By John S. Kay, Esq.

Hutchens Law Firm*

USFN Member (NC, SC)

     On May 17, 2023, the South Carolina Supreme Court issued an Order rescinding the requirements and obligations established by the Court’s previous Administrative Order issued on May 22, 2009, and the revised Order issued by the Court on May 11, 2011.  This new Order affects all loss mitigation activities in foreclosure actions in the state.  

     In response to the foreclosure crisis at the time, the South Carolina Supreme Court issued an Order in 2009 to ensure compliance with the new Home Affordable Modification Program (HAMP) initiated by the U.S. Treasury. The Order developed procedures to establish uniformity in how loss mitigation activity would be handled in the foreclosure process throughout the state. The 2009 Order was amended in 2011 to include provisions and adjustments designed to ensure loss mitigation was occurring in foreclosure cases where required by law.

     Because the HAMP program has now ended, the S.C. Supreme Court has issued its new Loss Mitigation directive stating that the 2009 and 2011 Orders, and their procedures, are no longer necessary. However, the Court has also noted that the 2023 Order is not meant to indicate that lenders and their counsel do not have to comply with all federal regulations regarding loss mitigation.

     In the current Order, the Court made it clear that the Order does not prevent any judge from “…inquiring about the status of loss mitigation or requiring that counsel for a Mortgagor confirm or certify there are no loss mitigation efforts underway, that a Mortgagor has failed to qualify for a program, or a Mortgagor defaulted under a loss mitigation agreement prior to scheduling a final hearing, entering a final order of foreclosure, or conducting a sale.” We expect that some lower courts may establish various procedures or certification requirements regarding the completion or failure of loss mitigation activities in pending cases.      

     At this time, the Masters in Equity and Special Referees that hear foreclosure cases in South Carolina are working on their procedures eliminating the requirements established by the 2009 and 2011 Administrative Orders and establishing what, if any, certification that lender’s counsel will need to provide to the Court to comply with the Supreme Court’s language stated above.

      USFN members in South Carolina will follow these developments closely and will issue further statements once any new rules or procedures by local courts are established.

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USFNews - May 31, 2023

* Denotes firm is a 2022 USFN Award of Excellence recipient.