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Bankruptcy lawyers advocating on behalf of homeowners in foreclosure

by Dorota Trzeciecka on July 21st, 2013

You may think that the Obama administration and state legislatures were the only ones at the forefront of battling the foreclosure crisis in Florida and the rest of the country.  But that is not so.  Since the beginning of the foreclosure crisis, bankruptcy attorneys and their national association, National Association of Consumer Bankruptcy Attorneys (“NACBA”), were lobbying Congress to adopt legislative actions, such as a cramdown in Chapter 13, and other solutions that would bring same results for their clients, without necessity of legislative actions.   Most notable of such solutions was called Principal Paydown Plan, or “PPP” for short, whose key feature provides that underwater homeowners who file Chapter 13 bankruptcy can apply all of their monthly mortgage payments to principal for five years by reducing the interest on their loan to zero for that period.  This would dramatically reduce negative home equity, which virtually every housing economist has cited as the leading factor pushing up home foreclosures nationwide.  Unfortunately, Congress did not adopt either the cramdown or the PPP.


But, the bankruptcy bar continued to work hard on the local level to bring relief to homeowners who were in foreclosure and wanted to save their homes.  The result of these efforts is a program called Loan Mitigation Mediation Program, which is currently in effect in the Bankruptcy Courts in the Middle and in the Southern District of Florida.   It is mortgage modification in Chapter 13 bankruptcy.  The program owes its high success rate to the improved exchange of documents and information between the borrower and the loan servicer, quality modification packages, and the prominent role of the mediator in the process.

From → Foreclosure