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The Supreme Court of South Carolina issued an ""administrative order"":http://www.sccourts.org/courtOrders/displayOrder.cfm?orderNo=2011-05-02-01 on Tuesday halting all pending foreclosure actions on May 9th, until the lender can demonstrate they have worked with the borrower to pursue a loan modification or other loss mitigation option.
[IMAGE]According to the order, written by Chief Justice Jean H. Toal, before any court hearings or foreclosure sales can proceed, the lender's attorney must certify that the borrower has been informed of their right to seek a foreclosure alternative resolution and has been given ""a full and fair opportunity"" to submit the necessary documentation.
If a loan modification or other foreclosure alternative is denied, the lender's attorney must certify that the borrower has been notified in writing.
Toal says the purpose of the statewide order is to ensure that eligible homeowners and lenders-servicers have been afforded the benefits of loan modification or other loss mitigation where possible, and to ensure mortgage foreclosure actions are not inappropriately concluded
[COLUMN_BREAK]while loan modification or other loss mitigation efforts are being pursued.
In an interview with the _Washington Post_, Toal said the action stems from frustration with lenders that are in the midst of negotiating loan modifications with borrowers but at the same time moving ahead to foreclose on those borrowers â€"" a practice commonly referred to as ""dual-tracking.""
In the order, Toal wrote that the state's trial courts with jurisdiction over foreclosure actions have reported to the Supreme Court ""difficulty in making final disposition of these actions as a result of failed or delayed loss mitigation efforts between lender-servicers and mortgagor-debtors.""
""As a result, the number of unresolved foreclosure actions has increased, with a resulting burden on the resources of the court before which the action is pending,"" Toal said.
She described it as a ""breakdown of loss mitigation efforts that all parties find to be in their best interests,"" and placed blame on the lack of communication between lenders, servicers, borrowers, and the representing attorneys.
""I further take judicial notice of the actions of courts in other jurisdictions describing a similar breakdown in the efforts of parties to foreclosure actions to reach a resolution of defaults in payment of mortgage loans,"" Toal wrote.
The statewide order applies to owner-occupant homes and all foreclosure actions pending on or after next Monday.
This is the second time in the past two years that Toal has put foreclosures on hold. She issued a similar order in May 2009 in order to give borrowers already in the system a chance to participate in the federal government's Home Affordable Modification Program (HAMP). That moratorium was lifted within two weeks.
