requests voluntary dismissal of the bankruptcy case during the loss mitigation period, the Debtor’s dismissal request shall indicate

11

whether the Debtor agreed to any settlement or resolution from a Loss Mitigation Party during the loss mitigation period or intends to accept an offer of settlement made by a Loss Mitigation Party during the loss mitigation period.

c. Notice: If a bankruptcy case is dismissed for any reason during the loss mitigation period, the Clerk of the Court shall note on the docket that loss mitigation efforts were ongoing at the time the bankruptcy case was dismissed.

X. SETTLEMENT

The Bankruptcy Court will consider any agreement or resolution reached during loss mitigation (a “Settlement”) and may approve the Settlement, subject to the following provisions: 1. Implementation: A Settlement may be noticed

and implemented in any manner permitted by the Bankruptcy Code and Federal Rules of Bankruptcy Procedure (“Bankruptcy Rules”), including, but not limited to, a stipulation, sale, plan of reorganization or amended plan of reorganization.

2. Fees, Costs or Charges: If a Settlement provides for a Creditor to receive payment or reimbursement of any fee, cost or charge that arose from loss mitigation, all such fees, costs or charges shall be disclosed to the Debtor and to the Bankruptcy Court prior to approval of the Settlement.

3. Signatures: Consent to the Settlement shall be acknowledged in writing by (1) an authorized representative of the Creditor, (2) the Debtor, and (3) the Debtor’s attorney, if applicable.

4. Hearing: Where a Debtor is represented by counsel, a Settlement may be approved by the Bankruptcy Court without further notice, or upon such notice as the Bankruptcy Court directs, unless additional notice or a

12

hearing is required by the Bankruptcy Code or Bankruptcy Rules. Where a Debtor is not represented by counsel, a Settlement shall not be approved until after the Bankruptcy Court has conducted a hearing at which the Debtor shall appear in person.

5. Amended Schedules I and J and Amended Chapter 13 Plan, if applicable:

Within fourteen (14) days after Court approval of a Settlement, the Debtor shall file amended Schedules I and J, and an amended Chapter 13 Plan, if applicable.

6. Dismissal Not Required: A Debtor is not required to request dismissal of the bankruptcy case in order to effectuate a Settlement. To ensure that the Settlement is enforceable, the Loss Mitigation Parties must request Bankruptcy Court approval of the Settlement. Where the Debtor requests or consents to dismissal of the bankruptcy case as part of the Settlement, the Bankruptcy Court may approve the Settlement as a “structured dismissal,” if such action complies with the Bankruptcy Code and the Bankruptcy Rules, and does substantial justice between the parties.

XI. COORDINATION WITH OTHER PROGRAMS [Provision may be added in the future to provide for coordination with other loss mitigation programs.] XII. EFFECTIVE DATE Pursuant to General Order 09-003, the Court’s LMP first became effective on November 1, 2009. By General Order 10-001, this Court amended Sections V.(A)(2),(3) and (D), and Section II.(C) as reflected herein.

Rev.011410

UNITED STATES BANKRUPTCY COURT Amended 10-001 Form A to G.O.FOR THE DISTRICT OF RHODE ISLAND TWO PAGE DOCUMENT - - - - - - - - - - - - - - - - - x In re: : BK No. Chapter Debtor(s) : - - - - - - - - - - - - - - - - - x

NOTICE AND/OR REQUEST FOR LOSS MITIGATION – BY THE DEBTOR

I am a Debtor in this case, and hereby request loss mitigation (LM) with respect to [Identify the property, loan and creditor(s) for which loss mitigation is requested]: NAME OF CREDITOR:_______________________________________________ ________________________________________________________________ PROPERTY ADDRESS:_______________________________________________ ________________________________________________________________ SIGNATURE I understand that if the Court orders loss mitigation in this case, I am required to comply with the LM Procedures, and will participate in LM in good faith. I understand that LM is voluntary, and that I am not required to enter into any agreement or settlement with any other party as part of this LM, and understand that no other party is required to enter into any agreement or settlement with me. I also understand that I am not required to request dismissal of this case as part of any resolution or settlement that is offered or agreed to during the LM period. I also certify that the property in question consists only of real property used as a principal residence in which I hold an interest.

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I further certify as follows: ( ) I will make my regular current monthly mortgage payments beginning with the payment due on during the LM period.

( ) I propose to make my monthly mortgage payments as follows during the LM period, but I agree that I am still obligated to pay the original amount until modified: _______________________________________________________.

( ) I propose to make the following monthly payment during the LM period based on my projected loan modification: ___ ____

Sign: Date: DEBTOR INFORMATION: Print Full Name:________________________________________________ Mailing Address:________________________________________________ Telephone Number:_______________________________________________ E mail Address (if any):_________________________________________

Attorney Information (if any): Name:___________________________________________________________ Address:________________________________________________________ Telephone Number: Fax Number:__________________ Email Address (if any):_________________________________________ Preferred Method of Contact: Debtor’s Attorney Debtor Pursuant to Section V of the Loss Mitigation Program, the above named Creditor has fourteen (14) Days to file with the Court and serve on the Debtor and Debtor’s attorney, any objection to this Request at:


Providence, Rhode Island 02903

Rev. 011410


INSTRUCTIONS RE: LOSS MITIGATION PROGRAM AND PROCEDURES

General Order 10-001

I. Effective Date, Chapters Affected, Eligibility, and Deadlines: 1. Effective Date: November 1, 2009 2. Chapters Affected: 7, 11, 12 or 13 3. Eligibility: Individual debtors with real property used as a principal residence 4. Deadlines: (A). Initiation of Loss Mitigation (LM): Debtor or Creditor may initiate loss mitigation at any time during the pendency of the case by filing a Notice and/or Request for Loss Mitigation (Amended Form A or Form B). See, Section V of LM Program. (B). Opportunity to Object: A Creditor has fourteen (14) days to object to LM. A Debtor has seven (7) days to object to LM. (C). Other Deadlines: Upon entry of a Loss Mitigation Order, the remaining deadlines – for designating contact persons; initial contact; document production requests; conducting the LM sessions; and filing status reports with the Court – will be set forth in the LM Order. II. New Events – All Located Under new “Loss Mitigation” Events Category in Bankruptcy Menu: 1. Loss Mitigation Notice/Request: To be used by either Debtor or Creditor. Sets a LossMit Flag in the case to notify parties that LM is in effect. 2. Loss Mitigation Contact Information: To be used by either Debtor or Creditor to provide contact information for participating in LM. 3. Loss Mitigation Status Report: To be used to update the Court on status of the LM process. 4. Loss Mitigation Request for Continuance: To be used when additional time is needed to complete LM process.

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5. Objection to Loss Mitigation Request: To be used when filing an objection to a LM request. 6. Motion to Compel Compliance with LM Order: To be used when seeking to compel compliance with the LM Order. 7. Motion to Approve LM Agreement: To be used for court approval of a loss mitigation settlement agreement.

8. Chapter 13 Plan Event to be modified (Located Under “Plan”): To include selection box indicating whether LM is being requested in the Plan document. Selection of LM in the Plan will also set the LossMit Flag in CM/ECF.

III. New Forms: 1. Notice and/or Request for Loss Mitigation-By the Debtor (Amended Form A): To be filed by Debtor and served on the Creditor to request LM, or within 7 days of indicating such interest in the Chapter 13 Plan. 2. Request for Loss Mitigation-By the Creditor (Form B): To be filed by Creditor and served on Debtor to request LM. 3. Loss Mitigation Order (Amended Form C): Form of order to be used by the Court to commence LM between the parties once the objection period expires or any filed objection is overruled. The party initiating a LM request must prepare a proposed LM Order using the

court’s PDF fillable form (the status conference date will be filled in by the court). The order and deadlines contained therein inform the lender of anticipated time frames involved and helps to gain involvement in the process.

The proposed order shall be filed as an attachment to the Notice/Request in ECF, and served with the Notice/Request on the Creditor.

IV. New Clerk’s Office Form: Order extending LM period and continuing status conference. This order will also reflect that in Chapter 13 cases, the confirmation hearing will also be continued to the date of the next status conference, and any motion for relief from stay between the LM parties is also continued to that date. V. New Flag: 1. LossMit Flag: Will be automatically set by filing of either: (1) Chapter 13 Plan indicating LM interest; or (2) Notice and/or Request for Loss Mitigation. Visual aid to notify parties that LM is in effect.

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VI. Website Enhancements: 1. A Loss Mitigation Page has been added to the Court’s website, located on the left vertical column and includes links to the General Order and Loss Mitigation Program and Procedures document, the new forms and instructions, and FAQ’s and Best Practices. 2. Links to the Government sponsored Loss Mitigation Programs (Making Homes Affordable) materials and the Home Affordable Modification Plan (HAMP) website will be included on the Court’s new LM Page, including the HAMP document checklist. Rev. 021110

UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF RHODE ISLAND - - - - - - - - - - - - - - - - x In re: : BANKRUPTCY GENERAL ORDER Second Amended Loss Mitigation : Program and Procedures : No. 10-002 : - - - - - - - - - - - - - - - - x

GENERAL ORDER ADOPTING SECOND AMENDED LOSS MITIGATION PROGRAM AND PROCEDURES

On January 14, 2010, this Court issued General Order 10-001, adopting First Amended Loss Mitigation Program and Procedures, effective January 15, 2010, and During the first four months of the Program, four areas have been identified that require clarification and/or explanation in order to further facilitate the implementation of the Program. THEREFORE, It is hereby ORDERED that the Second Amended Loss Mitigation Program and Procedures is adopted and shall replace the January 15, 2010 version, effective on April 2, 2010. The provisions herein substantively amended are:

Sections III.(A) – that the entry of a discharge and/or the granting of relief from stay does not prevent a debtor from requesting loss mitigation or preclude the entry of a loss mitigation order, nor does it prevent a creditor from pursuing their state court rights.

Section V.(D) – objections that fail to address: the success standard will be overruled without hearing, and the Court’s position regarding the payment of regular mortgage payments as a condition to participation in the Loss Mitigation Program.

Section VI.(A) – requiring the order to specify the date for the submission of written status reports; and continuing the hearing date for confirmation of Chapter 13 plans to a date after the last day of the loss mitigation period.

Section VI.(B) – in order that the automatic stay not expire during Loss Mitigation, a chapter 7 debtor may seek to extend the entry of discharge during the Loss Mitigation period.

Section VII.(A) — the procedures for seeking compliance

with deadlines in a Loss Mitigation Order. Section VII.(C) – eliminating the scheduling of a routine

status conference and requiring instead, the submission of written status reports to update the Court on the status of loss mitigation.

Section IX. (B) limiting requests for extensions to 60 days.

ORDER ENTER:

Susan M. Thurston Arthur N. Votolato Clerk of Court U.S. Bankruptcy Judge Dated: April 1, 2010 Rev’d 04/01/2010

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SECOND AMENDED LOSS MITIGATION PROGRAM AND PROCEDURES

I. PURPOSE The Loss Mitigation Program (LMP) is designed to function as a forum for debtors and lenders to reach consensual resolution when a debtor’s residential property is at risk of foreclosure. The LMP aims to facilitate such resolution by opening communications between the debtors’ and lenders’ decision-makers. While the LMP stays certain bankruptcy deadlines that may delay the normal progress of bankruptcy administration, more importantly, the LMP encourages the parties to finalize a feasible and beneficial agreement under Bankruptcy Court protection, instead of seeking dismissal of the bankruptcy case.


The “loss mitigation” process is intended to include the full range of solutions that may prevent either the loss of a debtor’s property to foreclosure, increased costs to the lender, or both. Loss mitigation commonly consists of several general types of agreements, or a combination of them: loan modification, loan refinance, forbearance, short sale, or surrender of the property in full satisfaction.1 The terms of a loss mitigation solution will vary in each case according to the particular needs and goals of the parties.

III. ELIGIBILITY The following definitions describe the types of parties, properties and loans that are eligible for participation in the Loss Mitigation Program:

1 This is not intended to be an exclusive list of loss mitigation solutions.

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A. DEBTOR

The term “Debtor” means any individual debtor in a case filed under Chapter 7, 11, 12 or 13 of the Bankruptcy Code, including joint debtors. If the Debtor is represented by counsel, the term “Debtor” is to be interpreted to include both the Debtor and the Debtor’s attorney, unless the Debtor, with the approval of Debtor’s counsel, has expressly requested and authorized direct involvement without counsel. The fact that a discharge has entered or that relief from stay has been granted does not prevent a Debtor from requesting Loss Mitigation or prevent the Court from entering a Loss Mitigation Order. However, neither do these actions prevent such Creditors from pursuing their state court rights during the Loss Mitigation period, if they so elect. B. PROPERTY

The term “Property” means any real property used as a principal residence in which an eligible Debtor holds an interest. C. LOAN

The term “Loan” means any mortgage, lien or extension of money or credit secured by eligible Property, regardless of whether the Loan (1) is considered to be “subprime” or “non-traditional,” (2) was in foreclosure prior to the bankruptcy filing, (3) is the first or junior mortgage or lien on the Property, or (4) has been “pooled,” “securitized,” or assigned to a servicer or to a trustee. D. CREDITOR

The term “Creditor” refers to any mortgage holder, assignee, servicer or trustee of an eligible Loan.


A. OTHER CREDITORS Where necessary or desirable to obtain a global (i.e., more than a two party) resolution, any party may request, or the bankruptcy court may direct that multiple Creditors participate in the loss mitigation process.

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B. CO-DEBTORS AND THIRD PARTIES Where the participation of a co-debtor or other third party is necessary or desirable, any party may request, or the Bankruptcy Court may direct that such party participate in loss mitigation, to the extent that the Bankruptcy Court has jurisdiction over the party, or if the party consents to such participation. C. CHAPTER 13 TRUSTEE It is the duty of the Chapter 13 Trustee under Section 1302(b)(4) of the Bankruptcy Code to “advise, other than on legal matters, and assist the debtor in performance under the plan.” Any party may request, or the Bankruptcy Court may direct the Chapter 13 Trustee to participate in loss mitigation to the extent that such participation would be consistent with the Chapter 13 Trustee’s duties under the Bankruptcy Code.

V. COMMENCEMENT OF LOSS MITIGATION Parties are encouraged to request loss mitigation as early in the case as possible, but loss mitigation may be initiated at any time, by any of the following methods: A. BY THE DEBTOR 1. In Section XIII of the Model Chapter 13 Plan

(RI Local Form W.1), a Chapter 13 Debtor may indicate an interest in discussing loss mitigation with a particular Creditor. If the box in Section XIII is checked, within seven (7) days of filing the Plan, the Debtor shall serve on the Creditor and its counsel, if known, and file with the Court, a Notice and/or Request for Loss Mitigation (Amended Form A to G.O. 10-001), together with a Proposed Loss Mitigation Order with applicable deadlines supplied (2nd Amended Form C to G.O. 10-002). The Creditor shall have fourteen (14) days to object. If no objection is filed, the Bankruptcy Court may enter the proposed order “Loss Mitigation Order”.

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2. Alternatively, a Debtor may file with the Court and serve on the Creditor and its counsel, if known, a Notice and/or Request for Loss Mitigation (Amended Form A to G.O. 10-001), together with a Proposed Loss Mitigation Order with applicable deadlines supplied (2nd Amended Form C to G.O. 10-002). The Creditor shall have fourteen (14) days to object. If no objection is filed, the Bankruptcy Court may enter a Loss Mitigation Order. Only one creditor/property may be included on a Request form. Use separate forms for additional creditors (liens).

3. If a Creditor has filed a motion for relief

from the automatic stay pursuant to Section 362 of the Bankruptcy Code (a “Lift-Stay Motion”), at any time prior to the conclusion of the hearing on the Lift-Stay Motion, the Debtor may file a Notice and/or Request for Loss Mitigation (Amended Form A to G.O. 10-001). The Debtor and Creditor shall appear at the scheduled hearing on the Lift-Stay Motion, at which time the Bankruptcy Court will consider the loss mitigation request and any opposition by the Creditor. If the objection deadline in the Loss Mitigation Request expires before the scheduled hearing and no objection is filed, the matter will be automatically removed from the calendar and the parties will be so notified and all pending matters will be continued to the status conference date.

B. BY A CREDITOR A Creditor may file with the Court and serve on the Debtor and Debtor’s counsel, if any, a Request for Loss Mitigation (Form B to G.O. 09-003), together with a Proposed Loss Mitigation Order with applicable dates supplied (2nd Amended Form C to G.O. 10-002). The Debtor shall have seven (7) days to object. If no objection is filed, the Bankruptcy Court may enter a Loss Mitigation Order.

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C. BY THE BANKRUPTCY COURT The Bankruptcy Court may enter a Loss Mitigation Order at any time, provided that the parties bound by said Order (the “Loss Mitigation Parties”) have had notice and opportunity to object and be heard. D. OPPORTUNITY TO OBJECT Where any party files an objection, a Loss Mitigation Order shall not be entered until the Bankruptcy Court, after adequate notice, has either held a hearing to consider the objection, or overrules the objection without a hearing for failing to include specific reasons why loss mitigation would not be successful. If a party objects on the ground that loss mitigation has been requested in bad faith, the assertion must be supported by objective reasons, and/or by sworn testimony. This Court’s LMP is intended to bring debtors and secured lenders together, hopefully, to reach consensual and mutually beneficial resolutions when residential property is at risk of foreclosure. With this in mind, and consistent with the federal HAMP eligibility requirements – that homeowners must be in default or at imminent risk of default, the requirement that debtors make regular mortgage payments during the loss mitigation process will not be automatically imposed as a condition to participation in the LMP. To do so would likely be fatal to the viability of most of the federal, state and municipal programs that have been developed in response to the residential foreclosure crisis. To give the Rhode Island Bankruptcy Court Program the best chance of success, parties are advised that objections to Loss Mitigation participation shall be filed by the applicable deadline and must contain specific reasons as to why the secured lender believes that loss mitigation would not be successful.

