MMM: The Bankruptcy Modification Program Banks Don’t Want You to Know About
With results yielding approximately 75% success rates , it is no surprise that more and more homeowners are turning to Mortgage Modification Mediation (MMM program) in bankruptcy. I’m sure your wondering - Why is the MMM program so successful?
The Court is WatchingThe MMM Program is much more successful because under Federal Law, if a bankruptcy judge orders parties to go to mediation, the lender is legally required to mediate in good faith. This legal duty to act in good faith does not exist in many state courts, including Florida. Outside of bankruptcy, bank underwriters routinely say," denied," and provide no reason or false reasons for denials to loan modifications. Many would argue that mortgage companies do not want to modify your mortgage - including former Bank of America employee, Simone Gordon, who recently testified in an affidavit that Bank of America employees regularly lied to homeowners. She stated that customers are denied loan modifications for knowingly false reason, and bank employees were rewarded for sending homeowners to foreclosure ! In bankruptcy court, "good faith" requires the mortgage servicer to provide a valid reason to deny a mortgage modification. Therefore, many homeowners who were previously denied, are now "approved". If a mortgage servicer is found to not have demonstrated "good faith," the Judge can sanction (i.e. punish) the bank. In a hearing before Bankruptcy Judge Jerry Funk, he ordered a national mortgage servicing company to pay more than $18,000 punitive damages, sanctions and attorney fees for failing to act in good faith. The Bankruptcy Judges and the Chapter 13 trustees are strongly committed to a successful program.
They may not be able to consider your other debtsThe existence of credit card debt, medical bills, past due Condo or HOA dues and a second mortgage might prevent qualification of a modification outside of bankruptcy. However, because a bankruptcy eliminates or reduces your other debts, the bank can no longer use this as an excuse to add to your expenses, reduce your income and in turn deny your loan modification.
There is no more run around for communication or documentsThe MMM requires use of an online portal for all communication and document submissions. The debtor will have proof of all uploaded documents with strict deadlines to the lender to confirm receipt and specify what additional information is required. The mediator will use the portal to facilitate the exchange of documentation and ensure good faith. Through this portal both the lender and borrower communicate via a time stamped message and notification system. The portal eliminates the she-said he-said run around.
There is a second chanceThe MMM can be utilized in a chapter 13 case even if the debtor received a discharge in a prior chapter 7, even if the lender previously denied a modification, and even if the debtor had defaulted under a prior modification.