With the property market continuing to improve in Florida, we are seeing more lenders delay and place obstacles in front of borrowers trying to modify their home mortgage in an effort to keep their homes. There are certain court rules and CFPB rules regarding modification that an attorney may be able to help ensure that the lender properly reviews a loan mod package. When that fails, an appeal or online complaint to the CFPB may help. When that fails, a very good way to make a lender accept your mortgage payments, is to file a Chapter 13.
First there is a modification process available in many bankruptcy courts, including the Middle District Tampa Division that works pretty well. There is a good faith requirement that does not exist in state court. So some mods that may be denied outside of court, or in the state court, may actually be approved in a Chapter 13.
A relatively foolproof way to keep a home is also to use a Chapter 13 plan to catch up on the missed payments. This may be really good for a borrower who had a prior loan modification (with principal reduction) that they fell behind. A Chapter 13 should be able to revive the terms of the favorable loan mod. The catch is that the total arrearage (missed payments, and any foreclosure fees/costs) must be paid within no more than five years, while at the same time the regular monthly payment is also made. A mortgage company cannot object to a plan like this that provides “adequate protection” to the lender. Many people cannot afford this, but an easy way to see if you can is to check your last mortgage statement for the balance due (not the principal amount). If it says $20,000, then divide $20,000 by 60 months which is $333. So if your mortgage payment is $1,500, you would add $333 to catch up and another 10% for the trustee’s fee for a monthly total of $1,983. If you can afford this, then your mortgage company must accept it — even though they may really want to foreclose.