Central District Institutes New LOAN MODIFICATION MANAGEMENT PILOT PROGRAM

Chief Judge Sheri Bluebond has announced that the Central District has established a Loan Modification Management Pilot Program (“LMM”).  Currently, the LMM is just a pilot program and not a district wide program.

Five Judges are participating in the pilot program, Judge Julia W. Brand, Judge Neil W. Bason, Judge Scott H. Yun, Judge Catherine E. Bauer and Judge Martin R. Barash.

There are forms and procedures as you can imagine.  The forms may be accessed here.  The procedures may be accessed here.

The 11 pages of procedures state:

The LMM is designed to function as a forum for debtors and creditors to reach a consensual resolution when a debtor’s property is at risk of foreclosure.  The goal of the LMM is to facilitate communication and exchange of information in a confidential setting and encourage the parties to finalize a feasible and beneficial agreement under the supervision of the United States Bankruptcy Court for the Central District of California.

The process begins with an “eligible debtor” or creditor filing a “Motion to Commence LMM (substantially in the form of Form LMM 4001-1.6.MOTION.COMMENCE).”  The debtor then serves the LMM Order.

Notable requirements thereafter include:

The Required Parties shall act in good faith throughout the entirety of the LMM Period, including but not limited to, promptly responding to all inquiries through the Portal and providing all requested documentation and information. A party failing to participate in good faith may be subject to sanctions and/or dismissal of the LMM after notice and a hearing.

During the LMM Period, unless otherwise permitted by the Court, all material communications between the Required Parties shall be conducted exclusively through the Portal . . .

[Within 7 days of the Order], Debtor shall upload to the Portal: (i) Debtor’s Initial LMM Package.

Upon the entry of the LMM Order, Debtor shall make adequate protection payments to the Creditor in an amount that is 31% of the Debtor’s gross monthly income. [and creditor may object to that].

There is a Program Manager who, among other things, must (might):

  • provide for and maintain the Document Preparation System and the portal;
  • assist pro se debtors “with the completing the Document Preparation Software and providing the Initial LMM Package (subject to Pro Se Debtor’s cooperation).”
  • advise Debtors and Creditors about the basic procedures for participation therein including their respective responsibilities,
  • provide free training on the use of the Document Preparation System as well as the Portal.
  • monitor all Portal communications between Debtor and Creditor to ensure that each party is performing its obligations and duties as required by the LMM Program.
  • file a Certificate of Non-Compliance with the Court, if necessary,
  • set and conduct an “LMM Conference” “in the event that Debtor and Creditor are not able to reach mutually agreeable terms.”

The Debtor must file a Status Report with the court 60 days after submission of the “LLM Loan Package.” don’t forget to get help from a Minimalist to Improve Your Financial Health.

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