Midweek, Wed. - Fri., July 28 - 30, 2010 Balita M Bankruptcy fi lers may still qualify for HAMP loan modifi cation
ANY homeowners who are in foreclosure and seeking a loan modification from their lenders are reluctant to file for bankruptcy although they can no longer sleep at night because of their insurmountable debts. They are afraid that if they filed for bankruptcy, the lenders would auto- matically reject their loan modification application. Similarly, those who have filed for bankruptcy and those whose debts have been discharged under Chap- ter or those whose repayment plan under Chapter 13 have been approved think that they would no longer qualify for loan modification.
These fears are generally true. But those who have applied for loan modification under Home Affordable
Mortgage Program (HAMP) of the Obama administration need not worry about filing for bankruptcy even if their loan modifica- tion applications are still pending. Under the guidelines released by the Treasury De- partment that took effect on July 1, 2010, bankruptcy filers who would otherwise qualify for HAMP loan modification are given additional protection.
If the homeowner who has already been approved for trial loan modification and decides to file for bankruptcy under either Chapter 7 or Chapter 13, the lender cannot deny the homeowner permanent modification just because he or she has filed for bankruptcy. In addition, the HAMP guidelines ef- fectively prohibits lenders from enforcing foreclosure proceedings until after the lender or loan servicer has determined that the borrower does not qualify for HAMP loan modification.
for three units; and $1,403,400 for four units.
• Have a first lien mortgage that was originated on or before January 1, 2009. • Have a monthly mortgage payment (including taxes, insurance, and home owners association dues) greater than 31% of your monthly gross (pre-tax) income. • Have a mortgage payment that is not
affordable due to a financial hardship that can be documented.
BY ATTY. JAMES G. BEIRNE
As a background, the Home Affordable Modification Program (HAMP) is part of the three-pronged comprehensive strategy by the Obama administration to help dis- tressed homeowners who are struggling to keep their loans current or who are already behind on their mortgage payments. Unlike the Home Affordable Refinancing Program (HARP) that is available only to those whose home loans are owned or guaranteed by Fannie Mae or Freddie Mac, HAMP is available to all homeowners in financial trouble. It provides mortgage loan servicers with financial incentives to modify existing first lien mortgages. To apply for a loan modification under
HAMP, the homeowner must: • Be the owner-occupant of a one- to
• Have an unpaid principal balance that is equal to or less than: $729,750 for one unit; $934,200 for two units; $1,129,250
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Here are some key highlights of the new HAMP guidelines with regards fore- closure: • The servicer must evaluate the bor-
rower’s eligibility under HAMP and de- termine ineligibility before referring the borrower to foreclosure.
• If foreclosure activity has already been initiated, the foreclosure sale cannot occur until after the servicer determines if the borrower is ineligible under HAMP. • The servicer must give the borrower 30 days to respond to HAMP “Non-Approval Notices” in certain circumstances before conducting the foreclosure sale. • The servicer must provide, in writing, to the foreclosure attorney certification that the borrower is ineligible for HAMP before conducting the foreclosure sale. With regards homeowners who are in bankruptcy or are planning to file for bankruptcy, here are the guidelines issued by the Treasury Department: • A borrower in active Chapter 7 or Chapter 13 bankruptcy or the borrower’s attorney or bankruptcy trustee can request the servicer to consider the borrower un- der HAMP. The servicer can no longer decline the borrower as a “proper exercise of discretion.”
• If the borrower has been approved on a trial loan modification and files a Chapter 7 or Chapter 13, the servicer may not deny the borrower a permanent modification simply for filing bankruptcy.
• If a delinquent borrower has a dis- Kare-kare Adobo
charged Chapter 7 and chooses not to reaffirm, the first lien mortgage debt is still eligible under HAMP with the fol- lowing provision added to the permanent modification agreement: “I was discharged in a Chapter 7 bankruptcy proceeding subsequent to the execution of the loan documents. Based on this representation, the lender agrees that I will not have per- sonal liability on the debt pursuant to this Agreement.” A reaffirmation is a new contract be- tween the lender and the debtor wherein the debtor agrees to reinstate personal li-
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ability on a debt otherwise discharged by the bankruptcy court.
Remember that if you think you qualify for loan modification under HAMP, you may still file for bankruptcy without surrendering your HAMP eligibility. At the same time, even if you are already in bankruptcy and think you may qualify for a HAMP loan modification, you can go ahead and apply.
It is always advisable for homeowners having difficulty negotiating with lenders to seek the services of an experienced at- torney. My office can help you package your HAMP loan modification application and, at the same time, fight for your rights under the HAMP guidelines.
Call us today and schedule a free con-
sultation. We have three convenient offices to serve you: Glendale (818) 552-4500; Cerritos (562) 865-4480; and West Covina (626) 262-4446.
Atty. James G. Beirne, a member of the highly respected National Association of Consumer Bankruptcy Attorneys and an active member of the State Bare of California, has been handling bankruptcy cases for over a decade. His offices are located at 520 E. Wilson Ave., Suite 110, Glendale, CA 91206, and 17215 Stude- baker Rd., Suite 380, Cerritos, CA 90703, with telephone numbers (818) 552-4500; (562) 865-4480; and (866) 903-4522. He also has offices at 2640 E. Garvey Ave., Suite 104, West Covina 91791, with tel. no. (626) 262-4446.
(This article is for information purposes
only, and does not necessary reflect the company’s opinions and views on general issues. We make no warranty, prediction nor representation, nor do we assume any legal liability for the completeness of any information and its effect on any case. Each case is different and results depend on the facts of each case. Consult with and retain counsel of your own choice if you need legal advice.)■
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