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VI. LOSS MITIGATION ORDER A. DEADLINES A Loss Mitigation Order shall contain deadlines for the following: 1. The date by which the Loss Mitigation

Parties shall designate contact persons and disclose contact information, if this information has not been previously provided.


3. The date by which each Creditor must transmit information requests to the Debtor.


5. The date by which a written report must be filed updating the Court on the status of the loss mitigation.

6. The date when the loss mitigation period will terminate, unless duly extended.

B. EFFECT Upon the entry of a Loss Mitigation Order, the following shall apply to the Loss Mitigation Parties:

1. Except where necessary to prevent irreparable injury, loss or damage, LM Creditors shall not file a Lift-Stay Motions during the loss mitigation period. Any Lift-Stay Motion filed by such LM Party Creditor prior to the entry of the Loss Mitigation Order shall be postponed to a date after the last day of the loss mitigation period, and the stay shall be extended pursuant to Section 362(e) of the Bankruptcy Code.

2. In a chapter 7 case, if the Loss Mitigation period is anticipated to continue more than 80 days from the date the chapter 7 petition was filed, debtors may seek to extend the entry of discharge pursuant to Fed.R.Bankr.P. 4004(c)(2), in order that the

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automatic stay not expire under 11 U.S.C. ' 362(c)(2)(C).

3. In Chapter 13 cases, the hearing date for confirmation of the plan shall be continued to a date after the last day of the loss mitigation period. The deadline by which a Creditor must object to confirmation shall be governed by local rules 3015-2(c)(3) and/or 3015-3(b)(2), as applicable, and calculated from the rescheduled confirmation date.

4. During the Loss Mitigation period, Debtors must stay current with their Chapter 13 plan payments in order to remain eligible for the program.

5. Pursuant to Federal Rule of Evidence 408, all communications and information exchanged by the Loss Mitigation Parties during the loss mitigation procedure will be inadmissible in any subsequent judicial proceedings.


Upon entry of a Loss Mitigation Order, the Loss Mitigation parties shall have the following obligations:

A. GOOD FAITH The Loss Mitigation Parties shall negotiate in good faith. A party failing or refusing to participate in loss mitigation in good faith may be subject to sanctions. At any time during the Loss Mitigation Period, a party seeking compliance with deadlines should file a Motion to Compel compliance with the Loss Mitigation Order or seek termination of the Loss Mitigation Order, if appropriate. If a party, instead, chooses to file a proposed Order to Show Cause, said proposed order must be accompanied by an affidavit verifying the facts asserted in the Order to Show Cause. B. CONTACT INFORMATION 1. The Debtor: The Debtor shall provide written

notice to each Creditor, indicating the manner in which the Creditor should contact the Debtor, unless the Debtor has already

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done so in the Chapter 13 plan or as part of a request for loss mitigation,

2. The Creditor: Each Creditor shall provide

written notice to the Debtor, identifying the name, address, and direct telephone number of the contact person with settlement authority, unless a Creditor has already done so as part of a prior request for loss mitigation.

C. STATUS REPORT The Loss Mitigation Parties shall provide a written report to the Bankruptcy Court regarding the status of the loss mitigation, within the time set by the Bankruptcy Court in the Loss Mitigation Order. The status report shall include whether one or more loss mitigation sessions have been conducted, whether a resolution was reached, and whether one or more of the Loss Mitigation Parties believe that additional loss mitigation sessions would be likely to result in either a partial or complete resolution. A status report may include a request for an extension of the loss mitigation period. Whenever the Court or the parties jointly continue the status reporting date, the Loss Mitigation period will automatically be extended to that date. D. BANKRUPTCY COURT APPROVAL The Loss Mitigation Parties shall file a written request for Bankruptcy Court approval of any resolution or settlement reached during the loss mitigation process. See also Section X infra.

VIII. THE LOSS MITIGATION PROCESS

A. INITIAL CONTACT Within seven (7) days after entry of a Loss Mitigation Order, the contact person designated by each Creditor shall contact the Debtor’s attorney, or Debtor, if specifically authorized, and any other Loss Mitigation Party, unless a different deadline is set by the Bankruptcy Court. The Debtor may contact any Loss Mitigation Party at any time. The purpose of the initial contact is to create a framework for the

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discussion at the loss mitigation session and to ensure that each of the Loss Mitigation Parties will be prepared to participate meaningfully in the loss mitigation session – it is not intended to preclude the introduction of additional issues or proposals that may arise during the session. During the initial contact phase, the Loss Mitigation Parties should discuss inter alia: 1. The time, place and method for conducting

the loss mitigation sessions. 2. The types of loss mitigation solutions under

consideration by each party. 3. A plan for the exchange of requested

information prior to the loss mitigation session, including the due date for the Debtor to complete and return any information request or other loss mitigation paperwork that each Creditor may require. All such information shall be provided at least 7 days prior to the loss mitigation session.

B. LOSS MITIGATION SESSIONS Loss mitigation sessions may be conducted in person, telephonically, or via video conference. Prior to the conclusion of each loss mitigation session, the Loss Mitigation Parties should discuss whether additional sessions are necessary and set the time and method for conducting any additional sessions, including a schedule for the exchange of any further information or documentation that may be required.

C. BANKRUPTCY COURT ASSISTANCE At any time during the loss mitigation period, a Loss Mitigation Party may request a settlement conference or status conference with the Bankruptcy Court, on any subject dealing with the Loss Mitigation process. D. SETTLEMENT AUTHORITY Each Loss Mitigation Party must have a designated person with full settlement authority present during the loss mitigation session. During a status conference or settlement conference with the Bankruptcy Court, a person with full settlement authority must either attend the conference in person

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or be available by telephone or video conference 30 minutes prior to the start of the conference.

IX. DURATION, EXTENSION AND EARLY TERMINATION A. INITIAL PERIOD The initial loss mitigation period shall be set by the Bankruptcy Court in the Loss Mitigation Order. B. EXTENSION 1. Agreement: The Loss Mitigation Parties may

agree to an extension of the loss mitigation period, not to exceed 60 days, by filing an a request for extension in writing on the docket in the main bankruptcy case and served on all parties in interest. Any objection to such request for additional time shall be filed within three (3) days.

2. No Agreement: Where a Loss Mitigation Party does not consent to the request for an extension of the loss mitigation period, the Bankruptcy Court shall schedule a hearing to consider whether further loss mitigation sessions are appropriate. The Bankruptcy Court may order an extension if it appears that (1) a further loss mitigation session is likely to provide a substantial benefit to a Loss Mitigation Party, (2) the party opposing the extension has not participated in good faith or has failed in a material way to comply with these Procedures, (3) the party opposing the extension would not be prejudiced, or (4) for other cause shown.

C. EARLY TERMINATION 1. Upon Request of a Loss Mitigation Party: A

Loss Mitigation Party may request that the loss mitigation period be terminated for cause, and shall state the reason(s) for the request. Except where immediate termination is necessary to prevent irreparable injury, loss or damage, the request shall be made on notice to all other Loss Mitigation Parties, and if it is deemed appropriate or

11

necessary, the Bankruptcy Court may schedule a hearing to consider said request.

2. Dismissal of the Bankruptcy Case: a. Other than at the request of a

Chapter 13 Debtor, or on the motion of the United States Trustee, case trustee, or the Court acting sua sponte, for failure to comply with requirements under the Bankruptcy Code, a case shall not be dismissed during the loss mitigation period unless the Loss Mitigation Parties have provided the Bankruptcy Court with an explanatory status report that is approved by the Court.

b. Upon the request of a Chapter 13 Debtor: A Debtor shall not be required to request dismissal of the bankruptcy case as part of any resolution or settlement that is offered or agreed to during the loss mitigation period. Where a Chapter 13 Debtor requests voluntary dismissal of the bankruptcy case during the loss mitigation period, the Debtor’s dismissal request shall indicate whether the Debtor agreed to any settlement or resolution with a Loss Mitigation Party during the loss mitigation period or intends to accept an offer of settlement made by a Loss Mitigation Party during the loss mitigation period.

c. Notice: If a bankruptcy case is dismissed for any reason during the loss mitigation period, the Clerk of the Court shall note on the docket that loss mitigation efforts were ongoing at the time the bankruptcy case was dismissed.

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X. SETTLEMENT The Bankruptcy Court will consider any agreement or resolution reached during loss mitigation (a “Settlement”) and may approve the Settlement, subject to the following provisions: 1. Implementation: A Settlement may be noticed

and implemented in any manner permitted by the Bankruptcy Code and Federal Rules of Bankruptcy Procedure (“Bankruptcy Rules”), including, but not limited to, a stipulation, sale, plan of reorganization or amended plan of reorganization.

2. Fees, Costs or Charges: If a Settlement provides for a Creditor to receive payment or reimbursement of any fee, cost or charge that arose from loss mitigation, all such fees, costs or charges shall be disclosed to the Debtor, the Trustee, the U.S. Trustee, and to the Bankruptcy Court prior to approval of the Settlement.

3. Signatures: Consent to the Settlement shall be acknowledged in writing by (1) an authorized representative of the Creditor, (2) the Debtor, and (3) the Debtor’s attorney, if applicable.

4. Hearing: Where a Debtor is represented by counsel, a Settlement may be approved by the Bankruptcy Court without further notice, or upon such notice as the Bankruptcy Court directs, unless additional notice or a hearing is required by the Bankruptcy Code or Bankruptcy Rules. Where a Debtor is not represented by counsel, a Settlement shall not be approved until after the Bankruptcy Court has conducted a hearing at which the Debtor shall appear in person.

5. Amended Schedules I and J and Amended Chapter 13 Plan, if applicable:

Within fourteen (14) days after Court approval of a Settlement, the Debtor shall file amended Schedules I and J, and an amended Chapter 13 Plan, if applicable.

6. Dismissal Not Required: A Debtor is not required to request dismissal of the bankruptcy case in order to effectuate a

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Settlement. To ensure that the Settlement is enforceable, the Loss Mitigation Parties must request Bankruptcy Court approval of the Settlement. Where the Debtor requests or consents to dismissal of the bankruptcy case as part of the Settlement, the Bankruptcy Court may approve the Settlement as a “structured dismissal,” if such action complies with the Bankruptcy Code and the Bankruptcy Rules, and does substantial justice between the parties.


[Provision may be added in the future to provide for coordination with other loss mitigation programs.] XII. EFFECTIVE DATE Pursuant to General Order 09-003, the Court’s LMP first became effective on November 1, 2009. By General Order 10-001, the Court’s First Amended LMP became effective on January 15, 2010. By General Order 10-002, this Court amended Section III.(A), Section V.(D), Section VI(A) and (B), Section VII.(A), and Section VII.(C) as reflected herein, which shall take effect on April 1, 2010.

Rev.04/01/10

UNITED STATES BANKRUPTCY COURT 2nd Amended Form C to G.O. 10-002 FOR THE DISTRICT OF RHODE ISLAND - - - - - - - - - - - - - - - - - -x In re: : BK No. Chapter : Debtor(s) - - - - - - - - - - - - - - - - - -x

LOSS MITIGATION ORDER □ A Loss Mitigation Request1 was filed by the Debtor on ______ ___________________________________________________ 2010. □ A Loss Mitigation Request was filed by a creditor on _____ __________________________________________________,2010. □ The Court raised the possibility of loss mitigation, and

the parties have had notice and an opportunity to object. Accordingly, it is ORDERED, that the following parties

(collectively, the “Loss Mitigation Parties”) are directed to

participate in loss mitigation:

1. The Debtor

2. , the Creditor with respect to _________________________________________________________________

_________________________________________________________________ [describe Loan and/or Property]. 3. ______________________________________________________________ _________________________________________________________________ _________________________________________________________________

[Additional parties, if any.]

1 All capitalized terms have the meanings defined in the section on Loss Mitigation Procedures.

It is further ORDERED, that the Loss Mitigation Parties shall

comply with the Loss Mitigation Procedures adopted by this Court; and

it is further

ORDERED, that the Loss Mitigation Parties shall observe the

following deadlines:

1. Each Loss Mitigation Party shall designate contact persons and disclose contact information within 7 days of the date of this Order, unless this information has been previously provided. As part of this obligation, a creditor shall furnish each Loss Mitigation Party with written notice of the name, address, and direct telephone number of the person who has full settlement authority, and shall file such Loss Mitigation Contact Information with the Court.

2. Each Creditor that is a Loss Mitigation Party shall contact the Debtor’s Attorney, or Debtor, if pro se, within fourteen (14) days of the date of this Order.

3. Each Loss Mitigation Party must make its information request, if any, within fourteen (14) days of the date of this Order.

4. Each Loss Mitigation Party shall respond to an information request within fourteen (14) days after such request is made, or seven (7) days prior to the Loss Mitigation Session, whichever is earlier.

5. The Loss Mitigation Session shall be conducted not later than 45 days from the date of the Order. 6. A Loss Mitigation status report shall be filed with the Court within 60 days of the date of this order. If additional time is required to complete the loss mitigation process, the parties shall include a request for additional time within said status report. 7. The Loss Mitigation Parties may agree to an extension of the loss mitigation period, not to exceed 60 days, by filing a request for extension in writing on the docket in the main bankruptcy case and served on all parties in interest. Any objection to such request for additional time shall be filed within three (3) days.

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8. The loss mitigation period shall terminate 90 days from the date of the Order unless extended as provided in the Loss Mitigation Procedures.

It is further ORDERED, that any other pending matters between the

Loss Mitigation Parties are hereby continued to a date after the last

day of the loss mitigation period, to the extent those matters concern

(1) relief from the automatic stay, (2) objection to the allowance of

a proof of claim, (3) reduction, reclassification or avoidance of a

lien, (4) valuation of a Loan or Property, or (5) objection to

confirmation of a plan of reorganization; and it is further

ORDERED, that the time for each Loss Mitigation Creditor to file

an objection to a plan of reorganization in this case shall be

governed by Local Rules 3015-2(c)(3) and/or 3015-3(b)(2) as

applicable, calculated from the rescheduled confirmation date.

Entered as an Order of this Court. Dated at Providence, Rhode Island, this day of . ________________________________ Arthur N. Votolato U.S. Bankruptcy Judge Entered on docket: Rev. 04/01/10


INSTRUCTIONS RE: LOSS MITIGATION PROGRAM AND PROCEDURES

General Order 10-002

I. Effective Date, Chapters Affected, Eligibility, and Deadlines: 1. Effective Date: November 1, 2009, amended April 1, 2010 2. Chapters Affected: 7, 11, 12 or 13 3. Eligibility: Individual debtors with real property used as a principal residence 4. Deadlines: (A). Initiation of Loss Mitigation (LM): Debtor or Creditor may initiate loss mitigation at any time during the pendency of the case by filing a Notice and/or Request for Loss Mitigation (Amended Form A or Form B). See, Section V of LM Program. (B). Opportunity to Object: A Creditor has fourteen (14) days to object to LM. A Debtor has seven (7) days to object to LM. (C). Other Deadlines: Upon entry of a Loss Mitigation Order, the remaining deadlines – for designating contact persons; initial contact; document production requests; conducting the LM sessions; and filing status reports with the Court – will be set forth in the LM Order. II. New Events – All Located Under new “Loss Mitigation” Events Category in Bankruptcy Menu: 1. Loss Mitigation Notice/Request: To be used by either Debtor or Creditor. Sets a LossMit Flag in the case to notify parties that LM is in effect. 2. Loss Mitigation Contact Information: To be used by either Debtor or Creditor to provide contact information for participating in LM. 3. Loss Mitigation Status Report: To be used to update the Court on status of the LM process. 4. Loss Mitigation Request for Continuance: To be used when additional time is needed to complete LM process.

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5. Objection to Loss Mitigation Request: To be used when filing an objection to a LM request. 6. Motion to Compel Compliance with LM Order: To be used when seeking to compel compliance with the LM Order. 7. Motion to Approve LM Agreement: To be used for court approval of a loss mitigation settlement agreement.

8. Chapter 13 Plan Event to be modified (Located Under “Plan”): To include selection box indicating whether LM is being requested in the Plan document. Selection of LM in the Plan will also set the LossMit Flag in CM/ECF.

III. New Forms: 1. Notice and/or Request for Loss Mitigation-By the Debtor (Amended Form A): To be filed by Debtor and served on the Creditor to request LM, or within 7 days of indicating such interest in the Chapter 13 Plan. 2. Request for Loss Mitigation-By the Creditor (Form B): To be filed by Creditor and served on Debtor to request LM. 3. Loss Mitigation Order (Amended Form C): Form of order to be used by the Court to commence LM between the parties once the objection period expires or any filed objection is overruled. The party initiating a LM request must prepare a proposed LM Order using the

court’s PDF fillable form (the status conference report date will be filled in by the court). The order and deadlines contained therein inform the lender of anticipated time frames involved and helps to gain involvement in the process.

The proposed order shall be filed as an attachment to the Notice/Request in ECF, and served with the Notice/Request on the Creditor.

IV. New Clerk’s Office Form: Order extending LM period and continuing status conference report date. This order will also reflect that in Chapter 13 cases, the confirmation hearing will also be continued to the a date after the next status conference last day of the loss mitigation period , and any motion for relief from stay between the LM parties is also continued to that date. V. New Flag: 1. LossMit Flag: Will be automatically set by filing of either: (1) Chapter 13 Plan indicating LM interest; or (2) Notice and/or Request for Loss Mitigation. Visual aid to notify parties that LM is in effect.

