What to Do When Your Servicer Denies You a HAMP Loan Modification Because You Received a Discharge in a Chapter 7 Case and Did Not Reaffirm the Mortgage Debt

1. Remind the servicer that a prior bankruptcy discharge is not a basis for denial. See HAMP Sup. Dir. 10-02, p. 8; Sup. Dir. 09-01, p. 2 and 16.

• You are eligible for a HAMP mod even if the first lien mortgage debt was discharged and no reaffirmation was entered into in the chapter 7 case.
• Same rule for GSE mortgages. See Fannie Mae Announcement 09-05R, p. 3.

2. Verify that your servicer has included language in HAMP agreement making loan modification non-recourse. See HAMP Sup. Dir. 10-02, p. 8; Sup. Dir. 09-01, p. 16.

• The following language must be inserted in Section I of the HAMP agreement: “I was discharged in a Chapter 7 bankruptcy proceeding subsequent to the execution of the Loan Documents. Based on this representation, Lender agrees that I will not have personal liability on the debt pursuant to this Agreement.”
• Same rule for GSE mortgages. See Fannie Mae Announcement 09-05R, p. 18.

3. Call Howard Law, P.C. at 1-800-872-5925 for assistance with your loan modification today. We have helped many homeowners who have been previously rejected by their lenders for a HAMP or other loan modification.

- July/August 2010, NCLC Reports Bankruptcy and Foreclosures Edition