Amendments to Maine Rules of Civil Procedure - New Foreclosure Rules

December 30, 2009

The Maine Supreme Judicial Court recently adopted Rule 93 of the Maine Rules of Civil Procedure, which deals exclusively with the Foreclosure Diversion Program (a copy of Rule 93 is attached for your reference). Rule 93 is effective on January 1, 2010 and governs all foreclosure actions against a defendant who is an “owner occupant” (defined as “an individual who is the mortgagor of a residential property that is that individual’s primary residence”).

Rule 93 further changes the way in which foreclosure actions are pursued through the courts. Some of the most significant impacts on foreclosure practice resulting from this rule are as follows:

• Plaintiffs will be required to provide to defendants certain forms requesting financial information: “plaintiff shall file and serve with the foreclosure complaint a set of financial forms requesting information from the defendant that would allow the plaintiff to consider or develop alternatives to foreclosure or otherwise facilitate mediation of the action. These forms may be forms designed by individual lenders or standardized forms developed by the federal government, a state agency, or some other group, provided that the forms sent by the plaintiff are the forms that it will use in considering or developing alternatives to foreclosure.” M.R.Civ.P. 93(c)(4).
• When mediation applies to a foreclosure action, “no dispositive motions or requests for admissions shall be filed until five (5) days after mediation is completed and a final mediator’s report is filed with the court, or until the court orders that mediation shall not occur.” M.R.Civ.P. 93(d)(1). This means that a Motion for Summary Judgment may not be filed until after the mediator’s report is filed. The mediator’s report is due to the court no more than 7 days after the mediation session. M.R.Civ.P. 93(n).
• The Court may schedule “informational sessions” for the parties: “The Foreclosure Diversion Program is authorized to design and implement informational sessions, and the court may, in its discretion, schedule informational sessions and order parties, counsel, and others to attend.” M.R.Civ.P. 93(c)(3). According to the Advisory Notes, an informational session “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.”
• The timing of the informational session (if required) and mediation shall be determined by the court. See M.R.Civ.P. 93(e). If an informational session is required, a foreclosure mediation scheduling order will be sent to the parties not more than 7 days after the scheduled informational session. If an informational session is not required, a foreclosure mediation scheduling order will be sent so as not to delay the start of the mediation process. Generally, mediation shall be completed no more than 90 days after the clerk sends the mediation scheduling order.
• Rule 93 establishes a list (non-exhaustive) of mediation issues that are to be discussed at mediation. “The mediation shall address all issues of foreclosure, including but not limited to: (1) proof of ownership of the note and any assignments of the note; (2) calculation of the sums due on the note for principal, interest, and any costs or fees, reinstatement of the mortgage, and modification of the loan; and (3) restructuring of the mortgage debt. Foreclosure mediations shall utilize the calculations, assumptions and forms established by the Federal Deposit Insurance Corporation and published in the Federal Deposit Insurance Corporation Loan Modification Program Guide, as set out on the Federal Deposit Insurance Corporation’s publicly accessible website.” M.R.Civ.P. 93(g). FDIC Loan Modification Program Guide and Appendix.
• At the mediation session, the parties must complete the Net Present Value Worksheet found in the FDIC Loan Modification Program Guide. See M.R.Civ.P. 93(n)(3).
• Participation in mediation is mandatory for “the defendant; counsel for the defendant, if represented; counsel for the plaintiff; and the plaintiff, or representative of the plaintiff, who has the authority to agree to a proposed settlement, loan modification, or dismissal of the action. When the plaintiff is represented by counsel who has authority to agree to a proposed settlement and is present, the plaintiff or its representative may participate by telephone or video.” M.R.Civ.P. 93(h).
• The parties are required to make a good faith effort to mediate. If a party does not make a good faith effort to mediate, the mediator will notify the court and the court may impose sanctions. See M.R.Civ.P. 93(j).
• A foreclosure defendant may be given additional time to answer a foreclosure complaint: “[I]f a defendant appears or otherwise requests mediation in the action within 20 days after service of the summons and complaint, but does not file an answer to the complaint, mediation shall be scheduled in accordance with this Rule, and the deadline for filing an answer shall be extended until 20 days after a final mediator’s report is filed with the court or until 20 days after the court waives mediation or orders that mediation shall not occur.” M.R.Civ.P. 93(c)(1).

The Foreclosure Diversion Program has been established pursuant to Maine statute (P.L. 2009 ch. 402, An Act To Preserve Home Ownership and Stabilize the Economy by Preventing Unnecessary Foreclosures, effective June 15, 2009), the stated purpose of which is to assist homeowners and lenders in achieving mutually agreeable resolutions to mortgage foreclosure actions through the diversion process. The new law requires the mediation program to be in place in all judicial districts by January 1, 2010. However, mediation is currently available only in York County by virtue of a pilot project that began in August. It is not clear whether the courts will be in a position to implement the program by the statutory deadline.

Please feel free to contact John Canders in our Bangor office if you have any questions relating to the provisions of Rule 93 or the foreclosure process in general.