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VI. Website Enhancements: 1. A Loss Mitigation Page has been added to the Court’s website, located on the left vertical column and includes links to the General Order and Loss Mitigation Program and Procedures document, the new forms and instructions, and FAQ’s and Best Practices. 2. Links to the Government sponsored Loss Mitigation Programs (Making Homes Affordable) materials and the Home Affordable Modification Plan (HAMP) website will be included on the Court’s new LM Page, including the HAMP document checklist. Rev. 041410

LOSS MITIGATION BEST PRACTICES

The Loss Mitigation Program in Rhode Island is based on a similar program in place in the New York Southern Bankruptcy Court. Below are some Best Practice tips learned from that court: I. SERVICE OF THE LOSS MITIGATION NOTICE/REQUEST: 1. Have a valid address to serve. Should also send a copy to the attorney for the lender if you know who they are (check proof of claim, notice of appearance, motion for relief). 2. Get service address from: proof of claim; entry of appearance; state corporation website; look on creditor’s website to find legal department to serve; use bank president’s name if necessary. Should serve as many related parties/addresses as available. 3. A copy of the proposed Loss Mitigation Order should be served with the Notice/Request. This order is in PDF fillable format on the court’s website. The initial deadlines set forth in the order are based on the date the order is entered. 4. It is recommended that where there are 2 mortgages on the property, that debtor’s attorney request LM to address the 2nd as well as the 1st mortgage. 5. It is also recommended that debtor’s counsel contact lender’s counsel at the outset of the loan modification process and advise them of the loan and property situation to facilitate a smoother process. II. ONCE LM REQUEST IS FILED AND LM ORDER ENTERED WITH DEADLINES: 1. Lender must post LM contact information in ECF once order approved or at Notice/Request stage. 2. Lenders counsel should immediately send the document requests to debtor’s attorney once the LM request is filed (if no objection) or order entered. 3. Strongly recommend that debtor’s attorney participate in the entire process and not let debtors do it themselves. Best Practice: Debtor’s counsel should be the contact person, not the debtors themselves. A higher probability of success if attorney for the debtor takes the lead. (Loss mitigation firms fraught with fraud, bankruptcy attorneys should not refer clients to these). 4. Debtor’s attorney should review financial information debtor is submitting to make sure it makes sense. 5. Debtor’s attorney should review the HAMP document checklist posted on the court’s website in preparation for assembling the information needed by the lender to consider a loss mitigation request. There is also a link to the HAMP site on the court’s loss mitigation page. 6. If either party fails to perform according to the terms of the LM Order, the

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aggrieved party should file a Motion to Compel compliance with the LM Order, or seek termination of the LM Order if appropriate. If a party chooses instead to file a proposed order to show cause, said order must be accompanied by an affidavit verifying the facts asserted in the order to show cause. 7. Parties are required to participate in a conference (can be done by telephone) or come to court to explain why no session took place. Suggestions for improving the ability of getting a representative of lender involved: send any requests to both groups – send documents by fax to lender and by email to attorneys. 8. HAMP requires an escrow account and this can take a while to figure out the escrow analysis to implement (working with taxing authorities). This can delay the process. 9. Creditors should give specific reasons for denial. Lender should send denial letter first to the attorney so they can be sure it’s understandable. Debtors should come back with counteroffers or to try and keep negotiating. III. LM STATUS CONFERENCE AND LOSS MITIGATION APPROVAL 1. Status conference will usually be scheduled on date of confirmation in chapter 13 cases, if possible. Debtors have to stay current on their Chapter 13 plan payments to stay in the program. 2. If the document request process or loan analysis is not completed by the scheduled status conference date, parties should file a written status report prior to the scheduled hearing date and the conference will be rescheduled for 30 days. Parties do not need to come to court to report a status if they have filed a written report. If not, the parties will appear and present the status in open court. 3. Part of the HAMP program requires a 90 day trial modification. If using this, seek adjournment of the status until completed. 4. Recommend filing a motion to extend time to continue LM process if the termination deadline (contained in paragraph 6 of the order) comes up before completing the process. 5. If Debtor does work out a loan modification – Debtor will have to amend schedules I and J, as necessary, and file an amended Chapter 13 plan. 6. Parties can file stipulation regarding a loss mitigation agreement (application for entry of proposed order) and the Court can approve. Order should include language that it survives any dismissal of the case pursuant to §349. Put a lot of detail in the order regarding what happens in the event of default – which balance to use. Make sure all privacy rules are complied with.

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IV. COUNSEL FEES FOR PARTICIPATING IN LM PROGRAM 1. Lenders can get some of their costs paid for under the HAMP program. Other costs can be factored into the settlement agreement. 2. Debtor’s attorneys have a number of options: (1) determine at the outset of taking the case if they will request LM and determine their fee appropriately at retention; (2) file a fee application and/or motion to amend 2016(b); (3) file an administrative proof of claim for additional fees and seek payment through the plan. Rev. 021110

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LOSS MITIGATION FREQUENTLY ASKED QUESTIONS:

1. If a debtor has already participated in a loan modification program (City of Providence/HUD) and it is denied pre-petition, are they eligible for the bankruptcy court program? 2. If a debtor has already received a discharge in their pending case, are they eligible to participate in the bankruptcy court program? 3. Is a debtor under Chapter 7 eligible to participate in the program? 4. Who is served with the loss mitigation request? How and where to? 5. How do I file the notice/request in ECF? 6. Are there any recommended best practices for getting the loss mitigation negotiations started? 7. Under the federal programs, there is a 90 day period to finalize the modification after payment of mortgage for 3 months. How will this trial modification period be handled in bankruptcy? 8. How are the Chapter 13 attorney fees handled for this program? 9. Who pays? Lenders will have costs. 10. What role does the Chapter 13 Trustee have? 11. What happens if the debtor doesn’t provide required documents? 12. What happens if the creditor does not respond to the LM order or provide required contact information? 13. What happens if we need more time to complete the negotiations for the loss mitigation? 14. If my Chapter 13 case is dismissed as a result of a successful loss mitigation, will bad faith be assumed?

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1. If a debtor has already participated in a loan modification program (City of Providence/HUD) and it is denied pre-petition, are they eligible for the bankruptcy court program? This would be a fact question for the Judge to decide upon a request for loss mitigation. The program provides an opportunity for a creditor to object to a loss mitigation request and to present information as to why such a request would not be successful (already attempted). 2. If a debtor has already received a discharge in their pending case, are they eligible to participate in the bankruptcy court program? Yes, any individual debtor with real property used as a principal residence is eligible for the program, whether or not they have received their discharge. 3. Is a debtor under Chapter 7 eligible to participate in the program? Yes, individual debtors under chapters 7, 11, 12 and 13 are all eligible to participate. 4. Who is served with the loss mitigation request? How and where to? The Debtor serves its loss mitigation notice/request on the named lender and its attorney, if known. Service addresses are found: (1) on Proof of claim form; (2) state corporation website; (3) entry of appearances; (4) lender=s website - legal department, or use Bank President=s name and address, if necessary; (5) on loan documents or correspondence. Service is by regular mail, but recommended practice is to also send copy by fax to lender and by email to their counsel, if known. In addition to the Notice/Request, the debtor must also serve a copy of the proposed loss mitigation order with deadlines for paragraphs 1, 5 and 6 filled in. For more information, see the attorney instructions posted on the website. 5. How do I file the notice/request in ECF? There are several new events in ECF related to the loss mitigation process. Use the event “Loss Mitigation Notice/Request” under Other to file the document and include the proposed loss mitigation order as an attachment to the notice/request filing. This is now a PDF fillable form on the Court’s website. 6. Are there any recommended best practices for getting the loss mitigation negotiations started? Attorneys have advised the Court that it has proven helpful at the outset of the loan modification process for the debtor’s attorney to contact the creditor’s attorney and advise them of the loan and property situation to facilitate a smoother process. 7. Under the federal programs, there is a 90 day period to finalize the modification after

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payment of mortgage for 3 months. How will this trial modification period be handled in bankruptcy? If using the HAMP program with the trial modification requirement, seek an adjournment of the status conference until the 3month trial period is complete. This will delay confirmation, but HAMP happens quickly so may not end up adding a lot more time. This was not found to be a problem or inhibitor to program success in NYS. 8. How are the Chapter 13 attorney fees handled for this program? Debtor=s attorneys determine at outset if they will request loss mitigation and determine their fee appropriately at retention. Also, Debtor=s attorneys can file fee applications or motion to amend 2016(b). Lastly, debtor=s attorneys can file an Administrative POC for additional fees B part up front and part paid through the plan. 9. Who pays? Lenders will have costs. Lenders are getting some of their costs paid for by the HAMP program. Other costs can be factored into the settlement agreement. 10. What role does the Chapter 13 Trustee have? Because the confirmation of the plan is delayed pending the outcome of the loss mitigation process, unsecured creditors will not get paid as quickly as they normally would. The Chapter 13 trustee does not have any special role in terms of the LM process, other than to use the new data from the LM agreement to evaluate any amended plan. Confirmations are continued until the LM process is completed. 11. What happens if the debtor doesn’t provide required documents? The Lender can move to terminate the loss mitigation period based on non-cooperation. 12. What happens if the creditor does not respond to the LM order or provide required contact information? The debtor should file a motion to compel compliance with the loss mitigation order and its terms. 13. What happens if we need more time to complete the negotiations for the loss mitigation? The parties should file a written status report advising the Court on the progress to date and how much additional time they need to complete the negotiations. Upon the filing of the status report, the Court will remove the matter from the hearing calendar.

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14. If my Chapter 13 case is dismissed as a result of a successful loss mitigation, will bad faith be assumed?

The program specifically provides that cases do not need to be dismissed if a loan modification is successful, and that the court can approve a settlement agreement. The suggested practice in New York is to modify the plan to pay off the debt and get the discharge right away at confirmation (to rehabilitate credit), rather than dismissing without a discharge. Rev. 02.11.10


In re. Alberto G. Sosa Debtor CHAPTER 7 Case No. 10-11702

OBJECTION OF PHH MORTGAGE CORPORATION D/B/A PHH MORTGAGE SERVICE CENTER TO DEBTOR’S REQUEST FOR ENTRY OF A LOSS MITIGATION ORDER

Now comes PHH Mortgage Corporation d/b/a PHH Mortgage Service Center (PHH) and

files this objection to the Debtor’s request for entry of a Loss Mitigation Order (No. 13). In

support of its objection PHH refers the Court to its supporting Memorandum of Law filed

herewith.

Wherefore, PHH respectfully requests that the Court:

(1) Deny the Debtor’s request for entry of a loss mitigation order; and

(2) Grant such further relief as the Court deems just.

Date: May 11, 2010

PHH Mortgage Corporation d/b/a PHH Mortgage Service Center,

By its attorney, /s/ Lynn Bouvier Kapiskas Lynn Bouvier Kapiskas, Esquire RI #3921 Law Offices of Mark L. Smith 176 Eddie Dowling Highway North Smithfield, RI 02896 Tel: (401) 769-4120 (Local Counsel)

Case 1:10-bk-11702 Doc 15 Filed 05/11/10 Entered 05/11/10 16:25:04 Desc Main Document Page 1 of 2

/s/ Susan W. Cody Susan W. Cody, Esquire RI # 6150 Korde & Associates, P.C. 321 Billerica Road, Suite 210 Chelmsford, MA 02184 (978) 256-1500 [email protected]

(Primary Counsel)

Case 1:10-bk-11702 Doc 15 Filed 05/11/10 Entered 05/11/10 16:25:04 Desc Main Document Page 2 of 2

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In re. Alberto G. Sosa

Debtor

Chapter 7

Case No. 10-11702

MEMORANDUM OF LAW IN SUPPORT OF PHH MORTGAGE CORPORATION D/B/A PHH MORTGAGE SERVICE CENTER’S OBJECTION TO DEBTOR’S REQUEST FOR ENTRY

OF A LOSS MITIGATION ORDER

Now comes PHH Mortgage Corporation d/b/a PHH Mortgage Service Center (PHH) and

files this Memorandum of Law in support of its objection to the Debtor’s request for entry of a

Loss Mitigation Order (No. 13). As grounds, PHH states as follows:

1. PHH Mortgage Corporation d/b/a PHH Mortgage Service Center services a first

mortgage in the original principal amount of $177,219.00 encumbering the Debtor’s

residence at 246 Lenox Avenue, Providence, Rhode Island (the “Property”) dated

January 28, 2004 and duly recorded with the City of Providence Land Evidence

Records in Book 6320, Page 211 (the “Mortgage”).

2. According to the City of Providence’s on-line Assessor Date Base, the Property is a

single-family colonial dwelling constructed circa 1930 (See Exhibit A).

3. The Debtor filed the instant Chapter 7 proceeding on April 20, 2010 and the first

scheduled date for the Section 341 meeting of creditors is scheduled for May 18,

2010 according to the pacer docket.

4. According to the Form R Affidavit recently executed by a representative of PHH in

preparation of the filing of a motion for relief from stay in the instant case a copy of

which is annexed hereto as Exhibit B, the Debtor is fourteen (14) months delinquent

in his payments due under the Mortgage and note secured thereby (exclusive of the

May 1, 2010 payment) for a total payment delinquency in excess of $22,000. This

Case 1:10-bk-11702 Doc 15-1 Filed 05/11/10 Entered 05/11/10 16:25:04 Desc Memorandum of Law Page 1 of 6

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sum does not include prepetition late charges, foreclosure attorneys fees and costs

and other charges assessed prior the filing of the Debtor’s petition in the instant

case.

5. Pursuant to General Order No. 09-003 dated October 22, 2009 and effective by the

terms thereof on November 1, 2009, as amended on January 14, 2010 by General

Order No. 10-001 effective January 15, 2010, copies of which are annexed hereto as

Exhibits C and D respectively, this Court adopted certain Loss Mitigation Program

and Procedures as set forth in Second Amended Loss Mitigation Program and

Procedures a copy of which is annexed hereto as Exhibit E.

6. Citing 11 U.S.C. Section 105(a) as the sole source of its authority to do so, the Court

concluded in General Order No. 09-003 that it was “advisable and in the public

interest to provide a uniform, comprehensive and court supervised Loss Mitigation

Program (hereinafter “LMR”) in order to facilitate and assist in the consensual

resolution of issues involving debtors and creditors with joint contractual interests in

residential real property at risk of loss to foreclosure.”

7. Neither the Court’s General Orders nor the LMR infer or expressly provide that the

LMR is designed to implement another provision or provisions of the Bankruptcy

Code.

8. Also citing an intent to avoid or reduce “unnecessary court litigation” the court

opined that LMR would “enable debtors to reorganize or otherwise address their

significant debt and asset structure under the Bankruptcy Code.”

9. On April 27, 2010 the Debtor filed his “Chapter 7 Individual Debtor’s Statement of

Intention – Amended” (document no. 12) wherein, as to the Property, he eschewed

the finite list of retention options, i.e., redeem or cure and reaffirm for a creative,

albeit unrecognized, “Other” option in the form of “loss mitigation”. See Statement

of Intention annexed hereto as Exhibit F.

10. Section 521(a)(2)(A) of the Code requires the Debtor to file a “statement of his

intention with respect to the retention or surrender of such property and, if

applicable, specifying that such property is claimed as exempt, that the debtor


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intends to redeem such property, or that the debtor intends to reaffirm debts

secured by such property.”

11. Section 521(a)(2)(B), in turn, mandates that the debtor perform his stated intention

within 30 days of the first date set for the 341(a) meeting of creditors or within such

additional time as the court, for cause, within such 30-day period fixes.

12. The First Circuit is among those Circuits which adhere to the position that the list of

retention options set forth in Section 521(a)(2)(A) is exclusive. In re Burr, 160 F3d

843, 849 (1st Cir. 1998). The Debtor does not claim the Property as exempt on

Schedule C nor has he chosen to redeem the Property or reaffirm the debt

evidenced by the Mortgage and the note which it secures.

13. The 2nd Amended Form C order annexed to the Court’s Second Amended Loss

Mitigation and Procedures (see Exhibit E) as well as the proposed order submitted

by the Debtor in this case contemplate an initial LMR period of 60 days as measured

from the date of the entry of the Loss Mitigation Order.

14. The adoption and implementation of the Court’s Second Amended Loss Mitigation

Program and Procedures and the required participation of secured creditors in

general and PHH in particular in such program necessarily conflicts with the

provisions of Section 521(a)(2)(A) and 521(a)(2)(B) of the Code by effectively

allowing the debtor to elect a retention option not available or provided for under

Section 521(a)(2)(A) and purporting to excuse the debtor from 521(a)(2)(B)’s

requirement of performing such election within 30 days of the first scheduled

meeting of creditors without any showing of sufficient “cause”.

15. The adoption and implementation of the Court’s Second Amended Loss Mitigation

Program and Procedures also conflicts with the Court’s earlier ruling in In re

Rathburn, 275 B.R. 434, 438 wherein the Court, following In re Burr, concluded that

the debtor must elect and perform one of the retention options in Section

521(2)(“i.e., redemption or reaffirmation”). Also at issue in Rathburn was the

remedy available to the mortgage holder (the collateral in Rathburn consisted of a

mortgage on the debtor’s residence as is the case in the instant proceeding), if any,


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in the event that the debtor did not perform his stated intention within the time

period set forth in Section 521(2)(B) [now 521(a)(2)(B)]. The Court, following Judge

Deasy’s earlier decision in In re Donnell, 234 B.R. 567 (Bankr.D.N.H.1999), granted

the mortgage holder relief from stay “based on the debtors’ failure to peform their

stated intention pursuant to Section 521(2)(B).” Rathburn, at 438.

16. If it is true, as pronounced by the court in In re Burr, supra, that Chapter 7 debtors

do not “enjoy a freestanding right under the Bankruptcy Code to retain property

securing a consumer debt merely by keeping current on their payments under old

loan agreements, such debtors certainly do not have the right to eschew the finite

list of retention options provided for in 521(a)(2)(A) by electing “loss mitigation”

while at the same time being relieved by the express terms of the Second Amended

Loss Mitigation Program and Procedures (hereinafter the “Procedure”) from

resuming or maintaining mortgage payments to the secured creditor during the Loss

Mitigation Period (see page 5, 2nd paragraph, under the heading “Opportunity to

Object”).

