By: Michael L. Moskowitz and Melissa A. Guseynov

In a memorandum opinion, dated February 28, 2022, United States Bankruptcy Judge Robert E. Grossman stated he will no longer entertain motions for loss mitigation in chapter 7 or 13 cases assigned to him. He explained the loss mitigation program was implemented in 2009 as a temporary administrative process due to the collapse of the mortgage industry and was never intended to become a “de facto right or a new form of bankruptcy protection.” Thus, while debtors and secured creditors may reach a consensual mortgage modification, it will be on a voluntary basis only and not court-sanctioned, as nothing in the Bankruptcy Code allows a Bankruptcy Court to “forcibly restructure a residential mortgage.”