June 19, 2018

by Louise Johnson, Ronald Scott and Reginald Corley
Scott & Corley, P.A. – USFN Member (South Carolina)

South Carolina’s senior Bankruptcy Judge, the Honorable John E. Waites, has amended his Chamber Guidelines with respect to Loss Mitigation/Mortgage Modification (LM/MM) requirements and procedures effective July 1, 2018. (View the Amended Guidelines.)

Below is a summary of the procedural and substantive changes with respect to Loss Mitigation/Mortgage Modification through the DMM Portal as set forth in the Amended Guidelines:

(1) Shortly after the commencement of any Chapter 13 case assigned to Judge Waites, the Court now will enter an Order Regarding Procedures for Loss Mitigation/Mortgage Modification. There is no deadline to serve this initial, early order.

(2) The LM/MM program will remain a mediator-based LM/MM program, but the appointment of a mediator is no longer automatic and/or mandatory in every LM/MM case. Now, the appointment of a mediator will be triggered only by the request of one of the parties who may need additional time to obtain/send necessary documents. This should reduce costs.

(3) In the event Debtor files an initial Plan that proposes to treat the Mortgage Creditor with LM/MM (and without adequate protection payments), a new 21-day deadline from the date of the Plan filing is imposed on Debtor and/or Debtor’s counsel which requires Debtor to file a Notice and Motion for LM/MM.

(4) The Amended Guidelines increase the amount of time after the entry of the LM/MM Order for Debtor to submit his/her Prepared Loss Mitigation Package from 7 days to 28 days. The Court will also set a status hearing approximately 35 days after the entry of the LM/MM Order to ensure the package has been submitted by Debtor and received by Creditor. Personal attendance at the status hearing is required of Creditor’s counsel and Creditor’s representative; however, attendance at the status hearing could be excused by the Court upon Creditor’s counsel’s filing of the following items at least 2 days prior to the status hearing: (a) correspondence indicating that the LM/MM package has been submitted by Debtor and received by Creditor; and (b) a calendar removal request.

(5) The Amended Guidelines also set a 21-day deadline after the submission of the Prepared Package for the creditor to complete an initial review of the Debtor’s entire Prepared Package, and to designate any additional requirements in a single entry in the DMM Portal. Creditor’s counsel shall also file a certification indicating that his/her client has completed these requirements.

(6) Thereafter, the parties shall have 28 days to provide and review any additional documentation that is required, so that the LM/MM application may be submitted to an underwriter or other approving official.

• Prior to the expiration of this deadline, the parties may have a telephonic conference for clear communication on the necessary requirements.
• If the parties do not meet this deadline, they shall report it to the Court and the Court will designate a mediator for the case.

(7) In all other circumstances, if a party determines that a mediator would assist the process, said party may request a mediator and the Court will appoint a mediator; however, counsel for the requesting party must hold his or her client’s share of the mediator’s fee before requesting the mediation.

(8) Upon the appointment of the mediator, the mediator schedules the session in his or her discretion. The mediation should be held within 60 days of the appointment, but the deadline is designed to be flexible, depending on the circumstances and need at the time.

(9) The mediator’s fee has been increased. Mediator is to be paid $100 upfront for an administrative fee, and then paid $250 per hour for the mediation sessions. The full mediator’s fee of $350 is required to be paid prior to the session and is split equally between Debtor and Creditor. If the fees are not paid, Mediator may cancel the mediation session and shall report the failure to pay to the Court.

(10) The deadline to conclude the LM/MM review has been extended from 90 days to 120 days with further opportunities for an extension.

(11) Creditors shall now post receipt of each trial payment in the Portal and the Debtors are to upload the executed LM/MM agreements into the portal.

(12) The Portal is to remain open until the final modification is posted.

(13) Any denial of LM/MM must be detailed and state-specific, and provide enumerated reasons.

(14) Requests for LM/MM in the portal should be made within 45 days of an order granting relief to the Mortgage Creditor, or such request by the Debtor may be denied.

(15) A second request for LM/MM during the case will require a demonstration of a change of circumstances if the Mortgage Creditor objects to the request.

(16) The non-standard South Carolina Chapter 13 Form Plan language has been modified to take into account the ability to amend the plan upon a denial of LM/MM (in cases where the Debtor is making adequate protection payments to the Mortgage Creditor).

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