Rule 93.Foreclosure Diversion Program

Subsections (3) and (4) of section (n) are revised to reflect the option resulting from recent legislative amendments to 14 M.R.S. § 6321-A for mediators to use a net present value analysis other than that found in the Federal Deposit Insurance Corporation Loan Modification Program Guide. See P.L. 2013, ch. 521, § F-2 (effective Aug. 1, 2014).

Advisory Committee Note — December 2010

The first amendment eliminates the 180-day look back; the second would give judges the discretion to return cases to the regular docket if a defendant fails to attend an informational session.

With regard to the first amendment, M.R. Civ. P. 93(a)(3) as it currently reads, requires court staff to do extra work to find defendants who are not residing in the properties at issue. When this language was added, there was some concern that the mediation process be available to individuals who had moved out of their homes because they could no longer afford to pay the mortgage. With experience, it has become apparent that virtually the only unoccupied houses undergoing foreclosure in Maine are “second” homes, which do not qualify for the program. In Maine it appears that people who are not paying their mortgages on their primary residences, for whatever reason, are not moving out.

The second proposed amendment [to M.R. Civ. P. 93(c)(2)] would allow judges to use their discretion to determine how to address cases when a defendant fails to appear for an informational session the defendant was ordered to attend. This amendment would conform the Rule to present practice in some courts.

Advisory Notes — January 2010

Rule 93 of the Maine Rules of Civil Procedure is adopted to implement, statewide, the foreclosure service and notice requirements adopted in 14 M.R.S. § 6111(1-A) and the Foreclosure Mediation Program authorized in 14

M.R.S. § 6321-A. The Court is acting pursuant to its general rulemaking authority and specific authority to act on this issue established by 4 M.R.S. § 18-B(12). Rule 93 tracks fairly closely the Rules adopted for the Foreclosure Diversion Program Pilot Project in York County that were implemented by Administrative Order JB-09-03, effective August 3, 2009. This draft includes adjustments to recognize the experience gained in the Pilot Project.

The statute indicates that the foreclosure diversion program is to take effect statewide on January 1, 2010. Thus the draft indicates that actions not subject to the new rules are those actions filed on or before December 31, 2009, and actions subject to the new rules are those actions filed after December 31, 2009.

Rule 93 includes sections (a) through (q) as follows:

Section (a) includes definitions of important terms.

-- the commercial loan definition covers loans used exclusively for commercial purposes, with the intention that the mortgages securing those loans may be exempted from the delay imposed on motion practice by section (d)(1).

-- the foreclosure action definition essentially covers the foreclosure provisions in title 14, chapter 713 of the Maine Revised Statutes, excepting State mortgages;

-- the owner-occupant definition includes a look-back provision, not in the statute, to include people who may have left their home in the last six months because they could not afford to live in it and perhaps found a renter or abandoned the home. Persons who have left their homes could not qualify if they have assumed another mortgage;

-- the primary residence definition is based on case law addressing the residence issue, see e.g., State v. Falcone, 2006 ME 90, ¶¶ 7-11, 902 A.2d 141, 143-44;

-- the residential property definition follows 14 M.R.S. § 6321-A(3) as to what properties qualify, with the added reference to a single condominium unit, which could be in a larger than four unit building.

Section (b)(1) indicates that Rule 93 governs all foreclosure actions filed after December 31, 2009, against defendants who are owner-occupants. Rule 93 also may govern foreclosure actions filed before December 31, 2009 against defendants who are owner-occupants, but only when a court orders the parties to participate in mediation.

The manager description section (b)(2) is self-explanatory.

The mediator description in section (b)(3) follows the statute in addressing active retired judges separately from others who may seek to be mediators. For others there are relevant training, education, and experience qualifications described in (b)(3)(B).

Section (c) establishes filing, response and scheduling requirements for the program. Subsection (c)(1) addresses the requirement for defendants to file answers in addition to appearing in or otherwise requesting mediation in the action. Although 14 M.R.S. § 6321-A(6) did not limit the time period during which a homeowner could request mediation, the Rule includes such a limitation in order to both expedite the mediation process and limit the delay imposed. Defendants who do not properly answer or otherwise respond may be subject to default pursuant to M.R. Civ. P. 55.

