Everyone gets into hard times, especially when it comes to home ownership. It is for this reason that the U.S. Bankruptcy Court for the Southern District of Florida, as well as similar courts across the country, have created programs to help debtors modify their mortgage obligations to avoid foreclosure.
In the Southern District of Florida, this program is known as the Mortgage Modification Mediation Program. Here are some tips on how the program works and what it can do to help avoid bankruptcy and foreclosure.
Miami’s U.S. Bankruptcy Court for the Southern District of Florida created the Mortgage Modification Mediation (MMM) Program after a recent statewide bankruptcy summit. It replaced the previous Loss Mitigation Mediation Program.
Under MMM, homeowners who are currently facing foreclosure can access the program to help facilitate a modification of their existing mortgage obligations. Trained mediators work with both sides to help them through the process to a successful resolution for all involved.
Mediation is a form of alternative dispute resolution that is much more informal and allows the parties to work closely together to come to a solution that works best for all involved. Mediation usually happen at the mediator’s offices instead of court.
The mediator is selected by both parties. In the Southern District of Florida, it is the debtor who has the initial choice of mediator, subject to the objection of the creditor.
Once he or she is chosen, the mediator’s job is to help the debtor and mortgage company to reach an agreement. Neither party can be forced to an agreement, however, so if it does not work, unfortunately the parties are back at square one.
That being said, the mortgage company usually wants to be paid, and if modifying the rate can help them receive payment, they may be willing to work with the debtor.
MMM usually results in a reduced rate or extended term for the debtor in lieu of foreclosure. Mediation allows parties to be creative in the solutions that are discussed, which results in an agreement that will work for both parties involved.
In comparison, if a judge is the individual handling a matter instead of a mediator, he or she will come to a resolution that neither party has a say in and may not even agree with. The process is also informal which means it can be a lot quicker and cheaper for the debtor to resolve.
Another benefit is payments made during mediation are limited to 31 percent of the debtor’s gross income.
Certain qualifications must be met for the debtor to participate in the mortgage modification program, including:
The MMM program is available to debtors who filed for bankruptcy under any Chapter, after August 1, 2014. Further, the bankruptcy filing fee must have been paid in full prior to the debtor seeking the MMM program.
The turnaround for mediation is normally a couple weeks. However, mediation needs to be filed rather quickly in terms of when bankruptcy is filed. The debtor must request mediation within that 90-day period. If the 90-day period lapses, the debtor can seek mediation but only under limited circumstances.
An attorney is never a requirement when it comes to any type of legal proceedings, but an attorney can always help. The mortgage company will likely have an attorney representing their interests, and the mediator will likely be an attorney, as well.
The attorney for the other side will be representing his or her client’s interests first, and the mediator will not be able to give the debtor legal advice as he or she needs to remain neutral throughout the entire process. It is for this reason that having legal counsel to represent the debtor, as well, can help move things along.
At RLC Lawyers & Consultants, we are here to walk you through this stressful process of bankruptcy. To request to schedule a free consultation, please call us at (561) 571-9610.