It is no secret to anyone in Miami that Florida was hit especially hard during the home mortgage foreclosure crisis. A number of homeowners have had to walk away from their mortgage, declare bankruptcy or get out of their mortgage with a short sale. The federal government was paying attention and began a pilot program in Orlando that has since been rolled out in other locations within Florida.
The bankruptcy foreclosure mediation program has been able to help some people save their homes. It has been reported that many have obtained a reduction of $100,000 in the life of their loan through new terms worked out in mediation and some have reduced their loan by as much as $275,000. As with any foreclosure option, it works for some but not for others.
Recently it was reported that those in Jacksonville are taking advantage of the program, although it was off to a slow start. Basically, the way it works is that a homeowner files for Chapter 13 bankruptcy and then asks to be included in the program. The mediation program couples a principal reduction with a loan modification. Some homeowners will receive both the principal reduction and the modification, although most have received just the loan modification.
There is one primary reason why the foreclosure mediation program does not work for some people.
The bankruptcy court judge decides that even with a modification the homeowner could probably not make his or her mortgage payment.
This program could help save home ownership for anyone who is facing foreclosure and considering Chapter 13 bankruptcy.
Source: Jacksonville Business Journal, “Bankruptcy foreclosure mediation program could help many, but not everyone,” Christian Conte, Oct. 25, 2012
Source: Herald-Tribune, “Mortgage modification may remedy foreclosure crisis,” Todd Ruger, Nov. 12, 2011
- At our Miami law firm we assist people with Chapter 7 or Chapter 13 bankruptcy and foreclosure defense similar to the method mentioned in this post.