Recent Entries

HAMP Single Point of Contact for Borrower Assistance

Published on May 20, 2011 in Homeowners Affordable Modification Program. 0 Comments

On May 18, 2011, The Treasury Department issued Supplemental Directive 11-04 under the Home Affordable Modification Program (HAMP).  The purpose of this Directive is to require servicers of non-GSE mortgages to have a single point of contact for dealing with customers who are currently in or may be eligible for HAMP programs on first mortgages.  Second Mortgages are not covered under this Directive. 

The single point of contact (SPC) must be in a position to communicate with the borrower about a resolution for their delinquency.  The SPC must be in place for the entire delinquency or the imminent default resolution process including any home retention or non-foreclosure liquidation options, and if the loan is subsequently referred to foreclosure, the relationship manager must be available to respond to the borrower’s inquiries regarding the status of the foreclosure.  In addition to HAMP, this will be required with the Home Affordable Unemployment Program (UP) and the Home Affordable Foreclosure Alternatives (HAFA) program.  The effective date of this Supplemental Directive is September 1, 2011.

Please be advised that for those borrowers who are in the process of being evaluated for HAMP, UP or HAFA, who are in a trial period plan or a UP forbearance plan, or who have executed a short sale or deed in lieu agreement by the effective date, the Supplemental Directive must be signed by the relationship manager by no later than November 1, 2011.  In addition, borrowers who were originally ineligible for any of the aforementioned programs prior to September 1, 2011 and re-request an evaluation after that time, must be assigned a relationship manager if the servicer determines there has been a significant change in the borrower’s circumstances that merits the re-evaluation. 

Under this Supplemental Directive, the relationship manager must provide the borrower, in writing within five (5) business days of being assigned to the borrower, a notice which includes a toll free number and at lease one other means of contact for the relationship manager.  The notice must also provide the preferred means for the transmission of any required documentation from the borrower to the servicer.  Please note, that if circumstances arise where the relationship manager should change, written notice of said change and contact information must be communicated to the borrowers. 

Additional information in regard to Supplemental Directive 11-04 may be obtained through the US Treasury’s website at treasury.gov.

Weltman, Weinberg & Reis Co., LPA will keep you advised on issues pertaining to HAMP and other bankruptcy matters.

If you have any questions, please contact Alan C. Hochheiser, Esq. Alan is the Managing Partner of the Bankruptcy Practice Group of Weltman, Weinberg & Reis Co., LPA located in the Brooklyn Heights, Ohio office. He can be reached at 216.739.5649 or .

Reaffirming Unsecured Debt in Western District of Pennsylvania

Published on May 2, 2011 in Chapter 7. 0 Comments

By Keri P. Claeys, Esq.

Recently, lenders/credit unions in Pennsylvania have been advised by debtors of their intentions and wishes to reaffirm unsecured lines of credit and/or visa loans in order to maintain their good relationship with the lending institution. With increasingly stringent lending practices and approval on loans being harder to secure, debtors are doing so in the hopes that the debtor(s)’ bankruptcy filing does not affect their chances in the future with such lending institution to receive approval on additional loans.

Upon such requests being received, the lenders/credit unions have been requesting reaffirmation agreements be prepared and sent to the debtors(s) and/or their counsel for review and execution. If feasible, the debtors(s) and their counsels are executing such reaffirmation agreements, even though this technically thwarts the act of Chapter 7 bankruptcy itself; to discharge all unsecured debt and to allow the debtor a clean start.

The issue arises when the reaffirmation agreement is filed with the court.  The bankruptcy court in the Western District of Pennsylvania is declined to approve such reaffirmation agreements. The court is scheduling hearings on such agreements and even upon the agreement and recommendation of both parties and their counsels; the courts are not issuing orders to approve the reaffirmation of any unsecured debt. As explained by one judge in the Western District of PA, regardless of the reason for wanting to reaffirm, he would not approve (even if it did not pose an undue hardship on the debtor) an agreement to reaffirm an unsecured debt, as the debtor filed bankruptcy in order to discharge such debts. Generally, in his opinion, what would be the point of filing bankruptcy, if upon discharge the debtor still owed thousands of dollars in unsecured credit card debt? The judge went on to say that he could not see any instance where he would approve such an agreement.

Upon review of 11 U.S.C. §524(m)(1) and (2), the code is clear that approval based on presumption of undue hardship does not apply to credit unions. Whether or not these sections leave room for discretion for the judge to deny based not upon presumption of undue hardship but based solely upon the fact of the debt being unsecured is left undetermined and such order could be appealable.

While the good intentions of the debtor(s) may be to maintain responsibility for his/her debts to certain lenders/credit unions, and likewise of the lender to try and collect upon a debt that nonetheless would be discharged, the courts, regardless of the intentions and/or reasoning of the parties, are not willing to reach beyond and approve such agreements.

If you have any questions on this matter, please contact Ms. Keri P. Claeys, Esq. Keri is an associate in the bankruptcy group located in the Pittsburgh office of Weltman, Weinberg & Reis Co., LPA. She can be reached at 412-338-7102 or .