www.hudclips.org 


U. S. Department of Housing and Urban Development
Washington, D.C. 20410-8000

September 27, 1995
 
OFFICE OF THE ASSISTANT SECRETARY
FOR HOUSING-FEDERAL HOUSING COMMISSIONER
 
MORTGAGEE LETTER 95-44
 
TO:  ALL APPROVED MORTGAGEES
 
ATTENTION:  SINGLE FAMILY SERVICING MANAGERS
 
SUBJECT:  Handbook 4330.2 Rev- 2, "Mortgage Assignment Processing," paragraph
          9-8, Assignment processing and Bankruptcy
 
     In Chapter 9 of the subject Handbook, dated March 24, 1995, the
Department established procedures for processing assignment requests from
homeowners in bankruptcy.  Under these procedures, if a mortgagor is found to
be eligible for assignment, acceptance into the assignment program is
contingent upon the lifting of the automatic bankruptcy stay and upon certain
actions being taken by the mortgagee.
 
     HUD has received numerous inquiries about these new Handbook provisions.
Concerns have been raised that actions related to processing assignments in
bankruptcy cases, as set forth in the Assignment Handbook, may be
misconstrued as violating the automatic bankruptcy stay or other bankruptcy
law provisions.
 
     The new procedures which provide for processing assignment requests from
mortgagors in bankruptcy are not attempts to collect the mortgage debt, but
rather reflect efforts to assist mortgagors through the assignment program.
Nevertheless, the Department recognizes the concerns that have been raised.
Therefore, effective immediately. and until further notice, mortgagees are
not retired to send the Borrower Information Packet, the Lender Assignment
Packet or the Lender Follow-up Packet to homeowners who have filed bankruptcy
petitions.
 
     In cases where a borrower has submitted assignment application forms and
subsequently files a bankruptcy petition the mortgagee, at its discretion may
continue to process the assignment request.  If the mortgagor is represented
by counsel, it is essential that any subsequent communications be with such
counsel, not with-the mortgagor, at least to the extent that such
communications might raise any question of violation of the automatic stay or
other bankruptcy law provisions.  The debtor's attorney should be kept
informed about the assignment process and about the debtor's applicatiOn for
the program.
     If the mortgagor is found to be eligible for the assignment program,
then the Bankruptcy Conditional Approval Letter (ASGN-21) would be issued
pending receipt of verification that the automatic stay has been lifted.  A
copy of the Bankruptcy Conditional Approval Letter is sent to both the debtor
and the debtor's attorney.
 
     Questions concerning this information should be directed to Charlene
Weaver at (202) 708-1672.
 
Sincerely yours,
 

Nicolas P. Retsinas
Assistant Secretary for Housing-
Federal Housing Commissioner