U.S. Senate Fails to Pass Bankruptcy Mortgage Modification Bill

The S. Amdt. 1014 to S. 896, the "Helping Families Save Their Homes Act of 2009", failed to pass in the Senate today by a vote of 45 to 51 with 3 not voting.


Despite the lack of passage of these amendments to the bankruptcy code, there remain various measures that may be of assistance to a struggling South Florida homeowner, including the following.

1. A second mortgage on a principal residence that is wholly "underwater" is generally avoidable in chapter 13 or chapter 11 bankruptcy

2. Voluntary mortgage modification may be available under President Obama's "Making Home Affordable Program"

3. Modification of mortgages on non-principal residences is presently allowed under chapter 13 or chapter 11 bankruptcy

4. Chapter 12 allows certain modification for mortgages for "Family Farmers"

5. Mandatory mediation of homestead mortgage foreclosures as of May 1, 2009 in Miami-Dade County, Florida

Vote Expected in Senate on Bankruptcy Mortgage Modification Bill

The Washington Post reports that a vote is expected tomorrow in the Senate on S. 896, the "Helping Families Save Their Homes Act of 2009". Senator Richard Durbin's amendments to S. 896 includes provisions for bankruptcy reform to allow certain modification of mortgages on primary residences.

The Wall Street Journal reports that a defeat it expected unless there is a last minute compromise. Senator Richard Durbin (D, Ill.) is reportedly continuing efforts to reach an agreement with banking leaders.

Miami-Dade Circuit Court Mandates Mediation of Homestead Mortgage Foreclosures

As reported in the media, on April 9, 2009, Judge Joseph P. Farina, Chief Judge of the the Circuit Court of 11th Judicial Circuit in Miami-Dade County, Florida signed Administrative Order No. 09-08 establishing the "11th Circuit Homestead Access to Mediation Program ("Champ") and generally requiring mediation of residential homestead mortgage foreclosure cases filed on or after May 1, 2009. The mediation services though are available to mortgage foreclosures filed prior to May 1, 2009 on a case by case basis.

Pursuant to the administrative order and unless otherwise agreed, parties will be deemed to have agreed to referral of the foreclosure mediation to the "Collins Center for Public Policy" for mediation and assignment of a certified circuit civil mediator. No action will be taken by the Court to set a final hearing or enter summary judgment until certain requirements are met. The Collins Center's website provides and overview of the program, frequently asked questions, as well as a link to a video as to the establishment of its foreclosure mediation program.

Under the plan, the plaintiff mortgage lender is required to pay the fee of the Collins Center. Under the plan, the Collins Center is to contact the homeowner within 30 days and advise of the availability of financial counseling and mediation. The Collins Center may refer the homeowner to a HUD or National Foreclosure Mitigation Counseling Program agency which is to contact the homeowner within 21 days for counseling and to assist with the completion of financial documentation for use in renegotiating the loan. The lender and homeowner may register at the Collins Center's website and retrieve forms for financial documentation. Upon completion of the financial documentation, a mediation session is to be scheduled with the Collins Center to pay the certified mediators who have received additional training in foreclosure mediation. The mortgage holder's attorney and the homeowners are required to be physically present at the mediation with the mortgage lender's representative available with full authority to settle.

If the homeowner fails to appear at the mediation session or an impasse is reached, the mortgage foreclosure case may proceed to a final hearing. Within 10 days after completion of the mediation, the mediator is to file a report with the Court as to the lack of agreement or a signed written agreement. This mediation is available only once per case.

It is noted that Form "A" which includes the "Certificate of Plaintiff Regarding Status of Residential Property" and "Certificate of Plaintiff Regarding Representative at Mediation" requires that a copy of certain pooling or servicing agreements with investors (ie. as to securitized mortgages) are to filed with the foreclosure complaint and brought to the mediation session.