17. Even if “loss mitigation” were an available option under Section 521(a)(2)(A), the

Procedures will necessarily result in most instances in imposing a Loss Mitigation

Period that extends more than 30 days beyond the first scheduled meeting of

creditors thereby institutionalizing and sanctioning non-compliance with the time

restraints imposed by 521(a)(2)(B) without requiring a showing of sufficient cause.

18. In addition to emasculating the requirements of Section 521(a)(2)(A) and

521(a)(2)(B), the Procedures necessarily conflict with a secured parties’ unfettered

right to file a motion for relief from stay if it can demonstrate sufficient grounds

under 11 U.S.C. Section 362(d)(1) or 362(d)(2) and with the time restraints on

conducting preliminary and final hearings set forth in Section 362(e)(1).

19. Pursuant to Section VI (B)(1) of the Procedures, a LM Creditor “shall not file” a Lift

Stay Motion during the Loss Mitigation Period “except to prevent irreparable injury,

loss or damage.” This language appears to be, in part, derivative of that appearing in

Section 362(f); this section, however, does not provide any license or authority to


5

bar the filing of a Motion for Relief by a secured creditor who otherwise has

sufficient grounds to do so under Section 362(d)(1) or Section 362(d)(2) nor does it

excuse conformity with the time limitations for conducting preliminary and final

hearings set forth in Section 362(e)(1).

20. Our First Circuit Court of Appeals has cautioned on the limitations of Section 105(a)

in the case of In re Ludlow Hosp. Soc., Inc., 124 F.3d 22 (1st Cir. 1997):

“Section 105(a) empowers the bankruptcy court to exercise its equitable powers – where “necessary” or “appropriate” –to facilitate the implementation of other Bankruptcy Code provisions (citation omitted). Although expansively phrased, section 105(a) affords bankruptcy courts considerably less discretion than first meets the eye, and in no sense constitutes a ‘roving commission to do equity’. . . (citations omitted) Instead, the equitable discretion conferred upon the bankruptcy court by section 105(a) ‘is limited and cannot be used in a manner inconsistent with the commands of the Bankruptcy Code.’ In re Plaza de Diego Shopping Ctr., Inc., 911 F.2d 820, 824 (1st Cir.1990). . . (. . . under this section, a court may exercise its equitable power only as a means to fulfill some specific Code provision); Official Unsecured Creditors’ Comm. v. Stern (In re SPM Mfg. Corp.), 984 F.2d 1305, 1311 (1st Cir. 1993)(‘Section 105(a) [does not] authorize courts to create substantive rights that are otherwise unavailable under the Code, or expand the contractual obligations of the parties.”); In re Dillon, 194 B.R. 533, 536 (Bankr.S.D.Fla.1996).” Id., at 27, 28.

21. PHH objects to the Debtor’s Request for Loss Mitigation because (a) the Procedures

are inconsistent and conflict with the requirements of Sections 521(a)(2)A),

521(a)(2)(B), 362(d) and 362(e)(1) of the Bankruptcy Code and (b) because they

were not adopted or implemented to facilitate implementation of another section of

the Bankruptcy Code and thus such Procedures are outside the scope of the Court’s

Section 105(a) powers.

Date: May, 11, 2010


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PHH Mortgage Corporation d/b/a PHH Mortgage Service Center,

By its attorney, /s/ Lynn Bouvier Kapiskas Lynn Bouvier Kapiskas, Esquire RI #3921 Law Offices of Mark L. Smith 176 Eddie Dowling Highway North Smithfield, RI 02896 Tel: (401) 769-4120 (Local Counsel)

/s/ Susan W. Cody Susan W. Cody, Esquire RI # 6150 Korde & Associates, P.C. 321 Billerica Road, Suite 210 Chelmsford, MA 02184 (978) 256-1500 [email protected] (Primary Counsel)


Case 1:10-bk-11702 Doc 15-2 Filed 05/11/10 Entered 05/11/10 16:25:04 Desc Exhibit A Page 1 of 1

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Case 1:10-bk-11702 Doc 15-5 Filed 05/11/10 Entered 05/11/10 16:25:04 Desc Exhibit D Page 1 of 2

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Case 1:10-bk-11702 Doc 15-7 Filed 05/11/10 Entered 05/11/10 16:25:04 Desc Exhibit F Page 1 of 1

UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF RHODE ISLAND

In Re:

Alberto G. Sosa

Case Number 10-11702-ANV

Chapter 13

CERTIFICATE OF SERVICE

I, Susan W. Cody, Attorney for PHH Mortgage Corporation d/b/a PHH Mortgage

Service Center hereby certify that on May 11, 2010 I electronically filed the foregoing

Objection to Debtor’s Request for Entry of a Loss Mitigation Order with the United

States Bankruptcy Court for the District of Rhode Island using the CM/ECF System. I

served the forgoing documents on the following CM/ECF participants;

Gary L. Donahue, U.S. Trustee

Stacy B. Ferrara, Trustee

Michael W. Favicchio, Esquire

I certify that I have mailed by first class mail, postage prepaid the documents

electronically filed with the Court on the following non-CM/ECF participants:

Alberto G. Sosa

246 Lenox Avenue

Providence, RI 02907

/s/ Susan W. Cody

Susan W. Cody, Esquire

RI# 6150

Korde & Associates, P.C.

321 Billerica Road, Suite 210

Chelmsford, MA 01824-4100

Tel: (978) 256-1500

Case 1:10-bk-11702 Doc 15-8 Filed 05/11/10 Entered 05/11/10 16:25:04 Desc Certificate of Service Page 1 of 1


IN RE: Jason E. Lawton and Case No. 10-11302 Bridget L. Lawton _________________ Alberto G. Sosa Case No. 10-11702 Debtors, Chapter 7

BRIEF OF AMICUS COUNSEL JOHN RAO AND THE NATIONAL CONSUMER LAW CENTER IN RESPONSE TO OBJECTIONS TO

DEBTORS’ REQUEST FOR LOSS MITIGATION ORDERS

Now comes amicus counsel John Rao of the National Consumer Law Center,

Inc.,1 and hereby submits this amicus curiae brief in response to the objections filed by

Ocwen Loan Servicing as servicer for Deutsche Bank National Trust Co. and PHH

Mortgage Corporation (hereinafter the “mortgage creditors”) to the Debtors’ requests for

Loss Mitigation Orders in the above-entitled cases. By Orders entered on July 12, 2010

in these cases, the undersigned counsel was appointed as pro bono amicus counsel to

submit this amicus curiae brief.

1 The National Consumer Law Center, Inc. is a non-profit Massachusetts corporation specializing in low-income consumer issues with an emphasis on consumer credit. NCLC is a nationally recognized expert on consumer credit and bankruptcy issues and has drawn on this expertise to provide information, legal research, policy analyses, and market insight to Congress and state legislatures, administrative agencies, and courts for almost forty years. NCLC has a specific expertise in the areas of bankruptcy, foreclosures and predatory lending practices. NCLC publishes an eighteen-volume Consumer Credit and Sales Legal Practice Series, including, inter alia, Consumer Bankruptcy Law and Practice (9th ed. 2009) and Foreclosures (3d ed. 2010). NCLC frequently is asked to appear as amicus curiae in consumer law cases before courts around the country and does so in appropriate circumstances.

I. Introduction

The Loss Mitigation Program (hereinafter “LMP”) for the Bankruptcy Court for

the District of Rhode Island was commenced on November 1, 2009, and was

implemented by General Order 09-003. Amendments to the LMP were made by General

Orders 10-001 and 10-002, which became effective on January 15, 2010 and April 2,

2010. The Court’s LMP is similar to a loss mitigation program implemented by the

Bankruptcy Court for the Southern District of New York (and certain judges in the

Eastern District of New York), as well as numerous programs adopted nationwide by

state and local courts and governments which are described in Part II, Section F of this

brief. The stated purpose of the LMP and similar programs is to “bring debtors and

secured lenders together, to encourage them to discuss mutually beneficial financial

resolution of their home mortgage difficulties, in a climate where both debtors and

creditors are at risk of suffering great pecuniary harm even if they were acting

prudently.” In re Simarra, 2010 WL 2144150 (Bankr. D.R.I. April 14, 2010). Serving

as a case management function, the LMP is intended to “avoid or reduce unnecessary

bankruptcy litigation and cost to debtors and secured creditors.” General Order 09-003.

The backdrop for the Rhode Island LMP is this nation’s worst foreclosure crisis

since the Great Depression. According to the Mortgage Bankers Association National

Delinquency Survey for the fourth quarter of 2009, the combined percentage of loans in

foreclosure or seriously delinquent was 15.02 percent, the highest ever recorded in the

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MBA delinquency survey.2 Goldman Sachs estimates that, starting at the end of the last

quarter of 2008 through 2014, 13 million foreclosures will be started.3

The situation in Rhode Island is more dire than in most areas of the nation. With

over ten percent of home mortgages in the state past due, Rhode Island ranked highest

among all New England states in the most recent Mortgage Bankers Association National

Delinquency Survey.4 Nationwide, only seven states had a higher rate of delinquent

home loans than Rhode Island. At the end of the First Quarter of 2010 there were 19,869

past-due home mortgage loans in the state.5 With an increase in foreclosures of 123%

from the last quarter of 2009 through the first quarter of 2010, Rhode Island led all fifty

states in the rate of increase in new foreclosure cases.6 It is projected that during the

years 2009 through 2012, a total of 31,192 homes will proceed to foreclosure in Rhode

Island.7 Not surprisingly, Rhode Island is one of the first ten states designated by the

2 Mortgage Bankers Association, National Delinquency Survey Quarter 4 2009 (Feb. 19, 2010). 3 Goldman Sachs Global ECS Research, Home Prices and Credit Losses: Projections and Policy Options (Jan. 13, 2009), at 16; see also Rod Dubitsky, Larry Yang, Stevan Stevanovic & Thomas Suehr, Credit Suisse Fixed Income Research, Foreclosure Update: Over 8 Million Foreclosures Expected (Dec. 4, 2008) (predicting 9 million foreclosures for the period 2009-2012). 4 Mortgage Bankers Association, National Delinquency Survey Quarter 1 2010 (March 31, 2010). 5 Center for Responsible Lending, Cost of Bad Lending Fact Sheet: Rhode Island: http://www.responsiblelending.org/mortgage-lending/tools-resources/factsheets/rhode-island.html. 6 Mortgage Bankers Association, National Delinquency Survey Quarter 1 2010 (March 31, 2010). 7Center for Responsible Lending, Cost of Bad Lending Fact Sheet: Rhode Island: http://www.responsiblelending.org/mortgage-lending/tools-resources/factsheets/rhode-island.html

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U.S. Treasury Department to receive special foreclosure assistance funds under the

“Hardest Hit Fund” states initiative.8

II. Argument

A. Congress Added Subsection (d) to Code § 105 in Order to Strengthen Bankruptcy Courts’ Authority to Establish Settlement Practices in Bankruptcy Cases.

The objecting mortgage creditors in these cases assert that 11 U.S.C. § 105 cannot

provide a basis for the Court to institute the LMP. In making this argument, the mortgage

creditors focus solely on subsection (a) of § 105. Subsection (a) generally authorizes the

bankruptcy court to issue orders necessary or appropriate to carry out the provisions of

the Code. According to the mortgage creditors, subsection (a) is not specific enough to

authorize this Court to implement the LMP. The mortgage creditors’ argument, however,

ignores subsection (d) of § 105. Subsection (d) specifically addresses the bankruptcy

courts’ case management powers. It provides:

(d) The court, on is own motion or on the request of a party in interest

(1) shall hold such status conferences as are necessary to

further the expeditious and economical resolution of the case; and

(2) unless inconsistent with another provision of this title or with applicable Federal Rules of Bankruptcy Procedure, issue an order at any such conference prescribing such limitations and conditions as the court deems appropriate to ensure that the case is handled expeditiously and economically . . . .

11 U.S.C. § 105(d).

8 United States Department of Treasury Press Release March 29, 2010: http://www.ustreas.gov/press/releases/tg618.htm.

4

Congress added subsection (d) to § 105 in 1994 in order to clarify that the full

range of settlement and conference procedures authorized under F.R. Civ. P. 16 are

available in bankruptcy cases. The pertinent House Report noted, “Notwithstanding the

adoption of Bankruptcy Rule 7016 (relating to pretrial conferences), some judges have

appeared reluctant to do so without clear and explicit statutory authorization. This

provision clarifies that such authority exists in the Bankruptcy Code in adversary and

nonadversary proceedings.” House Report No. 103-835 (Oct. 4, 1994) reprinted in 1994

U.S. Code Cong. & Admin. News 3340, 3345. The remarks of the 1994 amendment’s

House Sponsor, Representative Brooks, make this same intention clear:

This section makes a number of changes to clarify the powers of bankruptcy courts in managing bankruptcy cases. Several of these changes are based on the recommendations of the Federal Courts Study Commission. Subsection (a) authorizes bankruptcy court judges to hold status conferences in bankruptcy cases and thereby manage their dockets in a more efficient and expeditious manner. Notwithstanding the adoption of Bankruptcy Rule 7016 (relating to pretrial conferences), some judges have appeared reluctant to do so without clear and explicit statutory authorization. This provision clarifies that such authority exists in the Bankruptcy Code in adversary and nonadversary proceedings.

140 Cong. Rec. H 10,764 (daily ed. Oct. 4, 1994).

Thus, Congress gave the bankruptcy courts broad authority to regulate

bankruptcy cases in an efficient and effective manner, and that authority extends to all

aspects of bankruptcy case administration. As originally enacted, subsection (d)

permitted bankruptcy courts to hold status conference in cases generally and in adversary

proceedings. Notably, Congress strengthened the mandate of subsection (d) of § 105 as

part of the 2005 bankruptcy amendments. See Collier, supra ¶ 105.08 (noting that the

2005 amendments to § 105 made such status conferences mandatory to the “extent

5

necessary to further the expeditious and economical resolution of the case.”) (quoting H.

Rep. No. 109-31, 109th Cong , 1st Sess. 93; 2005 U.S. Code Cong. & Admin. News at

158.)

Contrary to the mortgage creditors’ perception that there is no authority in the

Code or Bankruptcy Rules for the LMP, the Code itself directs bankruptcy judges to

establish procedures that promote the goals of the Code and facilitate dispute resolution

promptly and without litigation. In requiring that mortgage servicers and creditors such

as PHH Mortgage and Ocwen review the loss mitigation options that they are bound by

contracts with the federal government to consider, the Court is simply carrying out its

duty as set by Congress in § 105(d). Faced with the alternative of numerous continuances

of plan confirmation and stay relief hearings, and deferrals of entry of discharge in

chapter 7 cases, until decisions are made on requests for loss mitigation, the LMP

program is an appropriate exercise of docket control and the Court’s case management

authority.

The mortgage creditors’ challenge to the court’s authority to direct settlement

conferences in the context of a stay relief motion is particularly without merit. As the

mortgage creditors acknowledge, subsection (a) of § 105 authorizes bankruptcy courts to

issue orders and process necessary to carry out provision of the Code. One of the

objecting mortgage creditors, Deutsche Bank, has chosen to file a motion for relief from

the automatic stay in the Lawtons’ case. In doing so Deutsche Bank imposed on the

court the duty to determine whether it has met its burden of proof to obtain stay relief

under § 362(d). Deutsche Bank, for example, asks the court to make findings consistent

with subsections (d)(1) and (d)(2) of § 362. (Case No. 10-11302, Document #10). In

6

carrying out its duties in interpreting and applying § 362(d), the court may issue orders

and establish procedures as necessary under § 105(a). Thus, given the procedural posture

of the Lawton matter, subsection (a) as well as subsection (d) of § 105 authorize the

court’s regulation of the parties’ conduct to carry out provisions of the Code.

B. The Court Has Authority to Implement Its Loss Mitigation Program

Under F.R. Bankr. P. 7016 and F.R. Bankr. P. 9014. F.R. Bankr. P. 9014 describes the procedural rules that apply to a “contested

matter” such as a motion for relief from the stay or an objection to chapter 13 plan

conformation. Under Rule 9014’s basic structure, certain enumerated Part VII adversary

proceeding rules apply automatically in contested matters, while the other Part VII rules

do not apply “unless the court directs otherwise.” Subsection (c) of Rule 9014 states that

in adjudicating a contested matter “[t]he court may at any stage in a particular matter

direct that one or more of the other rules in Part VII shall apply.” Rule 9014 thus gives

wide latitude to the bankruptcy courts to direct that any of the adversary rules not

specifically enumerated in the Rule may apply in contested matters. The language of

Rule 9014 does not place any limitations on the bankruptcy courts’ authority to direct that

an adversary rule apply in a contested matter. In speaking of the bankruptcy courts’

authority to direct the use of an otherwise non-applicable adversary rule in a contested

matter, Collier notes, that “[t]he direction otherwise may be by local rule or by a specific

order entered in a particular contested matter.” 10 Collier on Bankruptcy ¶ 9014.05 (Alan

N. Resnick & Henry J. Sommer eds. 15th ed. rev.). A bankruptcy court may thus direct

the application of any adversary rule in any contested matter either on a case by case

basis or by general rule applicable to a class of cases.

7

One of the Part VII adversary rules that the bankruptcy court may designate as

applicable in contested matters is F.R. Bankr. P. 7016. Rule 7016, like its federal rule

counterpart F. R. Civ. P. 16, grants courts broad authority over pre-trial proceedings.

