Florida Asset Protection : Asset Protection Law & Planning in Florida - Florida Homestead Exemption

To date, mortgage modification when available involved lowering interest rates and deferring arrearage in order to lower monthly payments but without any reduction of principal toward current market value. Soon, many homeowners will find their mortgage lenders willing to reduce principal balance as part of mortgage modification. The government’s mortgage modification program known as HAMP (Home Affordable Modification Program) issued a Supplemental Directive 10-5 which encourages lenders to offer principal reduction to underwater homeowners. The Directive is effective October, 2010.

Supplemental Directive 10-5 states theat mortgage lenders must evaluate any loans being considered for mortgage modification using an alternative analysis which reduces unpaid principal to a level that helps the homeowner achieve the target monthly payment of 31% of gross monthly income. Principal can be reduced until the loan balance is 115% of current market value.

Mortgage lenders must consider modification of loans on primary residences for people 60 days delinquent in mortgage payments. It helps to understand the guidelines before discussing mortgage modification with your mortgage lender. The HAMP program rules are available on the internet. If you cannot understand the HAMP guidelines you should get help from someone in the real estate business who does understand.

• Email This
• Print
• Comments (1)
• Trackbacks
• Share Link

One of my asset protection client introduced me to an attorney in Tampa, named Mike, who has a very large and successful practice defending mortgage foreclosures and negotiating mortgage modification. I spoke with Mike and asked him about his client’s experiences during court-ordered mediation with their mortgage lender during foreclosure litigation.

Mike said that mediation in state court proceedings is usually a waste of time for his clients. He listed several reasons why foreclosure mediation infrequently results in successful mortgage modification and foreclosure forbearance. For example, he said that there are so many foreclosure mediation that lenders usually send a foreclosure "clerk" with minimal authority to offer anything other than the lenders "in-the-box" standard modification packages for which, he said, few clients qualify. He said that the lender’s attorney see mediation as a temporary hurdle in their march toward foreclosure judgment and possession of the property. There are so many different state court judges with their own procedures that there is little uniformity how trial court’s treat mediation.

Mike said he is having success in mediation ordered by the appellate court. When an appeal is filed our appellate court (the Fifth District Court) orders almost all foreclosure cases to mediation. No briefs are due until mediation is completed. The attorney says lenders send more senior representatives to appellate mediation and they take more seriously mortgage mediation ordered by an appellate court. Appellate mediation is uniform because there is just one appellate court in our district.

The challenge is getting a foreclosure case to the appellate level. Mike lays the groundwork for appeal in response to lenders’ motions for summary judgment. He says that most trial courts ignore technical defects in lenders’ summary judgment motions because the trial judge wants to move his large foreclosure docket and get cases to their inevitable conclusion of a foreclosure judgment. Trial judges do not scrutinize foreclosure summary judgments as closely as they do in a typical civil case, according to Mike. Mike says that he uses technical summary judgment defenses which he anticipates may be overlooked by the trial court judge, but these technical defenses if ignored are the basis for an appeal. His clients can file and appeal and get to appellate mediation for a relatively small investment in legal fees.

I posted a blog article earlier this week about prospective bankruptcy court mediation in Chapter 13 cases. It will be interesting to see if bankruptcy mediation is, like appellate mediation, a better forum to negotiate mortgage modifications.

• Email This
• Print
• Comments (1)
• Trackbacks
• Share Link

Why won't my mortgage company offer me a reasonable mortgage modification? Why would they choose to foreclose when with just a little help I can pay the mortgage. These are questions I hear all the time from clients concerned about deficiency liability following a prospective mortgage foreclosure.

I usually advise the questioners that their mortgage lender will not agree to a workable mortgage modification (despite Washington's modification program) because the mortgage service company is not able to provide a reasonable modification or its not in their self-interest to modify.
I saw a blog post from bankruptcy attorney Craig Andresen that sheds some light on the modification problem. He writes:

None of the sources referred to here discussed what could be the real reason for the astonishingly small number of modified mortgages: most mortgages owed on the homes of American consumers are owned by securitized trusts. The trustees of these trusts may lack the authority to compromise on the amounts due under the terms of the mortgages. Having no authority to modify these mortgages, none are being modified. Instead, meaningless "trial modifications" are being offered as window dressing. Thankfully, the real story is beginning to emerge

This make sense. Borrowers should keep in mind that the mortgage industry build a very complicated "house of cards." A result of the complicated financial structure is that is difficult for the lenders to focus on one mortgage at a time and make unique settlement modifications based on the facts of each borrower's circumstances. I've been told by attorneys representing the lenders in foreclosure suits that their biggest frustration is finding people working for their own clients with authority to approve settlements. Mr Andresen's blog post is consistent with my clients' experiences.

• Email This
• Print
• Comments
• Share Link