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A More Successful Approach To Mortgage Modification

There has been a great deal of news in the past several years about mortgage modification. There have been programs launched by the federal government and state governments, as well as several “in-house” programs offered by individual banks and mortgage companies. Sadly, however, the number of people that have been materially assisted and kept in their homes through these programs has been quite small. Sources have the success rate for those applying for modification of a mortgage at a paltry 4%. For years, I have been hearing from struggling homeowners who have been through the bureaucratic nightmare of applying for a modification with their bank; producing reams of documentation, being told over and over again that the bank had misplaced documents or needed new figures because the file had sat too long, and finally being denied any mortgage assistance. Many of these homeowners were actually told to stop making payments during the application process, only to then be denied relief and then find themselves so far behind that avoiding foreclosure was impossible.

There is good news though. The bankruptcy courts in Central and North Florida have recently adopted a new program call Mortgage Modification Mediation . Courts in the Orlando area pioneered this program a little over two years ago and the success rate for obtaining modifications has been an astounding 75%! Compare that to 4% outside of the bankruptcy program. Much of the difference seems to be in holding the banks accountable. When the debtor requests that the bankruptcy court get involved, the judge enters an Order that requires the bank to appoint (and name) a responsible individual to take charge of the process from the bank’s side. No more calling and being told that the person you spoke to last week is not there and the new person has no idea what you agreed to last week. The bank will be ordered to assign a “single point of contact,” an individual that must take responsibility for the file. The court will also order a schedule for compliance, i.e, a set of dates for demands for documentation and production of those documents. Finally, the court will set a date that the parties will meet, with a certified mediator, to discuss the modification and come to a decision. The court has the power to impose penalties on the bank if it fails to comply with these requirements. The bank also has a greater incentive to cooperate and modify the mortgage, because if it does not, the bankruptcy discharge will eliminate their right to obtain a deficiency judgement against the homeowner. see:Northern District Bankruptcy Court / Mortgage Modification Mediation

The resulting success of this new modification program has already kept hundreds of Floridians in their homes with more affordable payment terms. If you are significantly behind on your mortgage payments or have been served with foreclosure papers, call my office for a free consultation. Mortgage Modification Mediation may be your best chance at keeping your family home.