Pursuant to Rule 7016, a bankruptcy court may require any group of litigants in an

adversary proceeding to participate in settlement conferences or in alternative dispute

resolution programs. Rule 9014(c) allows bankruptcy courts to issue similar directives in

contested matters. Concern for judicial economy and the goal of achieving negotiated

settlements can be just as urgent in contested matters as in adversary proceedings. In re

Philbert, 340 B.R. 886, 889 (Bankr. N.D. Ind. 2006) (“Furthermore, the vices that Rule

16 was designed to combat – wasted effort, unnecessary expense, and delay – are just as

real and the goals it seeks to promote – efficient and expeditious management of cases –

are just as important in contested matters as they are in adversary proceedings.”) See also

In re A.T. Reynolds & Sons, Inc., 424 B.R. 76 (Bankr. S.D. N.Y. 2010) (enforcing New

York bankruptcy court’s General Order M-211 authorizing assignment of adversary

actions and contested matters to mediation). In implementing their broad authority to

order parties into settlement conferences at any stage in a proceeding, the bankruptcy

courts may act on a case by case basis or by a local rule applicable to particular classes of

cases. The LMP is a proper exercise of the bankruptcy court’s authority to fashion

appropriate procedures for case management and for regulating bankruptcy proceedings

such as stay relief motions and objections to chapter 13 plan confirmation directed at

residential properties during the current foreclosure crisis.

8

C. The Loss Mitigation Program is a Special Dispute Resolution Procedure Adopted by Court Rule Consistently With F.R. Bankr. P. 7016 and F.R. Civ. P. 16.

F.R. Bankr. P. 7016 incorporates verbatim the terms of F.R. Civ. P. 16. The 1983

amendments to Rule 16 expressly recognized settlement of litigation as an objective to be

fostered during the pre-trial conference process. Wright, Miller & Kane, Federal Practice

& Procedure: Civil 2d § 1522. The spirit, intent, and purpose of Rule 16 are “broadly

remedial.” In re Baker, 744 F.2d 1438, 1440 (10th Cir. 1984) (en banc), cert denied 471

U.S. 1014 (1985). Bankruptcy Rule 7016, like its Federal Rule counterpart, authorizes

bankruptcy courts to direct attorneys and parties to comply with scheduling orders.

Under Rule 7016 the bankruptcy courts may direct parties to appear for conferences for

the purpose of “facilitating settlement.” F.R. Bankr. P. 7016(a)(5). In furtherance of their

case management authority the bankruptcy courts may direct parties to use “special

procedures to assist in resolving the dispute when authorized by statute or local rule.”

F.R. Civ. Bankr. P. 7016(c)(2)(I). As Collier notes, Rule 7016 authorizes bankruptcy

courts to promulgate local rules that direct litigants to participate in alternative dispute

resolution:

Rule 7016(c) contemplates the use of procedures other than litigation to resolve disputes, including extra-judicial measures. Subparagraph (c)(2)(I) emphasizes that certain statutes and local rules may authorize the court to order alternative dispute resolution procedures such as mediation and nonbinding arbitration, even when not agreed to by the parties. Collier, supra ¶ 7016.02[2]. In the following section the Collier treatise goes on to report: “Many districts

have adopted local bankruptcy rules specially authorizing conferences at any stage and

for any authorized purpose during a case or proceeding.” Id. at ¶ 7016.03. The LMP

9

program fits squarely within the scope of an appropriate local rule contemplated by Rule

7016. Under the LMP Program the Court approves requests for participation on a case by

case basis. A party may object to participation and the court will rule on the objection.

At the heart of the LMP process is the Court’s Loss Mitigation Order. LMP Part

VI, subpart A, Part VII, subpart C. The Order sets deadlines for initial contacts, the

exchange of documentation, and filing of ongoing updates and reports with the Court.

The parties may request a direct conference with the judge at any time during the process,

to cover any topic related to settlement. Part VIII, subpart C. The Bankruptcy Court

must approve any settlement. Part VII, Subpart D. The rules provide for additional

protections for unrepresented borrowers, including a hearing to approve settlement. Part

X.

Section 362(e)(1) authorizes the Court to continue the final hearing on a stay

relief motion beyond the time frames generally applicable for such motions in the

absence of a court order. When the court issues a loss mitigation order under the LMP,

the Order extends the § 362(e) time frame. LMP Section VI, subpart B. In cases such as

the Lawtons in which a stay relief motion has been filed, the entry of a Loss Mitigation

Order is a proper exercise of the Court’s express authority under § 362(e) and its case

management authority under Rule 7016. In addition to the automatic stay under § 362(a),

the court may also issue an order under § 105 staying a creditor from proceeding. A

party’s request for an LMP order is an appropriate trigger for the court to stay

proceedings using its powers under § 105 even if the stay otherwise terminated under the

time frame of § 362(e). See Collier, supra ¶ 362.08[5] (“The majority of the courts that

10

have considered the issue have held that a lapsed stay may be reimposed provided that

the debtor has properly applied for injunctive relief.”).

D. In Addition to the Authority Described in Rule 16 and in 11 U.S.C. § 105,

the Court Has Inherent Power to Manage the Progress of Litigation. F.R. Civ. P. 16 and 11 U.S.C. § 105 should not be construed as limitations placed

on the inherent authority of the Court to manage the proceedings in bankruptcy cases.

“[T]he inherent power of the courts is said to be ‘governed not by rule or statute but by

the control necessarily vested in courts to manage their own affairs so as to achieve the

orderly and expeditious disposition of cases.’ ” Brockton Savings Bank v. Peat,

Marwick, Mitchell & Co., 771 F.2d 5, 11 (1st Cir. 1985)(quoting Link v. Wabash

Railroad, 370 U.S. 626, 630 (1985). The civil rules neither completely describe, nor

purport to delimit, the courts’ inherent powers to control litigation. Aoude v. Mobil Oil

Corporation, 892 F.2d 1115, 1119 (1st Cir. 1989). These powers are inherent in the

bankruptcy courts as they are in the district courts. Section 105 merely supplements and

further defines those inherent powers. In re Armstrong, 309 B.R. 799, 805 (B.A.P. 10th

Cir. 2004). Similarly, while F.R. Civ. P. 16 specifies powers of the courts over

settlement and scheduling matters, it does so as an enhancement rather than a limitation

on those powers. Heileman Brewing Co., Inc., v. Joseph Oat Corporation, 871 F.2d 648,

651-52 (7th Cir. 1989) (upholding trial court’s power to compel a represented party’s

appearance at a settlement conference despite the lack of express authorization under

Rule 16 for court to do so).

The courts’ inherent power over the management of their dockets allows them the

flexibility to formulate creative responses to new problems as they arise. It permits the

11

courts to improve and operate more efficiently in meeting an urgent or temporary need.

As will be discussed below, the foreclosure crisis calls out for such measures. This

Court’s response of implementing a loss mitigation conference requirement fits within a

much wider judicial response to the foreclosure crisis and must be viewed within that

context. The Court’s plan is well within the range of what numerous courts around the

country have done over the past two years as procedural steps to mitigate the

unprecedented amount of home foreclosures.

E. The Court’s Loss Mitigation Program Does Not Violate Bankruptcy Code Section 521(a)(2).

The objecting mortgage creditors argue that the LMP is incompatible with the

debtor’s requirements under § 521(a)(2) and causes a debtor to pursue options for

retaining secured property that are impermissible under § 521(a)(2). They contend that

by selecting the “Other” box on the statement of intention (an election provided for on

Official Form 8), the Lawtons and Mr. Sosa failed to specify an intention for one of the

“exclusive” retention options under § 521(a): reaffirmation or redemption. Because

redemption under § 722 is not available for debts secured by real property, the objecting

mortgage creditors argument is essentially that participation in the LMP deprives

mortgage creditors in chapter 7 cases of the benefit of reaffirmation as the sole retention

option available to debtors for home secured loans.

As an initial matter, this argument is factually inaccurate. It fails to consider that

participation in the LMP could result in debtors electing to reaffirm their mortgage debt

following a modification of the loan terms as facilitated by the LMP. The objecting

mortgage creditors nevertheless argue that the LMP is in conflict with the specific

12

requirements of § 521(a)(2) and the First Circuit opinion in In re Burr, 160 F3d 843 (1st

Cir. 1998). This argument ignores Bankruptcy Code amendments enacted after Burr

which specifically affect debts secured by real property.

Section 524(j), enacted by the Bankruptcy Abuse Prevention and Consumer

Protection Act of 2005, provides that the holder of a claim secured by a security interest

in real property that is the debtor’s principal residence does not violate the discharge

injunction by engaging in any act that is in the “ordinary course of business between the

creditor and the debtor,” or by “seeking or obtaining periodic payments ... in lieu of

pursuit of in rem relief to enforce the lien.” By contemplating that a creditor may

continue to receive payments on a debt that has been discharged and not reaffirmed rather

than enforce its in rem rights against the property, this statutory provision codifies the

“ride through” procedure for home secured loans and effectively overrules decisions such

as Burr with respect to such loans. Surely there would be no reason for Congress to enact

§ 524(j) if reaffirmation were the only retention option available for home secured loans.

In fact, if the holding in Burr continued to be viewed as applicable to home secured loans

after BAPCPA, § 524(j) would be rendered a nullity. See Kawaauhau v. Geiger, 523 U.

S. 57, 62 (1998) (“[W]e are hesitant to adopt an interpretation of a congressional

enactment which renders superfluous another portion of that same law” (internal

quotation marks omitted)).

Other changes made by BAPCPA make clear that the Code’s “exclusive”

retention options are limited to loans secured by personal property. The most significant

change was the enactment of § 362(h), which codified court opinions such as this Court’s

opinion in In re Rathbun, 275 B.R. 434 (Bankr. D.R.I. 2001), which had held that the

13

remedy for failure to comply with § 521(a)(2) is relief form the automatic stay. Section

362(h) terminates the automatic stay with respect to certain secured property if the debtor

fails to both 1) timely file a statement of intention or to indicate an intent to redeem,

surrender, or retain the property and enter into a reaffirmation agreement and 2) take

timely action carrying out the stated intention, unless the debtor states an intention to

reaffirm and the creditor refuses to reaffirm on the original terms. Importantly, Congress

made this provision applicable only as to personal property. A related provision found in

§ 521(a)(6), also enacted by BAPCPA, similarly applies only to personal property.

These statutory changes have led a number of courts to hold in post-BAPCPA

opinions that a debtor may retain a home by continuing to make payments and without

reaffirming the mortgage debt. See, e.g, In re Waller, 394 B.R. 111 (Bankr. D.S.C.

2008); In re Caraballo, 386 B.R. 398 (Bankr. D.Conn. 2008); In re Wilson, 372 B.R. 816

(Bankr. D. S.C. 2007); In re Bennett, 2006 WL 1540842 (Bankr. M.D. N.C. May 26,

2006). For some courts, this conclusion with respect to home secured loans is bolstered

by Congress’s decision not to delete the “if applicable” language in § 521(a)(2)(A), and

to retain § 521(a)(2)(C) in its entirety except for the addition of the phrase “except as

provided in section 362(h)”, which again only applies to loans secured by personal

property.

Although this Court is not compelled in this case to decide whether these

BAPCPA statutory amendments have altered the First Circuit’s holding in Burr with

respect to home secured loans, these amendments directly challenge the objecting

mortgage creditors’ contention that the LMP permits a debtor to elect a retention option

not available under the Code. Retention of the debtor’s residence by continuing to make

14

payments on a discharged home mortgage debt is specifically contemplated by § 524(j).

Thus, a debtor who wishes to participate in the LMP can prepare the statement of

intention by checking the box for “Other,” and inserting language such as: “loss

mitigation” (as was done by Mr. Sosa) or “Retain with continuing payments and request

loss mitigation.” A debtor could also state an intention such as “Reaffirm the debt, if

loan modified under loss mitigation program.” No Bankruptcy Code provision precludes

these options for the retention of a debtor’s principal residence in a chapter 7 case, or

prohibits the debtor from stating an intention to reaffirm a debt that is conditioned upon

the debtor negotiating and obtaining acceptable terms for the reaffirmation agreement.

The objecting mortgage creditors contend, however, that participation in the LMP

prevents debtors from performing their stated intention within the time frame set out in §

521a)(2)(B), which is 30 days after the first date set for the meeting of creditors. They

argue that because the loss mitigation period under the LMP is 60 days after entry of a

Loss Mitigation Order, the LMP “necessarily conflicts” with the 30-day time period for

performing a stated intention as provided in § 521(a)(2)(B). On the contrary, in cases in

which a Loss Mitigation Order is entered soon after the case is filed, the time periods are

not necessarily in conflict. The parties could negotiate and finalize a loan modification

incorporated as part of a reaffirmation agreement within both the 60-day loss litigation

period and the 30-day period after the first date set for the meeting of creditors. In fact,

the objecting mortgage creditors’ argument on this point is somewhat disingenuous since

they control the speed within which a loss mitigation decision is made. All too often

delay in the process is caused by mortgage servicers failing to process applications and

15

making unnecessary requests for updated information.9 Decisions in bankruptcy cases

should be made even more quickly since the HAMP Treasury guidelines permit the

servicer to use the filed bankruptcy schedules and tax returns as a substitute for the

normal program application to determine eligibility.10 Servicers are required to render a

decision on a completed HAMP application within 30 calendar days.11 If mortgage

creditors adhered to the Treasury guidelines and promptly rendered decisions,

compliance with § 521(a)(2)(B) would occur in many cases without a need to seek an

extension of time. Treasury guidelines even permit waiver in a bankruptcy case of the

typical three month trial plan period, and immediate conversion to a permanent HAMP

modification, if the debtor has made at least three postpetition payments that are equal to

or greater than the proposed modified payment.12

The objecting mortgage creditors’ argument also ignores that procedural time

deadlines are rarely absolute. In recognition that certain retention options such as

reaffirmation may not be consummated within the 30-day period, both the Bankruptcy

Code and Bankruptcy Rules provide for an extension of applicable time periods upon a

showing of cause. Section 521a)(2)(B) provides that the debtor shall “perform his

intention with respect to the property” within the 30-day period or “within such

additional time as the court, for cause, within such 30-day period fixes.” F.R. Bankr. P.

9 The Providence Journal reported last year that a Rhode Island homeowner mailed 99 pages of financial documentation to her servicer and four months later, still had not been notified that her modification had been approved. See For struggling R.I. homeowners, federal help is slow to come, Providence Journal, Aug. 15, 2009. The New York Times has also reported that homeowners’ loan files are routinely lost. See Peter S. Goodman, Paper Avalanche Buries Plan to Stem Foreclosures, N.Y. Times, June 28, 2009. 10 U.S. Treasury Dept. HAMP Supplemental Directive, 10-02, p. 8. 11 U.S. Treasury Dept. HAMP Supplemental Directives, No. 09-07, p. 7; No. 10-01, p. 3. 12 U.S. Treasury Dept. HAMP Supplemental Directive, 10-02, p. 8.

16

4004(c)(2) provides that the debtor may request that the court defer entry of the

discharge, thereby preserving the automatic stay under § 362(c)(2)(C). See also Rhode

Island LMP, Part IV, subpart B(2). The Advisory Committee Note for Rule 4004(c)(2)

makes clear that it is intended to assist debtors and creditors in finalizing the execution of

reaffirmation agreements due to the requirement in § 524(c) that reaffirmations must be

filed before the entry of the discharge. See In re Roderick, 425 B.R. 556 (Bankr. E.D.

Cal. 2010).

Given the unprecedented foreclosure crisis nationwide and in Rhode Island, and

the national policy of promoting loan modifications through the HAMP program as a

response to the crisis, a debtor’s request for a Loss Mitigation Order and the Court’s

subsequent entry of the Order should be deemed sufficient cause for providing additional

time in accordance with § 521(a)(2)(B).

Moreover, the LMP provides sufficient safeguards for mortgage creditors to

address the objecting servicers’ concern about “institutionalizing and sanctioning non-

compliance” with the § 521(a)(2)(B) time requirements without a sufficient showing of

cause. If a mortgage creditor believes that loss mitigation would not be successful or that

it has been requested in bad faith, the LMP provides that the creditor may file an

objection. See Rhode Island LMP, Part V, subpart D. A Loss Mitigation Order may

enter only after consideration by the Court of the objection. To the extent that a request

for a Loss Mitigation Order is deemed a request for additional time under § 521(a)(2)(B),

the mortgage creditor’s concern that sufficient cause does not exist for a time extension

may be heard by the Court. This is effectively no different than the mortgage creditor’s

right to file an objection to a request for additional time under § 521(a)(2)(B).

