Opinion
2011-2.
January 20, 2011.
This 20th day of January 2011.
WHEREAS, a steering committee comprised of attorneys for borrowers, attorneys for lenders, bankers, advocates, housing counselors, and other interested parties has been reviewing the implementation of the Residential Mortgage Foreclosure Mediation Program ("Mediation Program") established by Administrative Directive No. 2009-3.
WHEREAS, the steering committee has recommended providing the HUD certified housing counseling agencies and homeowners 30 days to meet, and complete the Universal Intake Form (Exhibit B) used by the homeowner to enter the Mediation Program.
WHEREAS, the homeowner is better served when the Hotline Flyer, Universal Intake Form and Counseling Client's Checklist are revised to contain up-to-date information and guidance. NOW, THEREFORE, IT IS DIRECTED that Administrative Directive No. 2009-3 is rescinded and replaced in the entirety, as follows:
1. A Residential Mortgage Foreclosure Mediation Program ("Mediation Program") is hereby adopted.
2. Upon the initiation of a foreclosure action against a homeowner occupied primary residence, Plaintiff or counsel for Plaintiff in complying with the requirement to notify persons with a possible real or equitable interest in the affected property (Superior Court Civil Rule Form 36) shall send and post a Special Notice Hotline Flyer, providing a hotline number (attached as Exhibit A in English and Spanish), a Universal Intake Form (attached as Exhibit B in English and Spanish), and a Foreclosure Intervention Counseling Client's Checklist (attached as Exhibit C in English and Spanish), to the Defendant homeowner (hereinafter "homeowner") as part of the Notice to Lienholders and Tenants as set forth in Superior Court Civil Rule 4(f)(4) and will certify that the flyer, intake form and checklist were posted and mailed, in the affidavit, mandated by that rule. The Flyer will advise the homeowner to seek counseling with one of the HUD certified counseling agencies by calling the hotline and getting a referral and will provide the homeowner with information pertaining to the Residential Mortgage Foreclosure Program including time lines for meeting with the counselor and providing the financial information necessary to complete the worksheet. The flyer will encourage the homeowner to stay in contact with Plaintiff. This residential foreclosure Mediation Program is limited to homeowners who own a one to four unit home and reside in the home as their primary residence or reside in one of the units of a one to four unit home as their primary residence and the mortgage on that property which is their primary residence is being foreclosed. In either case the mortgage being foreclosed on cannot have provided security, in whole or in part, for a business, commercial or agricultural loan.
3. A Homeowner may elect to enter the Mediation Program by meeting with a HUD certified housing counseling agency or LSCD attorney, and submitting a completed version of the Universal Intake Form (Exhibit B) to the lender's attorney and Delaware Volunteer Legal Services ("DVLS") within 30 days of posting the flyer described in paragraph two above. However, Homeowners who have entered into a prior agreement through this Mediation Program with respect to the property in foreclosure and who have breached that agreement shall not be eligible to enter the Mediation program again absent the consent of the lender.
4. A Homeowner will qualify for the Mediation Program and the case will be scheduled for mediation when (i) the requirements of paragraph three above have been fully satisfied and (ii) the Homeowner and counselor prepare a good faith proposal under which the Homeowner can reasonably sustain monthly mortgage payments (including taxes, principle, interest, insurance, homeowner association dues and other fees typically placed in escrow and normally paid as part of the monthly mortgage payment) that do not account for more than 38% of the homeowner's gross (pretax) monthly income. The 38% threshold shall not be reached by a loan repayment term in excess of 40 years, an interest rate of less than 2%, or a principal reduction. These are threshold requirements for qualification and not intended to limit any agreements the parties may reach at Mediation. If the Homeowner qualifies for the Mediation Program, the HUD certified housing counselor or LSCD attorney will provide the completed worksheet and pertinent documents to (i) Counsel of Record in the foreclosure action and (ii) DVLS to permit them to schedule the case for the next available mediation day in the County where the foreclosed property is located. Homeowners who complete step one but cannot develop a good faith proposal that limits monthly payments to 38% of income, are encouraged to negotiate with the Plaintiff and counsel for Plaintiff shall have the discretion to ask that the case be scheduled for Mediation.
