Mortgage Modification for Orlando Homeowners in Chapter 13

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Chapter 13 BankruptcyYesterday I attended the annual seminar sponsored by Central Florida Bankruptcy Law Association. A panel of mediators discussed their experiences with the new mortgage modification program  in the Orlando division of the bankruptcy court. Their impression was that lenders are taking the program seriously and offering genuine modification arrangements that were useful to Chapter 13 filers. One mediator mentioned that they had not seen nor heard of a single case of principle reduction in any mortgage modification.  More likely are modifications offering reduction in interest rates, extension of the term, and amortizing arrears over the life of the loan.

The Obama administration’s mortgage modification program, which has been in effect since March of 2009,  has helped very few Orlando homeowners avoid foreclosure and save their homes.  In contrast, Chapter 13 bankruptcy offers homeowners in the right situation immediate relief from foreclosure.  Depending on the homeowner’s income and the number of mortgages and the amount of debt, Chapter 13 can significantly improve the long-term cost of owning a home.  This mediation program is welcome, and offers yet another tool in Chapter 13 for making homeownership both possible and affordable.

If you are an Orlando homeowner trying to determine if mortgage modification or a chapter 13 bankruptcy may offer a solution to your mortgage crisis, begin with taking 1/3 of the income available to you during the last six months and ask your self if you can afford that payment.  If you can, but your current mortgae payment is not affordable, then you may want to look closer at these options.   If you are in default or you are in  foreclosure, then a Chapter 13 bankruptcy will stop it immediately and force your lender to negotiate.

For more information about the mortgage mediation program in Chapter 13 bankruptcy follow this link: pdf

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