17

F. The Loss Mitigation Program Is Typical of Many Foreclosure Conference

Programs Now In Effect Around the United States. The nation is facing an unprecedented foreclosure crisis, with millions of homes

already foreclosed and millions more at risk to follow. Policy makers and investors in

mortgage-backed securities have stressed the need for active pursuit of loss mitigation

options.13 These options include loan modifications that lower a borrower’s monthly

payments, thereby preventing foreclosure and minimizing the substantial losses investors

otherwise incur in every foreclosure. The Treasury Department’s $75 billion Home

Affordable Modification Program (“HAMP”) announced in March 2009 has signed up

servicers responsible for over 85% of the home mortgage debt in the country.14 Most

13 See e.g., Cheyenne Hopkins, Modification: Tentative Steps Toward a Regulatory Consensus, American Banker (Nov. 27, 2007); The Subprime Lending Crisis: The Economic Impact on Wealth, Property Values and Tax Revenues, and How We Got Here, Report and Recommendations by the Majority Staff of the Joint Economic Committee (October 2007); Remarks of FDIC Chairman Sheila C. Bair, American Securitization Form (ASF) Annual Meeting (June 6, 2007); Statement on Loss Mitigation Strategies for Servicers of Residential Mortgages (Sept. 2007), available at http://www.occ.treas.gov/ftp/bulletin/2007-38a.pdf; Associated Press, Paulson to Mortgage Industry: Help Curb Defaults (Oct. 31, 2007), available at http://money.cnn.com/2007/10/31/real_estate/paulson_housing.ap/.; American Securitization Forum, Streamlined Foreclosure and Loss Avoidance Framework for Securitized Subprime Adjustable Rate Mortgage Loans, Executive Summary (Dec. 6, 2007), available at http://www.treas.gov/press/releases/hp706.htm. For a study documenting the staggering losses to investors associated with the foreclosure alternative see Alan M. White, Deleveraging the American Homeowner: The Failure of 2008 Voluntary Mortgage Contract Modification, 41 Connecticut Law Rev. 1107 (2009). Electronic copy available at: http://ssrn.com/abstract=1325534 at 14 (showing that as of late 2008 lenders were incurring losses averaging $124,000 in each foreclosure. With the loans in foreclosure having an average value of $212,000, this meant the lenders were losing 57% of their investment each time they completed a foreclosure. Average losses on foreclosed second mortgages were nearly 100%. 14 U. S. Dept. of Treasury Making Home Affordable Servicer Performance Report April 2010. Ocwen has published many press releases over the past year touting its eagerness to confer with homeowners about loan modifications and other loss mitigation options. Ocwen claims that it sets an industry standard for a servicer’s willingness to talk with

18

mortgage servicers, including Ocwen in this case, are signatories to a Servicer

Participation Agreement under the HAMP program.15 Participating servicers are under

contractual obligations to consider homeowners for an affordable loan modification

before they foreclose. They are required to consider a debtor in an active bankruptcy

case for HAMP if a request is made by the debtor, debtor’s counsel, or the case trustee.16

If a homeowner is found eligible under the HAMP program guidelines, the servicers must

stop the foreclosure and implement the loan modification.17 This Court’s LMP program

fulfills a much needed role in ensuring that foreclosures do not proceed without

consideration of these sensible alternatives if requested by the parties. Servicers who

comply with the HAMP guidelines likewise meet the requirements of the LMP easily and

quickly.

Four recent studies confirm what has been widely reported about the troubled

implementation of the HAMP program.18 Participating mortgage servicers routinely fail

homeowners. See e.g. Congressional Testimony of Ocwen CEO Ronald M. Faris March 3, 2010, available at http://www.irconnect.com/cfonews/ocn/ocn_others.html?d=185758, and June 24, 2010 press release concluding: “The firm also cites its reliance on consumer behavioral science research and long-standing partnerships with grass roots consumer advocacy groups as instrumental in enhancing borrower outreach and effective communications,” available at http://www.irconnect.com/cfonews/ocn/ocn_others.html?d=195061. Ocwen’s efforts to avoid talking to homeowners through this Court’s LMP is in marked contrast to these public relations efforts. 15 See http://makinghomeaffordable.gov/contact_servicer.html. 16 U.S. Treasury Dept. HAMP Supplemental Directive. No. 10-02, p. 7. 17 U.S. Treasury Dept. HAMP Supplemental Directive. No. 09-01, pp. 6, 2. 18 U.S. Government Accountability Office, Troubled Asset Relief Program, Further Actions Needed to Fully and Equitably Implement Foreclosure Mitigation Programs GAO 10-634 (June 2010); Congressional Oversight Panel: Evaluating Progress of TARP Foreclosure Mitigation Programs (April 14, 2010); Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP): Factors Affecting Implementation of the Home Affordable Modification Program (March 25, 2010); and U.S. Government Accountability Office: Troubled Asset Relief Program Home

19

to comply with Treasury Department guidelines that require notice to a borrower of the

reason for rejecting a HAMP application. Servicers frequently do not offer homeowners

the opportunity for a review HAMP denial decisions. The Congressional Oversight Panel

noted in its April 2010 Report that servicers were reporting reasons for only 31% of

disqualified or cancelled HAMP modifications. Much of the data the servicers did report

was plainly erroneous. For 71% of denials, servicers gave no valid reason. For

modification cancelations servicers provided no reason in 72% of cases.19 Over recent

months the number of homeowners approved for initial HAMP modifications has been

falling dramatically. In each of the past three months hundreds of thousands of

homeowners were dismissed from temporary loan modifications and exposed to renewed

foreclosure actions

Courts around the country have come to recognize that these developments call

for a degree of heightened judicial supervision over foreclosures. If they fail to take on

this responsibility, additional hundreds of thousands of families may lose their homes

unnecessarily. To avoid this outcome, the county courts serving such large cities as

Chicago, Philadelphia, Cleveland, and Pittsburgh have implemented foreclosure

Affordable Modification Program Continues to Face Implementation Challenges (March 2010). 19 COP Report, p. 54. The COP Report goes on to state: “[T]he panel is deeply concerned about the unacceptable quality of the denial and cancelation reasons and strongly urges Treasury to take swift action to ensure that homeowners are not denied the opportunity for a modification and shuffled off to foreclosure without a servicer at least accounting for why the modification was denied or cancelled.” Among the Panel’s specific recommendations in April 2010 were that Treasury impose “meaningful monetary penalties for non-compliance” with the requirement to refrain from foreclosure until the required review is completed. Despite the oversight panel’s call for “swift action” and an effective penalty system, Treasury’s enforcement of HAMP requirements remains ineffective.

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conference and mediation programs similar to this Court’s LMP program.20 Courts in

smaller cities, as diverse as Santa Fe, New Mexico and Louisville, Kentucky, have

followed suit.21

In addition to these initiatives from local courts, state supreme courts have

implemented similar programs. The New Jersey Supreme Court promulgated rules for a

uniform statewide foreclosure mediation program.22 In Delaware, the president judge of

the state’s superior courts issued a mediation rule applicable to all the state’s superior

courts.23 The Ohio Supreme Court has established a model program which common

pleas courts in many of the state’s most populous counties have implemented.24 Most

recently, Florida’s Supreme Court announced a statewide initiative that requires

mediation automatically in all foreclosure cases filed in that state.25

20 Chicago, Philadelphia, Cleveland, Pittsburgh Cook County Chicago Court Program: http://cookcountyforeclosurehelp.org/about/; Philadelphia County: http://s98001.gridserver.com/images/pdf/foreclosure_mortgage/foreclosure_med_prog_by_state/pa_philly_pilot_program.pdf; Cuyahoga County (Cleveland): http://s98001.gridserver.com/images/pdf/foreclosure_mortgage/foreclosure_med_prog_by_state/ohio_prgm_summary.pdf; Allegheny County (Pittsburgh): http://s98001.gridserver.com/images/pdf/foreclosure_mortgage/foreclosure_med_prog_by_state/pa_pitts_admin_order.pdf 21 Santa Fe First Judicial District Admin Order: http://s98001.gridserver.com/images/pdf/foreclosure_mortgage/foreclosure_med_prog_by_state/nm_admin_order.pdf Jefferson County Kentucky Admin Order: http://s98001.gridserver.com/images/pdf/foreclosure_mortgage/foreclosure_med_prog_by_state/kentucky_admin_order.pdf 22 http://www.nj.gov/foreclosuremediation/resources.html 23 http://www.deforeclosurehelp.org/mediation.html 24 See: http://s98001.gridserver.com/images/pdf/foreclosure_mortgage/foreclosure_med_prog_by_state/ohio_prgm_model.pdf . Cities with programs in effect include Cleveland, Cincinnati, Columbus, Toledo, and Akron. 25 Florida Supreme Court: No. AOSC09-54 Re: Final Report and recommendations on residential Mortgage Foreclosure Cases (December 28, 2009) http://www.floridasupremecourt.org/pub_info/documents/AOSC09-54_Foreclosures.pdf.

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In addition to these court-initiated programs, the legislatures in several states have

recently enacted statutes which direct state courts to implement various forms of

conference and mediation programs for foreclosure cases. These include programs now

in effect in Connecticut, Indiana, Maine, New York, and Vermont.26 In the non-judicial

foreclosures states of California, Oregon, Maryland, Michigan, and Nevada the

legislatures have enacted forms of conference and mediation requirements for foreclosure

cases, with varying degrees of court involvement.27 Even local Rhode Island

municipalities such as the Cities of Providence and Cranston have initiated similar

requirements.

These programs initiated by state and local courts and governments have several

features in common. They are designed to bridge the communication gap between loan

servicers and homeowners, a gap that has often been cited as the major obstacle to

effective loss mitigation. The programs require active participation by a representative of

the servicer with full authority to consider all loss mitigation options. They regulate

production of documents and facilitate some form of meeting between the homeowner

and servicer, either in person or by phone. The courts play a role in supervising and,

26 Connecticut (Conn. Gen. Stat. Ann. § 8-265ee); Indiana (2009 Senate Enrolled Act No. 492); Maine (14 Maine Rev. Stat. Ann. § 6321-A); New York (New York Civil Practice Laws Rule § 3408); Vermont (2010 House Bill 590). The Supreme Court of South Carolina has issued an administrative order that, while not requiring a specific form of conference, requires servicers to certify completion of HAMP-related loss mitigation reviews as a condition to proceeding with a foreclosure in the state. S.C. Administrative Order No. 2009--05-22-01 Re: Mortgage Foreclosures and the Home Affordable Modification Program (HMP). http://www.floridasupremecourt.org/pub_info/documents/AOSC09-54_Foreclosures.pdf. 27 California (Cal. Civ. Code § 2923.5 and §§ 2923.52-53); Maryland (2010 House Bill 472 (Chapter 485); Michigan (2009 Enrolled Bills 4453, 4454, 4455); Nevada (2009 Enacted Assembly Bill 149); Oregon (Enrolled Senate Bill 628).

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when necessary, intervening to move the process along. The programs do not require

servicers or lenders to implement a particular loss mitigation option. In the bankruptcy

context, these programs importantly do not compel a modification of the mortgage

creditor’s claim and therefore are not in violation of § 1322(b)(2). See In re Simarra,

2010 WL 2144150 (Bankr. D.R.I. April 14, 2010). Instead, they set a standard for

transparency and accountability in the foreclosure process that is often lacking without

this intervention. The Rhode Island Bankruptcy Court’s Loss Mitigation Program has all

of these attributes and functions with procedures modeled after many similar programs in

effect in courts around the country.

III. Conclusion

For the reasons stated above, amicus curiae counsel requests that this Court

uphold its statutory and inherent authority to implement the Loss Mitigation Program,

and issue loss mitigation orders in the above-entitled cases.

Respectfully submitted,

Amicus Counsel By its attorneys, /s/ John Rao RI # 2777 National Consumer Law Center, Inc. 7 Winthrop Square, 4th Floor Boston, MA 02110 (617) 542-8010 [email protected] Geoff Walsh National Consumer Law Center, Inc.

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7 Winthrop Square, 4th Floor Boston, MA 02110 (617) 542-8010

DATE: August 13, 2010

CERTIFICATE OF SERVICE

I, John Rao, amicus counsel, hereby certify that on the 13th day of August, 2010, I electronically filed this Brief with the Clerk of the Bankruptcy Court for the District of Rhode Island using the CM/ECF System. The following participants have received notice electronically:

Susan W. Cody, Esq. Lynn Bouvier Kapiskas, Esq. Gary L. Donahue, U.S. Trustee Stacy Ferrara, Trustee Charles A. Pisaturo, Jr., Trustee Michael W. Favicchio, Esq. Russell D. Raskin, Esq.

/s/ John Rao

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Recent Developments in the Home Affordable Modification Program (HAMP) John Rao National Consumer Law Center, Inc. 7 Winthrop Sq., 4th Floor Boston, MA 02110 [email protected] www.consumerlaw.org 1. New HAMP Guidelines Offer Hope for Distressed Borrowers With Supplemental Directive 10-02,1 the Treasury Department (Treasury) has modified the borrower communication, foreclosure procedures, and bankruptcy law provisions of the Home Affordable Modification Program (HAMP). The HAMP program is designed to get servicers to offer affordable loan modifications to borrowers for their first lien mortgage loans. The new directive, effective on June 1, 2010, requires that servicers improve their borrower outreach and communication efforts, and refrain from referring a loan to foreclosure until the (a) borrower is determined to be ineligible for HAMP or (b) reasonable solicitation efforts have failed. In addition, servicers are required to consider borrowers in active chapter 7 or chapter 13 cases for a HAMP modification if requested by the borrower, borrower’s counsel or bankruptcy trustee. Other changes were made to facilitate HAMP modifications for debtors in bankruptcy. Prohibition against Referral to Foreclosure Supp. Dir. 10-02 provides that, as of June 1, 2010, a servicer may not refer a loan to foreclosure or conduct a scheduled foreclosure sale until either (a) the borrower is evaluated for HAMP and determined to be ineligible, or (b) reasonable attempts to solicit the borrower have been unsuccessful.2 Importantly, in a drastic change from prior Treasury guidance, all foreclosure activity must cease once a borrower is in a trial period plan, even if the loan had previously been referred to foreclosure.3 The servicer must take all reasonable efforts to take actions within its authority to halt further activity in the foreclosure process, whether judicial or

1 Available at https://www.hmpadmin.com/portal/docs/hamp_servicer/sd1002.pdf. 2 A servicer may also refer a loan to foreclosure or continue with a planned foreclosure sale for other reasons, including if the borrower fails to make payments under an offered trial period plan, or declines to participate in the HAMP program. 3 If the borrower fails to make a payment, the servicer may proceed with the foreclosure process.

non-judicial, once the borrower enters into a trial period plan based on verified income. In other words, servicers are no longer permitted to accept trial plan payments and simultaneously going forward with foreclosure proceedings on a separate track. The servicer does not violate this provision if:

a state foreclosure court, bankruptcy court, or public official refuses to stop proceedings after requested to do so by the servicer;

the servicer must take action to protect the interest of the investor; or there is not sufficient time to stop the activity or event (but the servicer

must not permit a sale to go forward). If a borrower is denied a HAMP modification, the servicer is required by Supp. Dir. 09-08 to send a written Non-Approval Notice. Per the new guidance, the servicer may not conduct a foreclosure sale within 30 days of the Non-Approval Notice, or any longer period that is needed to consider supplemental material provided by the borrower.4 However, this 30-day window does not apply if the modification is not approved because the property or mortgage is ineligible, the borrower withdraws from the program, or the borrower fails to make payments under a trial or permanent HAMP modification.5 What Constitutes Reasonable Solicitation

Servicers must pre-screen all first-lien mortgages when two or more payments are due and unpaid to determine whether they qualify for the basic criteria under HAMP.6 Servicers are also now required to proactively solicit borrowers whose mortgage loan passes this initial pre-screen, unless they have documented that the borrower is not willing to participate in HAMP. A servicer is deemed to have made a “Reasonable Effort” to solicit a borrower if over a period of 30 calendar days: (1) the servicer makes a minimum of four telephone calls at different times of day; and (2) the servicer sends two written notices clearly describing HAMP, one certified/express mail and one regular mail. If the servicer is successful in contacting the borrower and the borrower wishes to participate in HAMP, the servicer must send a written communication via regular or

4 This provision should be read in connection with the provisions in Supp. Dir. 09-08, which may extend the time to foreclosure sale beyond 30 days if the servicer needs to resolve “inconsistencies” in the NPV test. 5 These exceptions indicate that Treasury intends that each borrower be considered for a full evaluation and eligibility be determined before a referral to foreclosure can occur, including the running of an NPV test. 6 One-to-four unit residential property, occupied by buyer as primary residence, not vacant or condemned, loan originated on or before January 1, 2009, unpaid principal balance does not exceed $729,750 for a one-unit dwelling (higher amounts for larger dwellings) and was not previously modified under HAMP.

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electronic mail describing the initial package required to be submitted by the borrower to request a HAMP modification.7 The servicer is not required to send the initial package if it determines that the borrower does not meet the basic eligibility criteria for a HAMP modification or the borrower’s monthly mortgage obligation is substantially less than 31% of the borrower’s gross monthly income. Deadline for Suspension of Foreclosure Sales Supp. Dir. 10-02 imposes a deadline for the suspension of foreclosure sales: when a borrower submits a request for HAMP consideration after the sale has been scheduled and the request is received no later than midnight of the seventh business day prior to the foreclosure sale date, the servicer must halt the sale. The borrower is deemed to have made a request for HAMP modification when it submits a complete Initial Package (RMA, Form 4506T-EZ, evidence of income). The servicer is permitted, in its discretion, to impose additional requirements for requests received later than 30 days prior to the scheduled foreclosure sale.8 Mitigating the Impact of Foreclosure Supp. Dir. 10-02 also requires that servicers take steps to mitigate the impact of foreclosure. For example, when a borrower is simultaneously in foreclosure and either being evaluated for HAMP or is in a trial period plan, the servicer must provide the borrower with a written explanation and make clear that while certain foreclosure actions may continue, the home will not be sold at sale. A servicer is now also required to provide to the foreclosure attorney/trustee a written certification that the borrower is not eligible for a HAMP modification before a foreclosure sale may be conducted. The certification must be provided within seven days prior to the scheduled foreclosure sale date. In addition, servicers are required, within 90 days of signing a Servicer Participation Agreement with Treasury, to review all agreements to determine investor participation in HAMP. Within 30 days of identifying a non-participating investor, the servicer must contact the investor in writing and encourage it to permit modifications under HAMP. This standard appears largely toothless, but an attorney can use the Truth in Lending Act to obtain the investor’s identity9 and then try to find out whether the servicer has 7 This communication must: (1) include a description of the income evidence required for a HAMP modification; (2) provide the Request for Modification and Affidavit (RMA) and, if necessary, a Hardship Affidavit; and (3) include IRS Form 4506T-EZ or IRS Form 4506T. 8 For example, a servicer may require that a complete Initial Package be delivered through certified/express delivery mail with return receipt/delivery confirmation to either the servicer or the foreclosure attorney/trustee. Any such requirement must be posted on the servicer’s website and communicated to the borrower in writing. 9 See 15 U.S.C. § 1641(f)(2).

