Now in Effect in the Southern District of Ohio: Mortgage Modification Mediation Program

The United States Bankruptcy Court for the Southern District of Ohio adopted a Mortgage Modification Mediation Program (MMM Program), effective October 1, 2020. The goal of the program is to encourage debtors and creditors to reach a consensual resolution when a debtor’s real property is at risk of foreclosure or other adverse action. Any debtor is eligible to participate in the MMM Program.  

Once the bankruptcy court signs the order approving a debtor for the MMM Program, the debtor and creditor would communicate through a portal for any documentation in which a creditor may require to consider the debtor’s request. The debtor must complete the Document Preparation Software requirements and pay the fee to the provider prior to filing a motion to participate. Meanwhile, the creditor must register on the portal within ten days after the Order Directing Mortgage Modification Mediation. The registration is a one-time event in which the creditor does not have to re-register for any subsequent mediations.  

It is highly recommended that the creditor registers with the portal prior to participating in the MMM Program, which can be done here. The creditor must also provide its initial MMM package to the portal, which includes the forms and supporting documentation that the creditor requires to initiate the assessment of the debtor’s loss mitigation options. Once the Initial MMM Package is completed, the creditor must acknowledge the receipt of the completed package within seven days and designate a single point of contact and outside legal counsel through the portal. If additional documentation is needed, the request is also made through the portal.  

A debtor may commence the MMM Program at any time after the commencement of the bankruptcy case. Prior to filing a motion to request participation in the MMM Program, the debtor must complete the software requirements as mentioned above. Additionally, the debtor must sign a Certification of Mortgage Modification Mediation Eligibility and Readiness (Certification). The Certification provides that the debtor will act in good faith, provide an adequate protection payment to the creditor, and submit initial documentation to the creditor - provided it is included in the portal, as well as other information. The adequate protection payment for the debtor’s homestead will be the lesser of 31% of the debtor’s and the debtor’s filing spouse’s, if any, gross income after deducting homeowner association fees, or the normal monthly contractual payment. For non-homestead income-producing property, the debtor shall pay 75% of the gross rental income generated by the property. If the property does not fall into either of those categories, the debtor and creditor can stipulate to a monthly payment or either party can file a motion with the court to establish the amount.   

The duration of the MMM Program is 150 days from the entry date of the Order Directing Mortgage Modification Mediation and may be extended up to an additional 60 days by either stipulation or motion. A request to terminate the MMM Program prior to its expiration may also be made by motion.  

While the MMM Program is pending, any motions for relief from the automatic stay with respect to the real property subject to the MMM shall be held in abeyance until after the conclusion of the MMM.

During the MMM Program, the debtor’s counsel, or a third party facilitator if the parties agree to such, must schedule an initial MMM conference within 30 days of the Order Directing Mortgage Modification Mediation. The creditor must appoint a designated representative to appear on its behalf, which may include its attorney, provided the attorney is familiar with the creditor’s modification process and the current status of the debtor’s application. A second conference may be held within 30 days after the first conference, if necessary.  A status report must be filed with the court by the debtor’s counsel or the facilitator within seven days after each conference.  It is important that each party meets the deadlines throughout the MMM Program.

Once the creditor has all of the information necessary to make a decision on the resolution, any agreement must be approved by the court - including any trial payments or permanent modifications. There cannot be a provision that requires dismissal of the bankruptcy case in an agreement reached through the MMM Program.  

The purpose of this article is to provide a brief summary of the MMM Program. Should you have any questions, feel free to contact any of the attorneys at Weltman, Weinberg & Reis, Co. LPA.

For more comprehensive information and insights, watch our Ask a Pro: Navigating Chapters 11 & 12 Bankruptcies webinar.

This blog is not a solicitation for business and it is not intended to constitute legal advice on specific matters, create an attorney-client relationship or be legally binding in any way.