Life happens - job loss, reduction of hours, illness, divorce, business setbacks, you name it. Any of these or other unfortunate events can lead to missed mortgage payments and eventually, foreclosure. The mere thought of it is enough to lose sleep over. But there are options!
In Florida, some of the options that may be available to a homeowner on the brink of foreclosure are:
Reinstatement: a lump sum payment made to the lender to bring the mortgage current (along with applicable fees and costs), as long as this is paid in full prior to the foreclosure sale/auction.
Refinancing: some borrowers are able to refinance but this is rare and not always advisable.
Bankruptcy: Filing bankruptcy may stop foreclosure by virtue of the automatic stay, giving you peace of mind while you try to resolve your debt without the threat of losing your home or creditor calls. Chapter 13 bankruptcy generally lasts three to five years and allows homeowners in South Florida the following options for saving their home from foreclosure:
Cure and Maintain - while shielded by the bankruptcy automatic stay, homeowners can save their home by catching up on the missed mortgage payments within the Chapter 13 repayment plan. This would require the borrower/homeowner to spread out the missed mortgage payment amount over the life of the bankruptcy case (36 to 60 months) in addition to the regular mortgage payment amount.
Mediated Mortgage Modification (MMM) - In South Florida, homeowners may apply for the MMM program through the Chapter 13 bankruptcy case, while making good faith monthly payments based on their income to the lender through the bankruptcy plan while the modification application is being reviewed. Getting rid of unsecured debt in bankruptcy frees up borrowers’ disposable income and debt-to-income ratio, giving them a better chance of getting approved for a modification. If, however, a modification is not granted (or at least not one with favorable terms), the homeowner would have to catch up on the missed mortgage payments (as explained above) in order to keep the home.
Additionally, if there are junior liens (such as second mortgages or past due homeowners’ association dues), yet the fair market value of the home is less than the payoff balance of the first mortgage, the junior liens may be eliminated and discharged in the Chapter 13 bankruptcy. Every case is different and certain criteria have to be met.
Call 305-224-6101 or schedule online to discuss your options with Miami bankruptcy lawyer Alexandra Lopez and determine which of the above (or other) options is most beneficial to you.