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complied with its obligation to request participation. Servicers are also required to provide Fannie Mae, HAMP’s Program Administrator, with a list of investors that do not participate in HAMP. Limitations of the Supplemental Directive Supp. Dir. 10-02 only forbids servicers from referring a mortgage loan to foreclosure until (1) the borrower is determined to be HAMP-ineligible, or (2) solicitation efforts have failed. If the servicer determines the borrower is not eligible for a modification or the solicitation efforts have failed, it may refer the loan to foreclosure. In addition, the new guidance does not forbid servicers from proceeding with pending foreclosure actions, at least until a trial modification based on verified income, as described in Supp. Dir. 10-01, has begun. If the borrower is denied a loan modification, or misses a payment, the servicer may proceed with foreclosure activities to the point of sale, even if the borrower is contesting the denial. Practice Pointers If a foreclosure sale has already occurred, ask the foreclosure attorney/trustee for the servicer’s certification that the borrower was HAMP-ineligible. If the certification is missing or inaccurate, this should strengthen the case for a wrongful foreclosure action. In the same vein, servicers are now required to have a procedure under which a borrower can escalate disagreements to a supervisory level, and the failure to establish such a procedure can be additional grounds for contesting a sale or denial of modification. Some borrowers have run into situations in which servicers are asking them to submit income or property valuations repeatedly. Supp. Dir. 10-02 makes clear that servicers must have procedures in place to “ensure that borrowers are not required to submit multiple copies of documents.”10 Documentation under HAMP remains current for 90 days after the time the servicer receives it.11 The program does not require verified income to be resubmitted before a permanent modification is granted, nor does the property valuation need to be updated.12 Finally, be sure to remind the server of the timelines established by Supp. Directives 09-07 and 10-01. The servicer is required to provide a notification of receipt within ten business days.13 The servicer is also required to provide a notification of a decision or of incomplete submissions within 30 calendar days and any request for submissions beyond this 30 days is untimely. Supp. Dir. 10-02, p. 3.

10 Supp. Dir. 10-02, p. 4. 11 Supp. Dir. 10-01, p. 2. 12 Supp. Dir. 09-07, pp. 2, 6. 13 Supp. Dir. 10-01, p. 2.

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If the servicer is not complying with these timelines, it might be necessary to escalate. The appropriate email address is [email protected] and the telephone number is 1-866-939-4469. Borrowers in Bankruptcy Supp. Dir. 10-02 makes clear that borrowers in active chapter 7 and 13 cases are eligible for a HAMP modification. This is a marked departure from Treasury’s prior guidance in HAMP Supp. Dir. 09-01, which provided that borrowers in bankruptcy were eligible for HAMP modifications “at the servicer’s discretion.” In addition, borrowers who are in a trial period plan and subsequently file for bankruptcy may not be denied a HAMP modification on the basis of the bankruptcy filing. While servicers are not required to actively solicit borrowers in active bankruptcy cases, they must consider them for a HAMP modification if the borrower, borrower’s counsel or bankruptcy trustee submits a request to the servicer. The guidance provides that servicers are required to work with the borrower and borrower’s counsel to obtain any court and/or trustee approvals required in accordance with local rules and procedures. Some courts have required that a motion be filed seeking approval of a permanent modification, while others have permitted approval to come from the trustee followed by the submission of an agreed order. Borrowers in a trial period plan might run up against the three-month trial modification deadline if it takes any significant amount of time to obtain court and/or trustee approvals. In such a case, Supp. Dir. 10-02 provides that servicers “should” extend the trial plan period to accommodate delays in obtaining such approvals, but are not required to extend the trial period beyond two months, resulting in a five-month trial period. The guidance reiterates Treasury’s previous position in Supp. Dir. 09-01 that borrowers who have received a chapter 7 discharge and did not reaffirm the mortgage debt are nonetheless eligible for a HAMP modification. The following language must be inserted into the modification agreement: “I was discharged in a Chapter 7 bankruptcy proceeding subsequent to the execution of the Loan Documents. Based on this representation, Lender agrees that I will not have personal liability on the debt pursuant to this Agreement.” Protection from Plan Objections, Stay Relief and Dismissal Motions Supp. Dir. 10-02 also addresses the problem of servicers filing motions for stay relief and/or plan objections while the debtor is being considered for a modification. For example, servicers have filed objections on the grounds that the debtor/borrower is not making the full mortgage payment, even though they have been making payments under the trial period plan.

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Under the new guidance, if a borrower in an active chapter 13 case is in a trial period plan and makes post-petition payments in the amount required by the trial period, the servicer may not object to confirmation, move for stay relief, or move for dismissal on the grounds that the debtor did not pay the non-modified mortgage payments. While this provision does not apply if the borrower has not yet begun a trial period plan at the time of filing, it should reduce unnecessary litigation costs for borrowers. Document Requirements For purposes of determining income eligibility, the servicer may accept copies of the bankruptcy schedules and tax returns (if required to be filed) in lieu of the RMA and Form 4506T-EZ. If the schedules are more than 90 days old, the borrower must provide the servicer with updated income information. Borrowers are still required to provide a Hardship Affidavit (or RMA). Servicer may Waive Trial Plan for Chapter 13 Borrower Supp. Dir. 10-02 also provides that borrowers in an active Chapter 13 case who are HAMP-eligible may be converted to a permanent modification without completing the trial period if: (1) the borrower makes all post-petition payments on the mortgage to be modified and at least three of the payments are greater than or equal to the modified payment; (2) the bankruptcy court approves the modification; and (3) the trial period plan waiver is permitted by the investor guidelines. However, waivers under this approach are contingent on the development of “systems capability” and at the discretion of the servicer. It remains unclear whether servicers will in fact waive the trial period or whether the investor guidelines permit such a waiver.

2. Notice Requirements Under HAMP Many borrowers—potentially hundreds of thousands—have been left in limbo by servicers, unsure of the status of their Home Affordable Mortgage Program (HAMP) applications. Many have had foreclosure sales scheduled or completed while their servicers were considering them for HAMP, in violation of the servicers’ contract with Treasury.14 This article discusses two tools for obtaining information from the servicer about a borrower’s HAMP application: Supplemental Directive 09-08 and the servicer provisions of the Real Estate Settlement Procedures Act. Both—at least in theory—can be used not only to obtain information, but to prevent a foreclosure sale and force a

14 A survey of consumer advocates conducted by NCLC and NACA found that almost 95% of respondents had worked with at least one client who had a foreclosure sale scheduled during HAMP review. 14% of respondents had had more than 50 clients facing improper foreclosure sales. Available at: www.consumerlaw.org/issues/foreclosure/content/NCLC-NACA-Foreclosure-Sale-Survey-ResultsJan2010.pdf.

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proper evaluation of the borrower for a HAMP modification. Discovery is, of course, another option for acquiring information from servicers. Obtaining information about the status and substance of the servicer’s evaluation of a borrower is important because it can be used to show that a foreclosure sale has been improperly scheduled or that foreclosure can be avoided through appropriate application of the HAMP guidelines. Many courts, even in non-judicial states, consider foreclosure to be an equitable remedy only available if the foreclosing entity has proceeded properly and with “clean hands.”15

What Does the Servicer Need to Disclose - Supplemental Directive 09-08 Supplemental Directive 09-08 (Supp. Dir. 09-08),16 released in November, 2009, purports to provide for servicer accountability. It requires notices to borrowers who fail to qualify for a trial or permanent HAMP modification, or who default on a trial modification, listing the reason for the non-approval. Supp. Dir. 09-08 also requires servicers to provide some elements of the Net Present Value (NPV) test upon request. The absence of the borrower notices required by Supp. Dir. 09-08 can be used to argue that the borrower is still being considered for HAMP, and that a foreclosure sale should therefore not take place.17 Supp. Dir. 09-08 became effective January 1, 2010, so any borrower whose eligibility for a HAMP modification had not been determined by that date should receive notice if later determined to be ineligible. Supp. Dir. 09-08’s notice requirements apply if a borrower is not offered a Trial Period Plan, a permanent HAMP modification, or if the servicer contends that eligibility may be denied because the borrower has not provided financial information.18 The notice must provide the primary reason or reasons for the non-approval.19 Importantly, if the notice discusses other non-HAMP loss mitigation options that are being considered or offered to the borrower, it must clearly state that the borrower was considered for but is not eligible for HAMP.

15 See NCLC, Foreclosures § 6.4.5 (2d ed. 2007 and Supp.). For a particularly strict application of this principle, resulting in the cancellation of the underlying mortgage, see IndyMac Bank v. Yano-Horoski, 2009 WL 3858797 (N.Y. Sup. Ct. Nov. 19, 2009). See also Woods v. Monticello Dev. Co., 687 P.2d 1324 (Colo. Ct. App. 1982) (“Equitable remedies are not automatic—the term itself implies a balancing.”); Sovereign Bank, F.S.B. v. Kuelzow, 687 A.2d 1039 (N.J. Super. Ct. App. Div. 1997) (“Foreclosure is a discretionary remedy.”); M & T Mortg. Corp. v. Foy, 858 N.Y.S.2d 567 (N.Y. Sup. Ct. 2008) (“The courts are not merely automatons mindlessly processing paper motions in mortgage foreclosure actions most of which proceed on default.”); Rosselot v. Heimbrock, 561 N.E.2d 555 (Ohio Ct. App. 1988). 16 All Supplemental Directives are available at www.hmpadmin.com/portal/ programs/hamp/servicer.html. 17 See Supp. Dir. 10-02. 18 Supp. Dir. 09-08, at 1. 19 The notices must comply with the Equal Credit Opportunity Act, when applicable. Supp. Dir. 09-08, at 1.

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When the reason for non-approval of a trial or permanent modification is a negative result on the NPV test, the servicer must inform the borrower that she has the option of requesting certain data related to the NPV test.20 The borrower (or her representative) has 30 calendar days from the date of the notice of non-approval to request the NPV daThe servicer must provide it within 10 business days of the request. The servicer is not allowed to proceed to a foreclosure sale until 30 calendar days after the NPV data is given to the borrower, to allow the borrower time to identify potential errors. If the borrower finds “material” errors, the servicer must redo the NPV test. By triggering a 30-day period of ostensible protection from foreclosure sale, a request for the NPV inputs provides an opportunity for borrowers and their advocates to discover whether errors have been made.

ta.

Although somewhat useful, Supp. Dir. 09-08 has a number of weaknesses:

Investor or guarantor rules can be listed as the reason for rejection, but the identity of the investor, the source of purported conflict (such as the PSA) and evidence of the servicer’s required efforts to get a waiver are not provided;

The borrower must make an affirmative request for the NPV values, adding a cumbersome extra step;

Servicers are only required to provide some of the NPV values21—notable exceptions include the market value of the property and how it was determined, the terms of the modified loan that were used for the test, and the numerical values of the NPV results for modification versus rejection (critical for knowing how far the borrower is from qualifying); and

NPV retesting is only required if the borrower finds “material” inaccuracies “likely to change the NPV outcome.” This effectively leaves the decision to retest in the hands of frontline servicer staff, without meaningful standards, despite the fact that only minimal effort would be required to redo the NPV test for any error pointed out by the borrower.

In addition, Supp. Dir. 09-08 fails to address ongoing concerns that the NPV test itself is not publicly available, that there is no meaningful appeal process for HAMP denials

20 For a discussion of the factors considered under the NPV test, see NCLC, Foreclosures § 2.3.4A (2009 Supp.). 21 Available NPV inputs are: a) unpaid balance on the original loan as of [data collection date]; b) interest rate before modification as of [data collection date]; c) months delinquent as of [data collection date]; d) next ARM reset date (if applicable); e) next ARM reset rate (if applicable); f) principal and interest payment before modification; g) monthly insurance payment; h) monthly real estate taxes; i) monthly HOA fees (if applicable); j) monthly gross income; k) borrower’s total monthly obligations; l) borrower FICO; m) co-borrower FICO (if applicable); n) zip code; and o) state. SD 09-08, at A-2.

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(borrowers are directed to contact the HOPE Hotline for escalation), and that servicers persistently lose borrower submissions and fail to stop scheduled foreclosure sales in accordance with HAMP requirements.

Getting the Full Story - Send a QWR Under RESPA Complete NPV information, as well as other records of the servicer’s eligibility determination should be obtainable under the Real Estate Settlement Procedures Act (RESPA), which imposes requirements on servicers to respond to borrower requests for information or correction of account errors.22 The servicer’s obligation is triggered by receipt of a “qualified written request” (QWR) from the borrower or her representative, sent to an address for receipt of QWRs if so designated by the servicer,23 that includes sufficient information to identify the borrower’s account and provides the “reasons for the belief … that the account is in error” or “sufficient detail” to the servicer regarding the information requested.24 The servicer must acknowledge receipt within 20 business days and take action on the request within 60 business days (closer to 3 months on the calendar). The power of a QWR to get complete information about the servicer’s consideration of a borrower for HAMP has yet to be tested (at least as reflected in court opinions). The information available through a QWR is limited to information “relating to the servicing” of the loan.25 HAMP activities should qualify because loss mitigation has become a routine function of servicers in the servicing of mortgage loans, and the only method of obtaining a HAMP modification based on the design of the program is through a participating servicer. But some servicers resist providing anything other than payment and escrow information.26 If servicers do not provide requested information after conducting an investigation, they must provide the borrower with an explanation of why the information “is unavailable or cannot be obtained by the servicer.”27 Because of servicers’ extensive reporting obligations under HAMP, nothing that a borrower might request is likely to be actually unavailable or unobtainable by the servicer.28

22 12 U.S.C. § 2605. See also Regulation X, the implementing regulation for RESPA, especially 24 C.F.R. § 3500.21. 23 See NCLC, Foreclosures § 8.2.2.3 (2d ed. 2007 and Supp.). 24 12 U.S.C. § 2605(e)(1)(B)(ii). 25 12 U.S.C. § 2605(e)(1)(A). See also 24 C.F.R. § 3500.21(e)(2)(i). 26 For a discussion of what constitutes a QWR, see NCLC, Foreclosures § 8.2.2.2 (2d ed. 2007 and Supp.). 27 12 U.S.C. § 2605(e)(2)(C)(i); 24 C.F.R. § 3500.21(e)(3)(ii)(B). 28 Supp. Dir. 09-01, 09-02, 09-03, 09-06, and 10-01 all include requirements relating to record keeping and documentation. Supp. Dir. 09-06 in particular lists many of the data fields that servicers must report to Fannie Mae. All NPV inputs and results are of course required, including the method of property valuation and the details of the modification considered (which may vary from the standard waterfall because of investor restrictions). Supplemental Directives 09-01 and 10-01 contain helpful minimum documentation

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Servicers also sometimes claim that requested information is privileged or confidential, even though there is no language in RESPA or Regulation X that suggests this as a reason for withholding information. There is almost no useful case law on this question.29 Given strong servicer resistance to making the NPV test public, it is a likely response to QWRs and could get a boost from language in Supp. Dir. 09-08 which states that “[s]ervicers are not required to provide the numeric NPV results or NPV input values not enumerated in [the list of available data].” On the other hand, participation in the HAMP program clearly does not exempt servicers from otherwise applicable law and regulation. For instance, the Servicer Participation Agreement explicitly requires servicers to warrant that HAMP activities “will be performed in compliance with … Federal and state laws designed to prevent unfair, discriminatory or predatory lending practices.” If RESPA would otherwise require disclosure of NPV information, contrary language in HAMP program documentation should be of little import.

Disputing a Wrongful HAMP Denial with a QWR Another potential use of the QWR mechanism would be to request “correction” of a borrower’s account in the form of a loan modification consistent with the HAMP guidelines. A threshold question is whether wrongful denial of a HAMP modification or incorrect application of the HAMP modification guidelines would constitute an account error within the meaning of RESPA. The statute and Regulation X do not specify the types of errors that borrowers may seek to correct. 30 Given that RESPA is a remedial consumer protection statute that should be construed liberally,31 and that the handling of loss mitigation requests is a customary task of servicers in servicing mortgages, errors related to processing loan modification requests should be subject to the dispute procedures in RESPA.32

requirements, including logs of individual borrower contacts, attempts to obtain waivers from investors, and training and policy materials. 29 See Pettie v. Saxon, 2009 WL 1325947 (W.D. Wash. May 12, 2009) (accepting as in compliance with RESPA, without discussion, servicer’s withholding of requested information with the explanation that it was privileged or confidential); In re Price, 403 B.R. 775 (Bankr. E.D. Ark. 2009) (finding that plaintiffs had stated a claim for relief under RESPA by alleging that information withheld by servicer was public record information reported to the SEC and would have identified specific loss mitigation and foreclosure avoidance measures available but not offered to plaintiffs). 30 See NCLC, Foreclosures §§ 8.2.2.2, 8.2.2.5 (2d ed. 2007 and 2009 Supp.). 31 Ploog v. HomeSide Lending, Inc., 209 F. Supp. 2d 863 (N.D. Ill. 2002) (holding RESPA is remedial in nature); Johnstone v. Bank of America, N.A., 173 F. Supp. 2d 815 (N.D. Ill. 2001) (same); Rawlings v. Dovenmuehle Mortgage, Inc., 64 F. Supp. 2d 1156 (M.D. Ala. 1999) (same). 32 To the extent a borrower is charged late fees or penalties resulting from a delay in the conversion from Trial Plan to permanent modification or is charged any improper fees in relation to the modification, an even stronger argument can be made that the account should be “corrected.” See 12 U.S.C. § 2605(e)(2)(A), defining correction of account to include crediting of late charges and penalties.

