You Are NOT Disqualified From HAMP Modification

Clients will sometimes tell me that their mortgage company/servicer told them they do not qualify for a mortgage modification because the client did not reaffirm their mortgage in the Chapter 7 case.  That is simply not correct. Period.

Making Home Affordable – Supplemental Directive 10-02

On March 24, 2010, the federal Making Home Affordable program issued “Supplemental Directive 10-02 (Home Affordable Modification Program – Borrower Outreach and Communication)”. In that Directive, the federal government made it clear that a homeowner is NOT disqualified for a HAMP modification just because they did not reaffirm the mortgage debt in a Chapter 7. The Supplemental Directive says, in part (emphasis added):

Borrowers who have received a Chapter 7 bankruptcy discharge in a case involving the first lien mortgage who did not reaffirm the mortgage debt under applicable law are eligible for HAMP.

Further, that Directive goes on to confirm that a debtor does not reacquire personal liability on a HAMP modified mortgage (not reaffirmed) by simply obtaining a HAMP modification. The Supplemental Directive says, in part:

The following language must be inserted in Section 1 of the Home Affordable Modification 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.”

Finally, the HAMP Frequently Asked Questions also make it perfectly clear that not reaffirming the mortgage does NOT disqualify a former debtor from a HAMP modification.

Free Initial Consultation

We are happy to help you work through these potentially confusing issues. We offer a free initial consultation on these questions. Just let us know if we can be of assistance.