For several years now, at least since the real estate market downturn in 2006, homeowners have struggled to modify their underwater mortgages. Most homeowners have failed at successfully obtaining a modification because home loan lenders initially weren’t set up to do modifications. Mortgage lenders would represent to borrowers that the various programs were available, but in fact getting a modification was nearly impossible. Borrowers applied through the Keep Your Home California program, the HAMP program, the HARP program, and other government sponsored or instituted modification systems, but the lenders did not have the staff, resources, or desire to actually modify their customers’ mortgages. Borrowers were routinely and invariably told that their whole application and supporting documents were lost, requiring a second or even third round of submissions.
For the first several years following the real estate market meltdown, almost nobody got a mortgage modification. Now there is a way that debtors in bankruptcy in Northern California can take advantage of a new mortgage modification program in Chapter 13 bankruptcy that is efficient and effective. Using the U.S. Bankruptcy Court for the Northern District of California’s Mortgage Modification Mediation program, debtors in bankruptcy can get a Judge’s Order requiring the mortgage lender to sit down and work with the borrower in good faith to modify their loan. The Court will order your lender to review all the documents you’ve submitted, discuss the lender’s requirements, explain any decision to accept or deny your modification, and generally talk to you with your attorney and a neutral mediator helping the parties work towards an agreement.
This new program, implemented in August 2015, is an empowering new tool to help borrowers who are underwater and behind on their mortgage payments avoid foreclosure, get a new reasonable payment, (and sometimes a reduction on the principal balance) and protect their home.
To discuss mortgage modification in bankruptcy, please Contact Brian Barta today.
