Thousands of Floridians remain in the grips of the foreclosure crisis. Many homeowners still owe more on their mortgage than their property is worth, or are very close to being in that position.
But, there is a new ray of hope for state residents fighting to keep up with their payments. Launched in Orlando, the Bankruptcy Mortgage Modification Mediation Program has helped homeowners restructure their mortgages and avoid foreclosure. Now, the program is spreading across the state, and with the help of a Tampa bankruptcy attorney, struggling homeowners can take advantage of the significant new benefits available to them.
How the Program Works
The Bankruptcy Mortgage Modification Mediation Program essentially creates a streamlined process for negotiation between borrowers and mortgage providers in the course of a Chapter 13 bankruptcy plan. Those going through Chapter 13 bankruptcy set up a court-approved repayment plan over a three to five year term that involves the rescheduling of many types of debts (this usually means lower payments, and the complete discharge of certain obligations at the end of the repayment term).
While Chapter 13 bankruptcy can be hugely beneficial, it does have shortcomings: typically, a Chapter 13 proceeding alone does not help homeowners secure lower mortgage payments. The new Florida modification program has helped fill in this gap.
Participants in the program enter a fast-tracked negotiation with lenders that is facilitated by the bankruptcy court. While a mortgage modification is not guaranteed, the ease and low cost of the new program is attractive to lenders growing weary of the headaches of foreclosing on and reselling homes in a depressed real estate market.
So far, 90 percent of homeowners who entered the program have secured a mortgage modification. Many of them have gotten new mortgage terms that will result in interest payment savings of up to $100,000 over the life of their loan. One out of five homeowners in the program received a reduction in principle loan balance – for some of them, six figure savings.
Mortgage Modification Program on Its Way to Manatee County, Other Florida Areas
Florida’s new program is set to expand into Manatee and Sarasota counties next. If it continues to be a success, it could become statewide by the end of 2012.
Although the mortgage modification program offers a lifeline to many homeowners, it can be complex and has stringent eligibility criteria, including the requirement that homeowners who wish to engage in the program file a Chapter 13 bankruptcy petition. If the new program sounds like it may be of interest to you, contact a Florida bankruptcy attorney today to explore your legal options.