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In the context of error correction, a QWR must include “a statement of the reasons for the belief of the borrower, to the extent applicable, that the account is in error.”33 Without knowing all the NPV inputs, it might be difficult for a borrower to make the necessary statement of reasons about why a HAMP denial was in error. Still, if the advocate has obtained some or all of the input values by either making a request under Supp. Dir. 09-08 or sending a QWR as described above, and it appears that HAMP eligibility was wrongfully denied, a follow-up QWR should be sent stating the reasons “to the extent applicable” why an account error has been made and requesting correction. If the borrower requests correction of an account error, within 60 business days, the servicer must either: 1) correct the account and notify the consumer, or 2) conduct an investigation and state the reasons why the account is correct, with the name and phone number of a servicer employee who can provide further information.34

Private Remedies Available Sending a QWR does not stop the foreclosure process or collection efforts,35 but if the servicer fails to respond appropriately, the borrower has a private right of action for actual (including emotional distress) damages, costs and attorney fees, as well as statutory damages up to $1,000 in the case of a pattern and practice of noncompliance.36 Care should be taken in pleading your client’s damages.37 Sending a QWR also protects a borrower’s credit. Servicers cannot report adverse information on payments related to the subject of the QWR to consumer reporting agencies during the QWR response period.38 This may be valuable in the HAMP context, because the borrower’s mortgage remains in force during the Trial Plan Period and the

33 12 U.S.C. § 2605(e)(1)(B)(ii). 34 12 U.S.C. § 2605(e)(2)(B). 35 24 C.F.R. § 3500.21(e)(4)(ii). This is arguably an overreaching interpretation by HUD of 12 U.S.C. § 2615, which provides that “validity and enforceability” of mortgages is not affected by RESPA. 36 12 U.S.C. § 2605(e). See also NCLC, Foreclosures § 8.2.6 (2d ed. 2007 and Supp.). 37 Courts are increasingly requiring an allegation of actual damages as an element of a RESPA claim. See NCLC, Foreclosures § 8.2.6.2 (2d ed. 2007 and Supp.). This should not be insurmountable in the case of a HAMP wrongful denial. Even the failure to provide information could result in actual damages. For example, a borrower might argue that failure to provide the numerical NPV values resulted in the borrower throwing good money after bad trying to qualify for an unlikely HAMP modification when other loss mitigation options, such as a deed in lieu, would have been better for the borrower’s finances and credit score. 38 12 U.S.C. § 2605(e)(3); 24 C.F.R. § 3500.21(e)(4)(i).

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reduced payments made by borrowers may be reported by servicers to credit bureaus as if they were partial payments.39 3. HAMP Changes Made By Dodd-Frank Bill The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank)40 was signed into law on July 21, 2010. Dodd-Frank makes the Home Affordable Modification Program (HAMP) more transparent. It mandates creation of a new web portal for homeowners to determine whether their loan modification meets HAMP’s Net Present Value test, requires servicers to turn over NPV inputs and outputs at the time of denial, and mandates public release of the NPV model itself and certain data.41 The Act also sets up a bridge loan program for unemployed homeowners,42 modeled on the Pennsylvania Homeowners’ Emergency Mortgage Assistance Program. The funds, while permitted to be used in a federally administered program, may be provided to state-tailored programs as well.

39 The Consumer Data Industry Association has recently created a new reporting code for payments made under a HAMP Trial Plan. It is not clear whether reporting using the new code would qualify as providing “adverse information.” HAMP FAQs, Q67. 40 Pub. L. No. 111-203, 124 Stat. 1376 (July 21, 2010) ("Dodd-Frank"). 41 Dodd-Frank § 1482–1483. 42 Id. § 1496.

Getting A Second Look

1) Get and review the denial notice

SD 09-08 requires a denial notice with a reason. The notice must have a toll-free number to reach a servicer representative who can provide

more information. NPV values need not be provided in the denial notice, but must be provided if requested

within 10 calendar days if the borrower requests them within 30 calendar days of the denial notice. Sup. Dir. 09-08, p.3.

Dodd-Frank, P.L. 111-203, Section 1482 requires more NPV values to be provided to borrowers.

2) If the servicer got any of the NPV inputs wrong, provide information as to the correct

inputs.

The servicer must re-run the NPV if the correction “is material and likely to change the NPV outcome.” Sup. Dir. 09-08, p. 3.

Dodd-Frank, P.L. 111-203, Section 1482 requires a portal for use by borrowers to check the accuracy of the servicer’s NPV calculation.

The foreclosure sale must be suspended while the NPV is re-run. Sup. Dir. 09-08, p. 3.

3) If the borrower was denied for any financial reason, including the NPV test or excessive forbearance, and the borrower has additional income to report, including additional income from a non-borrower, request reconsideration.

A borrower remains eligible for HAMP if the denial is for any financial reason or because of basic eligibility considerations, and the borrower’s circumstances change. Sup. Dir. 10-01, p. 4.

The borrower has until midnight of the seventh business day (typically 10 days) proceeding a scheduled foreclosure sale to request reconsideration. Sup. Dir. 10-02, p. 9.

5) If the servicer won’t review, escalate!

Ask for the servicer’s in-house escalation team. E-mail [email protected].

© National Consumer Law Center, March 2010 Boston Headquarters: 7 Winthrop Square, Boston, MA 02110

www.nclc.org

Ask for Ken Hannold if escalation isn’t satisfactory.

Identifying Participating Servicers

1) Check to see if the loan is owned by either Fannie Mae or Freddie Mac.

All loans owned by Freddie or Fannie are governed by their loss mitigation requirements, which include specific versions of HAMP

www.fanniemae.com/loanlookup www.freddiemac.com/mymortgage

2) Check to see if the Loan is a VA or FHA loan.

VA and FHA loans have their own versions of HAMP. Usually, VA or FHA loans will be identified as such on the settlement statement (the HUD-

1 or HUD-1A)

3) Check the Making Home Affordable website.

http://makinghomeaffordable.gov/contact_servicer.html

4) Google the servicer.

Does their website say they are participating in HAMP? Are they a subsidiary of another entity? Is the servicer’s name a “dba” for another entity?

5) Check the actual contracts at financialstability.gov.

HAMP FAQ 1301 provides that a parent company may sign on behalf of its subsidiaries. Some of those contracts spell out who is covered. Some of the contracts are signed by one or more entities, or require notice to be provided to

multiple entities. Any entity named in the contract is at least arguably covered.

6) Check the FFIEC’s website.

http://www.ffiec.gov/nicpubweb/nicweb/SearchForm.aspx Listing of all lending institutions and their affiliate/ subsidiary structure

7) If you believe the servicer is covered, but the servicer denies, escalate!

E-mail [email protected].


www.nclc.org


http://www.fanniemae.com/loanlookup

http://makinghomeaffordable.gov/contact_servicer.html

http://www.ffiec.gov/nicpubweb/nicweb/SearchForm.aspx

What to Do When the Servicer Asks You to Re-Verify Income Documentation

1. Ask why they need it.

HAMP only requires that documentation be within 90 days at the time of the servicer receives it. Sup. Dir. 09-07, p. 2, Sup. Dir. 10-01, p. 2.

HAMP does not require verified income to be resubmitted before the permanent modification. Sup. Dir. 09-07, p. 2.

Property valuation similarly does not need to be updated once obtained. Sup. Dir. 09-07, p. 6

Servicers are supposed to have procedures in place to “to ensure that borrowers are not required to submit multiple copies of documents.” Sup. Dir. 10-02, p. 4.

HAMP probably allows for servicers to re-verify income more often if required by the investor. Sup. Dir. 10-01, p. 4. If the servicer says the investor requires more frequent re-verification, ask them to give you a copy of the PSA or other contract that requires more frequent verification.

2. Remind the servicer of the timelines established by Sup. Directives 09-07 and 10-

01.

Notification of receipt within 10 business days of receipt. Sup. Dir. 09-07, p. 7, Sup. Dir. 10-01, p. 2.

Notification of decision or of incomplete submission within 30 calendar days. Sup. Dir. 09-07, p. 7, Sup. Dir. 10-01, p. 3. Any request for information beyond this 30 days is untimely.

3. If the servicer isn’t complying with those timelines, escalate!



www.nclc.org

Ask for Ken Hannold if escalations isn’t satisfactory.

What To Do When The Servicer Denies a HAMP Mod Because The Client Received a Discharge In A Chapter 7 Case and Did Not Reaffirm the Mortgage Debt? 1. Remind the servicer that a prior bankruptcy discharge is not a basis for denial. Sup.

Dir. 10-02, p. 8; Sup. Dir. 09-01, p. 2 and 16.

The debtor is eligible for a HAMP mod even if the first lien mortgage debt was discharged and no reaffirmation was entered into in the chapter 7 case.

Same rule for GSE mortgages. FannieMae Announcement 09-05R, p. 3. 2. Verify that servicer has included language in HAMP agreement making loan

modification non-recourse. Sup. Dir. 10-02, p. 8; Sup. Dir. 09-01, p. 16.

The following language must be inserted in Section I of the HAMP agreement: “I was discharged in a Chapter 7 bankruptcy proceeding subsequent to the execution of the Loan Documents. Based on this representation, Lender agrees that I will not have personal liability on the debt pursuant to this Agreement.”

Same rule for GSE mortgages. FannieMae Announcement 09-05R, p. 18. 3. If the servicer isn’t complying, escalate!



www.nclc.org


What to Do When the Servicer Denies a HAMP Mod Because They Re-Ran the NPV Test

1. Ask when they ran it the first time

The NPV test should be run before the trial plan offer is extended. Sup. Dir. 09-01, p. 4, HAMP Checklist for Verified Trial Period Plans, p. 7, FAQ 2314.

Check what version of the NPV test was in effect at that time. The version used the first time they run the NPV test must be used for any subsequent runs of the NPV test. FAQ 1808, 1809.

2. Ask why they re-ran the test

HAMP only provides for the NPV test to be run twice: once, when there is a verbal request for a modification and once, when verified income is submitted. FAQ 2314

Servicers do not need to update property valuations or re-run the NPV test to account for updated property valuations. FAQ 2100, Sup. Dir. 09-07, p. 6.

Servicers do not need to re-run the NPV test if escrow amounts, including tax and insurance payments, change. FAQ 2209

Servicers should not re-run the NPV test when approving the final, permanent modification; they should only re-visit the waterfall to determine the final payment, principal, and forbearance amounts. FAQ 2314.

Servicers cannot use the NPV test for other purposes, other than those specified in their contracts—which should mean that the NPV test cannot be re-run because an investor asks. FAQ 1812.

3. Ask what version of the test they used and what inputs they held constant.

The servicer can only change the following inputs: association fees, insurance, taxes, income, and the post-modification terms determined by the income (the unpaid principal balance, monthly payment, principal forbearance amount, amortization term, and interest rate after modification). FAQ 1810. Note that a change in the association fees, insurance, or taxes is not a reason to re-run the NPV test. FAQ 2209.

When the servicer re-runs the NPV test, they must use the same version of the NPV test. FAQ 1808, 1809.

4. If the NPV test was run with inaccurate inputs, ask them to run it again.

Servicers must re-run the test if the homeowner identifies inaccuracies in the inputs the servicer used, and the correct inputs would change the NPV result. Sup. Dir. 09-08, p. 3.

5. Escalate!



www.nclc.org


What To Do When the Servicer Refuses To Accept or Process a HAMP Application Because Client Is In An Active Bankruptcy Case?

1. Remind the servicer that a pending bankruptcy is not a basis for denial. Sup. Dir. 10-

02, p. 7.

A debtor in an active chapter 7 or chapter 13 bankruptcy case must be considered for HAMP if the debtor submits a request to the servicer.

A debtor in a trial period plan who later files bankruptcy may not be denied a permanent HAMP on the basis of the bankruptcy filing.

2. Inform servicer’s bankruptcy counsel of the obligation to work with you to get court

or trustee approval of the mod, if needed. Sup. Dir. 10-02, p. 7-8.

Trial period may be extended two months (resulting in total five-month trial period) to get court approval.

3. File an objection and seek sanctions if the servicer takes action in a chapter 13 case

because the debtor is paying the trial plan payment rather than the regular, non-modified mortgage payment. Sup. Dir. 10-02, p. 8.

Servicer must not object to plan confirmation, move for dismissal, or move for relief from the automatic stay on this basis.

4. Request that Trial Period Plan be waived if the debtor has already made sufficient

payments. Sup. Dir. 10-02, p. 8.

Servicer may put debtor in a permanent mod without completing the trial period plan if the debtor has made all post-petition mortgage payments and at least three of them are equal to or greater than the proposed modified payment.

Waiver of trial plan must be permitted under applicable investor guidelines.

5. Request that servicer use schedules and tax returns filed in chapter 7 or 13 case in lieu of RMA and Form 4506T-EZ. Sup. Dir. 10-02, p. 8.

Servicer may accept these documents if they are not more than 90 days old. Debtor must still provide executed Hardship Affidavit (or RMA).

6. If the servicer isn’t complying, escalate!



www.nclc.org


What to Do When the Servicer Says the Investor Is Not Participating

1) Ask who the investor is.

Servicers participate, not investors. You can do a 15 U.S.C. §1641(f)(2) request to the servicer to identify the holder, and the

servicer is liable for statutory damages and attorney fee’s if it doesn’t answer you. Under Sup. Dir. 10-02, after June 1, 2010, servicers must provide Fannie Mae with a list of

investors who are not participating; this list could be obtained in discovery or FOIA’ed and cross-checked.

If the loan is a Freddie, Fannie, or FHA loan, the servicer has to review for HAMP and offer a Freddie, Fannie or FHA HAMP modification if the homeowner qualifies. (Freddie and Fannie are the “investors,” and you can find out if they hold the loan from their websites; FHA is the mortgage guarantor and requires FHA HAMP participation).

2) If there is mortgage insurance on the loan, contact the mortgage insurance company.

FHA-insured loans must be evaluated for FHA HAMP. Private mortgage insurers may be involved in evaluating loans for modification; unlike the

servicer, they stand to lose money if the loan forecloses.

3) Ask the servicer to identify the document forbidding the servicer from offering a HAMP modification.

Investors do not make these decisions on a case-by-case basis; the directive will likely be in a PSA. Few PSAs forbid all modifications.

Even if there is a conflict between the PSA and a HAMP modification, HAMP allows the servicer to skip steps in the waterfall if required by the PSA or to substitute amortization extension for term extension. HAMP FAQs 2301, 2304.

4) Ask the servicer what “reasonable efforts” they’ve taken to get the investor to waive the restrictions on HAMP mods in the PSA.

Reasonable efforts are required by Sup. Dir. 09-01, p. 1. Under Sup. Dir. 10-02, effective June 1, 2010, the servicer must write to the investor

requesting a waiver at least once.

5) If the servicer won’t answer those questions, escalate!

Ask for the servicer’s in-house escalation team. E-mail [email protected].


www.nclc.org


UNITED STATES BANKRUPTCY COURTDISTRICT OF NEW JERSEY

In Re:

NEW JERSEY JUDICIARYFORECLOSURE MEDIATION PROGRAM

_______________________________

GENERAL ORDER CLARIFYING THAT PARTICIPATION INTHE NEW JERSEY JUDICIARY FORECLOSURE MEDIATION PROGRAM

DOES NOT VIOLATE THE AUTOMATIC STAY

UPON RECOGNITION of a need to facilitate expanded access to the NewJersey Judiciary Foreclosure Mediation Program for individual debtors withpending bankruptcy cases, the Court adopts this general order to clarify thatparticipation by debtors and mortgagees in the Foreclosure Mediation Programdoes not violate the automatic stay of actions or proceedings against the debtorunder 11 U.S.C. § 362(a) in any way. By resolution of the Board of Judges ofthe United States Bankruptcy Court for the District of New Jersey,

IT IS ORDERED, that participation in the New Jersey JudiciaryForeclosure Mediation Program (“Program”) by mortgagees and by debtors withpending bankruptcy cases who meet the qualifying conditions of the Program shall not be deemed to be violative of the automatic stay. The parties are notrequired to obtain relief from the automatic stay in order to participate in theForeclosure Mediation Program.

IT IS FURTHER ORDERED, that for a pending case under Chapter 13,the debtor must continue to comply with all obligations in the bankruptcy case,including the obligation to continue to make regular monthly mortgagepayments to the mortgagee(s) and to make any required payments to theChapter 13 trustee during the time that the mediation process is pending.

IT IS FURTHER ORDERED, that in all cases, if the automatic stay is inplace during the participation of the parties in the Program, the automatic staywill remain in place. The mortgagee(s) will not have the right to continue withthe foreclosure process otherwise permitted in connection with the Program,unless a separate motion for relief from the stay is granted by the BankruptcyCourt.

-2-

IT IS FURTHER ORDERED, that mortgagees shall retain all rights underthe Bankruptcy Code, including the right to move for full relief from theautomatic stay under 11 U.S.C. § 362(d), and the right to commence orcontinue foreclosure proceedings following the termination of the automatic stayby operation of law under 11 U.S.C. § 362(c).

IT IS FURTHER ORDERED, that if the mediation process results in asettlement or other consensual arrangement, including modification of themortgage, the parties must seek Bankruptcy Court approval of the resolution ofthe matter by motion on notice to the mortgagee, trustee and all otherinterested parties.

IT IS FURTHER ORDERED, that if a settlement or other consensualarrangement approved by the Court impacts on the provisions of a Chapter 13plan, a modified plan must be filed.

IT IS FURTHER ORDERED, that notice to the Bar of this Order shall beprovided on the Court’s website at www.njb.uscourts.gov.

Date: May 18, 2009 /S/Hon. JUDITH H. WIZMUR

Hon. Judith H. Wizmur, Chief JudgeUnited States Bankruptcy CourtDistrict of New Jersey

http://www.njb.uscourts.gov/