The U.S. Bankruptcy Court of the Middle District of Florida has implemented the Mortgage Modification Mediation (“MMM”) program that allows debtors to modify their mortgages in bankruptcy. The MMM is available in all cases and for any type of property, home or investment. Under the MMM program, a neutral mediator is assigned to facilitate negotiations between the debtor and the lender’s mortgage modification underwriter with full settlement authority regarding the interest rate reduction (either temporary or permanent), moving payment for mortgage arrears to the end of the loan, or reducing principal.

To participate, the debtor must request a referral to the MMM within 90 days from the bankruptcy petition filing. Generally, once the referral is requested, strict deadlines and obligations are imposed on both the debtor and the lender. A sample Order Directing Mortgage Modification Mediation can be found at http://www.flmb.uscourts.gov/mortgage_modification/Sample_District_Order_Directing_MMM_8102015.pdf.

The MMM program has a reported success rate of over 70% in reducing mortgage interest rate to as low as 2% for five years with one year step up reaching the current rate of approximately 4.0%. Although most of the mortgage modifications in this program are through the “Making Home Affordable Program” (referred to as HAMP), there are a lot of traditional modifications with comparable terms for those debtors who do not qualify for HAMP. On average, mortgage modification through the MMM program in bankruptcy has been saving debtors $505.00 per month.

To be eligible for mortgage modification through HAMP, the debtor’s monthly mortgage payment (including homeowner’s insurance, property taxes and homeowner’s association fees) must be greater than 31% of the debtor’s gross monthly income and the mortgage payment must not be affordable due to a financial hardship.

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