Monday, April 9, 2012

Bankruptcy, Foreclosure, and Mortgage Modification: Who is Winning?

There is really no need to tell you the economy not doing very good. Although bankruptcies have slowed in the Middle District of Florida, and some people are now finding employment after being unemployed for an extended time, foreclosures appear to be steady, though it appears, as predicted by some, to be the beginning of a second wave. This would have been hard for anyone to predict in an election year.

The stories surrounding bankruptcies and foreclosures are vast, to say the least. They range from the breadwinner losing his or her job and loan documents being lost, to fraudulent loans being orchestrated and lost of destroyed documents being recreated. While some states have attempted to handle the problem by allowing non-judicial foreclosure proceedings similar to a typical collection on a titled asset (like an automobile), other states do not permit such actions. Here, in Florida, it is difficult to see how non-judicial proceedings could be done on homestead property in keeping with our Florida State Constitution which contains homestead protections.

Mortgage modifications were looked at as being a possible answer to the foreclosure crisis. The Florida Supreme Court even ordered mediation for all homestead property being foreclosed on (with some exceptions). However, both the modifications and mediations have been highly ineffective, resulting in the Florida Supreme Court to lift its order directing mediation for homestead properties.

In Central Florida, mediation through bankruptcy has been surprisingly successful. The practice is now in for a trial run in the Jacksonville Division, however, since the Florida Supreme Court lifted its mediation order, it is not yet known how successful it will be.

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