Loan Modifications

The Southern District of Florida implemented the Loss Mitigation Mediation (LMM) program adopted under Administrative Order 13-1 on April 1, 2013. This program was later refined and relaunched as the Mortgage Modification Mediation (MMM) Program on July 9, 2015 under Administrative Order 14-03. This program is designed to help bankruptcy debtors who have issues with the affordability of their mortgages or who fell behind, and need a more manageable payment option than the traditional cure and maintain option where the current payment is coupled with a payment is applied toward the outstanding arrears.

Loan Modifications

What is the advantage of applying for a loan modification inside of a bankruptcy?

Applying for a loan modification inside of a bankruptcy gives the loan modification process more structure, and other benefits. The bankruptcy can alleviate the concerns of the lender about your other outstanding debts, such as credit cards and medical bills. Additionally, if there are issues with an underwater second mortgage or an arrearage on your homeowner’s association that may prevent a loan modification on your first mortgage, a bankruptcy provides different alternatives for resolving these issues, such as stripping the obligation off the property or curing a default.

Who is eligible to use the Mortgage Modification Mediation Program?

People who have filed for bankruptcy protection under or converted to Chapters 7, 11, 12 and 13, are eligible to participate in Mortgage Modification Mediation Program. No more than four units of real property can be included in the program for each case. However, not all Chapters allow for the same negotiation options.

In a Chapter 7, a Debtor may only request Mortgage Modification Mediation Program to negotiate the surrender of any real property in which the Debtor holds an interest.

In a Chapter 13, a Debtor may request Mortgage Modification Mediation Program to modify a mortgage or surrender any real property in which the Debtor holds an interest. Individuals who seek to modify a mortgage must pay a monthly adequate protection payment during the pendency of the negotiations to show good faith. If an agreement is reached, these payments usually function to pay down the principal on the modified loan. The parties are given 150 days to exchange documents and information, and conduct 2 mediation conferences.

How is a mediation going to help me in the loan modification process?

Mediation allows for the loan modification applicant to see the thinking of the Lender and how the information is being processed. In the case of a denial of the loan modification, the applicant can understand the reasoning or question the numbers that the Lender used in arriving at its decision. Many times, issues with the presentation or use of information can be resolved in these mediations, and may end in a different decision by the lender.

How is a mediation going to help me in the loan modification process?

Mediation allows for the loan modification applicant to see the thinking of the Lender and how the information is being processed. In the case of a denial of the loan modification, the applicant can understand the reasoning or question the numbers that the Lender used in arriving at its decision. Many times, issues with the presentation or use of information can be resolved in these mediations, and may end in a different decision by the lender.

What does the mediator do in the Mortgage Modification Mediation Program?

The mediator helps each side to keep track of the applicable time lines and ensures each party is abiding by all the Mortgage Modification Mediation Program rules. The mediator works to keep all communications and documents on the portal. This safeguards that the portal is a complete record of the loan modification process. This is helpful to all parties in the mediation sessions because all the documents and communications concerning the application are at the parties’ fingertips.

 How do I know if I should try the Mortgage Modification Mediation Program?

The Bankruptcy Law Offices of James Schwitalla, P.A is experienced with the Mortgage Modification Mediation Program and offers the service to its clients. We sit down with clients in the initial consultation and review whether the facts of your case make you a good candidate for the Mortgage Modification Mediation Program. If you have been previously denied for a loan modification or thought you would not qualify for a loan modification for any reason, call to schedule a free consultation with one of our attorneys to find out if you may qualify for a loan modification using the Mortgage Modification Mediation Program.

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