The Mortgage Modification Program May Help You Keep Your Home
There are a number of ways that bankruptcy can help you in foreclosure. Bankruptcy can buy you more time to make a modification work, stop a foreclosure sale or, in the case of a Chapter 13, allow you to pay back what you owe on the loan in smaller, more manageable payments, so that you are current by the time your Chapter 13 plan ends.
But now there’s a new way that bankruptcy can help you if you are in foreclosure: The Mortgage Modification program, a program started by the Southern District of Florida federal court system.
Requirements and Eligibility
The program requires that lenders and borrowers meet and negotiate, to try to come to some resolution of the foreclosure case. The program does require that you have an active foreclosure case pending, so if you’re behind on payments, but no foreclosure has been filed yet, you won’t be able to participate.
The program uses a secure portal to avoid those “the bank lost my paperwork” problems.
Procedures and Rules
If you want to participate in the program, your bankruptcy attorney needs to request an order of referral within 90 days of your bankruptcy case being filed. All supporting documentation for the modification must be completed and uploaded into the system.
The parties will then jointly select a mediator. If the bank drags its feet, and doesn’t suggest a mediator, the borrower can pick a mediator of their choice. If the parties can’t agree on a mediator, the clerk will select one randomly.
The lender can appear at the mediation by telephone. The borrower can either be on the phone along with their bankruptcy attorney, or else, if the borrower has no attorney the borrower must appear for the mediation conference in person.
All mediations will last a maximum of one hour, but there is the option of a second, follow-up mediation should the parties so choose.
Delays to Ensure Compliance
If the mediator asks to lift the automatic stay, to get permission to continue with a pending foreclosure case, it will not be able to continue until it completes its obligations under the modification program.
If the parties reach an agreement, it is likely that there will be a trial payment period. If this is the case, any discharge will be delayed until the trial payment period is over—but that’s a small sacrifice, in return for obtaining a mortgage modification that allows you to keep your home.
The program is far from perfect. However, it is a way to bring a lender to the table to negotiate, and an opportunity for you to communicate with a bank representative to try to keep your home.