The U.S. Bankruptcy Court in New Jersey recently started a new program designed to help avoid foreclosures. It’s called the Loss Mitigation Program. It provides several options besides mortgage modification to debtors who are in danger of losing their homes. The most interesting thing about the program is that there are no mediators. No one participates except debtors, creditors and their lawyers. Indeed, the program’s flexibility is one thing making it attractive to debtors and creditors alike.
Either side may initiate the process, and, after it begins, the two sides have 90 days in which to come to an agreement. One of the few requirements is that the parties act in good faith. Part of the good faith requirement forces debtors to continue to pay a portion of their mortgage during the proceedings.
Of course, the problem with the program is that you have to declare bankruptcy in order to take advantage of it.