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Mortgage Modification in Bankruptcy

by Dorota Trzeciecka on April 7th, 2013

If you tried to get mortgage modification in foreclosure and you were unsuccessful, now there is a new and more effective way to save or surrender your home.  Beginning on April 1, 2013, Bankruptcy Court for the Southern District of Florida, covering Miami-Dade, Broward and Palm Beach counties, adopted its own mediation program called Loss Mitigation Mediation (“LMM”), which offers debtors an opportunity to engage in settlement discussion with lenders regarding modification of mortgages and surrender of real property in consumer cases in Chapters 7, 9, 11, and 13.  The LLM works in conjunction with an online web portal called Default Mitigation Management (  That portal facilitates preparation of the debtor’s loan modification package and exchange of information between the borrower and the loan servicer.

The LMM program is a significant improvement on the state’s mandatory foreclosure mediation, which the Florida Supreme Court terminated in December of 2011.  Remember the days when you went to a foreclosure mediation, and the mediation invariably ended up in an impasse because the lender did not have all the documents and information necessary to make a decision about your loan modification.  Those days are gone.  To expedite and improve the exchange of documents and information between the debtors and the lenders, the LMM program mandates the use of a secure online portal for exchange of documents especially designed for the bankruptcy court.

Another major improvement is that, in this program, it is the mediator’s duty to ensure that the lender has all the required documentation prior to mediation.   Mediation cannot proceed unless the mediator confirms that the borrower submitted all the required documents to the lender, and the lender received and reviewed them.  So, even though the mediator ‘s fee is higher than for the state court mediation ($600 split between the parties), the success of the mediation falls heavily on the mediator to ensure that the lender has all the necessary documents and information to come to a decision at the mediation.

The mediation is broken into two one-hour segments.  If you cannot resolve your case in the first hour, you get another hour and another chance at resolving it at a later date, without any additional cost to you.

This LMM program, which piloted in the Middle District of Florida, owes its high success rate to the improved exchange of documents and information between the borrower and the loan servicer through the secure online portal, improved modification packages through the Default Mitigation web portal, and the more prominent role of the mediator, who ensures that the complete exchange of documents.


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