Many Florida residents are in a financial crisis. Our posts have focused on the increase of bankruptcy filings in seniors and other residents, and we have discussed the rise in foreclosures and people facing foreclosure. According to an article published by The Wall Street Journal, Florida has the highest U.S. foreclosure rate. Almost 25 percent of the mortgages held in Florida are 30 days or more delinquent. The Mortgage Bankers Association reported that the national average in mortgage delinquency is only 13.8 percent.
However, Florida residents may see some changes that could improve their financial situation. Fannie Mae has started a new foreclosure-prevention program in Florida that aids the negotiation process between borrowers and lenders regarding mortgage modifications. The program focuses on getting lenders to meet with borrowers who are struggling financially. The key is to get the parties together to discuss mortgage modifications earlier on when an alternative to foreclosure is still possible.
Mediations are organized by the Collins Center for Public Policy, which is a non-profit based in Miami. The organization is currently running meditations in six of the state’s 20 judicial circuits. Although many states have adopted laws that require lenders to meet with troubled borrowers, the timeframe for a scheduled meeting could be up to eight months. By this time, the borrower is so behind in payments that a modification of mortgage is no longer a valid option. In most cases, foreclosures have already been filed with the court.
The Collins Center has been able to get lenders and borrowers together for negotiations within four months of becoming delinquent on mortgage payments. When the process is sped up, borrowers have an opportunity to meet with lenders before a foreclosure is filed. Homeowners have a better chance of saving their home by working out a modification agreement with lenders.
Currently, only borrowers with a loan owned or guaranteed by Fannie Mae can participate in the program. Freddie Mac does plan to implement a similar program in Florida, but it is not certain when the program would start. Florida bankruptcy attorneys can also assist struggling homeowners with finding solutions to avoid foreclosure by seeking out a mortgage modification. Bankruptcy lawyers understand the foreclosure process, and they can educate Florida homeowners about all of the options that could help them save their home.
The Wall Street Journal: “Fannie Tests Foreclosure-Prevention Plan in Florida,” Anthony Klan and Nick Timiraos, 8 Jan. 2011