Subsection (c)(2) generally establishes the mandatory mediation process for foreclosure actions filed after December 31, 2009, against defendants who are owner-occupants. It also recognizes that a plaintiff may proceed to seek a default judgment pursuant to M.R. Civ. P. 55 if a properly served defendant completely fails to respond to an action.

Subsection (c)(3) gives courts discretion to order defendants and others to attend informational sessions before participating in mediation. The informational sessions, when they can be held, will be used to educate individuals about the law, process and paperwork involved in foreclosure actions so that they may better understand their options as the action proceeds.

Subsections (c)(4) and (5) outline the duties of the plaintiff and defendant in coordinating the preparation and exchange of financial information needed for the parties to consider alternatives to foreclosure. The rule requires homeowners to provide the requested financial information

necessary within a relatively short period of time, again in order to expedite the mediation process and to avoid delay. The date the defendant must return the financial forms to plaintiff’s counsel, with a copy of the forms sent to the court, is dependent upon whether the defendant is required to attend an informational session. If the defendant fails to attend an informational session and fails to send the required paperwork with plaintiff’s counsel on time, the court may order that mediation will not occur, and return the foreclosure case to the regular court docket.

Section (d)(1) addresses the deferral of dispositive motions and requests for admissions for all cases where mediation has been ordered. This is designed to allow the parties to focus on the mediation process, and is based on 14 M.R.S. § 6321-A(9), which requires that when a defendant has responded to an action, there be no entry of judgment before mediation is completed. However, subsection (d)(2) provides that cases involving commercial loans may be exempted from the deferral by order of the court.

Section (e) describes the timing of notice to the parties regarding informational sessions and mediation. The Rule imposes a 90-day limit on the mediation process, in order to ensure that mediation occurs as expeditiously as possible.

Section (f) authorizes the court to require parties to gather and exchange specific financial information in the foreclosure mediation scheduling order.

Section (g) outlines the issues to be addressed in mediation. It is based on 14 M.R.S. § 6321-A(3) with proof of mortgage ownership and calculation of sums due issues added.

Section (h) addressing mandatory and discretionary participation in mediation is based on 14 M.R.S. § 6321-A(11) with lien holders and other essential creditors added. It also addresses requirements for remote participation in mediation sessions.

Section (i) authorizes mediators to schedule additional mediation sessions, if determined necessary by the mediator, provided that the time limit to complete mediation is not exceeded, unless the parties agree to or the court has ordered an extension.

Section (j), the good faith provision, is based on 14 M.R.S. § 6321-A(12). Although section (j) lists some sanctions available to the court, it is not meant to limit a court’s authority to devise other forms of appropriate sanctions.

Section (k) outlines the procedure for parties to request continuances or cancellations of scheduled mediation sessions and to inform the mediator and other parties of such requests.

Section (l) specifies that mediations will be conducted at court locations, whenever possible. If the parties would prefer an alternate location, or if courthouse resources cannot accommodate mediation sessions, the Foreclosure Diversion Program Manager may permit the session to occur in an alternate site. Original case files may not be removed from Judicial Branch buildings.

Section (m) addresses waiver of mediation with court approval. Only defendants may request waiver of mediation.

Section (n) regarding mediator’s reports is based on 14 M.R.S. § 6321-A(13), with an added reference to points of agreement to be reported.

Section (o) specifying that no party waives any rights by participating in informational sessions or mediation tracks 14 M.R.S. § 6321-A(5).

Section (p) addressing mediation confidentiality and the confidentiality of information provided or developed during the mediation process, is based on 14 M.R.S. § 6321-A(4) with added reference to M.R. Evid. 408, 514, and M.R. Civ. P. 16B(k).

Section (q) authorizes courts in their discretion, and after consultation with the Foreclosure Diversion Program Manager, to order parties to foreclosure actions involving defendants who are owner-occupants, which were filed before January 1, 2010, and have not yet resulted in a final judgment to participate in mediation. One requirement for participation in this program is payment of the mediation fee. That fee, set in the Court Fees Schedule, is currently $200. The Rule does not specify the fee amount because the Fees Schedule is subject to change.

[Chapter XIII , Rules 100 – 125, is effective January 1, 2009]