5. Upon receipt of the completed worksheet and attachments, Counsel of Record for the Plaintiff will post haste forward the completed worksheet with attachments to the Plaintiff. In the event that the Homeowner does not file a timely answer to the foreclosure action, Counsel for Plaintiff shall not seek a default judgment until at least 60 days after Plaintiff has received the completed worksheet and attachments thereto. If Mediation does not occur within 60 days, through no fault of the Plaintiff, and an Answer with an Affidavit of Defense is not filed, Default Judgment may be requested without Motion in accordance with Superior Court Rule of Civil Procedure 55(b)(1). Even if Default Judgment does enter, Mediation can still occur and the Default Judgment can be vacated by stipulation of the parties if an agreement is reached or as otherwise allowed in Superior Court Rules of Civil Procedure.
6. If the Plaintiff and Homeowner (who has qualified for the Mediation Program) either do not enter into good faith negotiations designed to end the foreclosure action, or do enter such negotiations, but fail to reach a settlement, a mediation conference between the parties will take place as already scheduled on the next available Mediation Program mediation day in the County where the foreclosure action was commenced. A preliminary position statement will be provided by the parties to the Mediator one day in advance of mediation.
7. A representative of the Plaintiff, who has decision making/settlement authority, must attend the mediation session either in person or be available by phone.
8. Once scheduled, if both parties appear, a mediation conference may only be continued or rescheduled at the request of the Plaintiff or upon agreement of both parties. If Plaintiff fails to appear, the case will be rescheduled for the next available mediation day or such other time as the parties may agree. If mediation is being rescheduled because of Plaintiffs failure to appear, consideration will be given to schedule mediation at a time(s) convenient of the Homeowner.
9. After mediation has concluded, the case may be resolved, placed on the dormant docket (Administrative Directive No. 2008-3) pending additional discussion between the parties, or if no settlement is reached, proceed pursuant to Court rules as if mediation had not been elected or pursued. If a workout is reached at mediation, the terms of the agreement will be memorialized in writing at the conclusion of the mediation. Promptly thereafter, the parties shall deliver to each other fully executed documents.
10. If seeking a default judgment against a mortgagor eligible to elect to participate in the Mediation Program, the Plaintiff or Plaintiffs counsel must have complied with the requirements in Paragraph two of this Directive.
11. Each mediator shall submit to the Court and to the Community Legal Aid Society, Inc. ("CLASI"), an ADR evaluation form which shall indicate, among other things, (i) whether the Homeowner and Plaintiff appeared, and (ii) whether a workout was reached.
12. CLASI shall maintain statistics on (i) the number of Mediation Program workouts that avoided losses of homes, (ii) the number of Mediation Program workouts that did not avoid losses of homes, (iii) the number of Mediations that did not result in a workout, (iv) the number of homeowners (counting joint homeowners on a single mortgage as one) who qualified for the Mediation Program, (v) the number of such homeowners who failed to appear at the scheduled Mediation and who had not earlier reached a workout agreement with the Plaintiff, (vi) the number of workouts reached outside of the Mediation Program that avoided losses of homes, (vii) the number of workouts reached outside of the Mediation Program that did not avoid losses of homes, (viii) the number of Plaintiffs who failed to appear at the scheduled Mediation and who had not earlier reached a workout agreement with the Homeowner, and (ix) such other statistics as the Court deems appropriate to assess the Mediation Program and inform the public. These statistics shall be published quarterly by the Court. A steering committee consisting of stakeholders and representatives of stakeholders will meet, at the pleasure of the Court, to recommend improvements to the Mediation Program.
13. This First Amended Administrative Directive shall apply to all mortgage foreclosure actions within its scope filed on or after February 1, 2011; actions filed before November 1, 2010 but on or after September 15, 2009 shall be controlled by the original Administrative Directive, 2009-3.
14. To remain consistent with this Administrative Directive and related State and Federal foreclosure prevention programs, the Delaware State Housing Authority (DSHA) may update the 3 Exhibits in English and Spanish: (Exhibit A) Special Notice Hotline Flyer; (Exhibit B) Universal Intake Form; and (Exhibit C) Foreclosure Intervention Counseling Client's Checklist.
15. Prior to making substantive changes to the Hotline Flyer, Universal Intake Form or Foreclosure Intervention Counseling Client's Checklist, DSHA shall circulate drafts to the steering committee for comment.
16. Through the DSHA web page and through the Delaware State Bar Association (DSBA), DSHA shall distribute revised Hotline Flyers, Universal Intake Forms and Foreclosure Intervention Counseling Client's Checklists. Superseded Hotline Flyers, Universal Intake Forms and Foreclosure Intervention Counseling Client's Checklists will be considered current 15 days from the date of publication on the DSHA website. Any foreclosure filed within that 15 day period may use the superseded forms.
EXHIBIT A
EXHIBIT AEXHIBIT B
EXHIBIT B
EXHIBIT C
EXHIBIT C