hafa short sale
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HAFA Short Sale
Preparing and offering the SSA If the Servicer evaluates the
Borrower and determines that the Borrower is eligible for a HAFA Short Sale The Servicer must comply with the
following steps
Preparing and offering the SSA The Servicer is not required to obtain
Freddie Mac's prior approval ,provided: Minimum acceptable net proceeds Allowable Transaction Costs SSA
Minimum acceptable net proceeds The Servicer must document the
minimum acceptable net proceeds The Minimum acceptable net
proceeds determined by:▪ Broker's Price Opinion (BPO) or appraisal
minus :▪ (1) the Allowable Transaction Costs▪ (2) the maximum amount payable to subordinate lien holders▪ (3) the Borrower relocation incentive paid
Minimum acceptable net proceeds example For example, if the 90 day "as is" marketing
valuation of the Mortgaged Premises is $100,000, then the minimum acceptable net proceeds will be $82,000:
$100,000 (gross sales price) -$9,000 (maximum Allowable Transaction
Costs) -$6,000 (maximum aggregate payment to
subordinate lien holders) - $3,000 (Borrower relocation incentive)
$82,000 (minimum acceptable net proceeds)
Minimum acceptable net proceeds After signing an SSA, the Servicer
must not: Increase the minimum acceptable net
proceeds Decrease the minimum acceptable net
proceeds unless authorized by Freddie Mac
Disclose the minimum acceptable net proceeds amount to any party
Allowable Transaction Costs Freddie Mac will pay up to a total of
9% of the final sales price towards (1) reasonable closing costs paid by a
seller. (2) Real estate brokerage commissions of
up to 6% of the final sales price.
SSA
The SSA outlines the roles and responsibilities of the Servicer and the Borrower in the HAFA Short Sale process.
After the Servicer has performed an evaluation, the Servicer must prepare and send an SSA to the Borrower.
SSA
The Servicer must also: Send the Borrower Form 1136, Request for Approval of Short Sale (RASS)
Prior to sending the SSA and RASS to the Borrower, the Servicer must complete all missing information and delete all inapplicable language
In accordance with the information on the following slides
SSA Requirements
A fixed termination date that is 120 calendar days from the effective date of the SSA
The minimum list price which shall be the 90 day "as is" marketing value
SSA Requirements
The Allowable Transaction Costs which may be deducted from the gross sale proceeds are (1) the reasonable closing costs (2) real estate brokerage commissions of up to
6%, for a total of 9% of the final sales price If the Servicer retains a vendor , the
Servicer must indicate this in the SSA.
SSA Requirements
The amount of the monthly mortgage payment the Borrower will pay during the term of the SSA
A closing date that is no less than 45 calendar days from the date of the sales contract
Borrower Obligations
The Borrower must sign and return the SSA within 14 days
A copy of the listing agreement A copy of the multiple listing service
("MLS") listing Information regarding any
subordinate liens.
Borrower Obligations
Provide all information and sign documents required to verify HAFA eligibility
Cooperate with the listing broker Maintain the interior and exterior of
the Mortgaged Premises
Borrower Obligations
Work to clear any liens or other impediments to title
Make the monthly payment
Monitoring marketing activity; cause for termination
The Servicer must terminate the SSA before its expiration if any of the events in the following slides occur
Causes for Termination
The Borrower's financial situation The Borrower or the listing broker
fails to act in good faith A significant change occurs to the
condition and/or value of the Mortgaged Premises
Causes for Termination There is evidence of fraud or
misrepresentation The Borrower files for bankruptcy
and the court declines to approve the SSA
Litigation is initiated or threatened
Causes for Termination
Note: The Borrower's failure to make monthly payments on the Mortgage is not a cause for termination, unless accompanied by another breach of the SSA.
Title work and identification of claims on title After receipt of the signed SSA from
the Borrower, the Servicer must order title work to identify subordinate liens and other claims
There are, of course, exceptions
Title work and identification of claims on title If the Servicer has previously ordered
title work The Servicer must share the title
work with the Borrower and/or the listing broker
Title work and identification of claims on title The Servicer may not require the
Borrower to pay in advance However, the Servicer may add the
cost to the amount owed under the Mortgage
Title work and identification of claims on title If a HAFA Short Sale or Deed-in-Lieu
is completed, the Servicer may request reimbursement of the expense
Request for approval of a HAFA Short Sale Submitting the RASS to the Servicer The RASS provides the terms and
conditions Delivering to the Servicer a
completed RASS
What is Required
A copy of the executed sales contract and all addenda
Buyer's documentation of funds or buyer's pre-approval or commitment letter
Copies of all documentation indicating that subordinate lien holders have agreed to release their liens and the Borrower from liability
A preliminary HUD-1
Approval or disapproval of a HAFA Short Sale Two aspects:
Net sale proceeds equal or exceed minimum acceptable net proceeds
Net sale proceeds less than minimum acceptable net proceeds
Net sale proceeds equal or exceed minimum acceptable net proceeds
Within ten (10) Business Days of receipt of the RASS, the Servicer must indicate its approval
Determined by the Servicer prior to execution
Net sale proceeds equal or exceed minimum acceptable net proceeds
Within one (1) Business Day of approval of a RASS, the Servicer must enter all terms of the transaction and other required information into Workout Prospector®
Requirements
Enter information related to the Borrower relocation incentive, etc., on the HUD-1 screen of Workout Prospector
In the "Recommendations" section, indicate the following in all caps: HAFA SHORT SALE
Requirements
Send an email to NPL_file_prep@freddiemac.com and
In the subject line of the e-mail enter the Freddie Mac loan number and notation "HAFA Short Sale – Approval"
Net sale proceeds equal or exceed minimum acceptable net proceeds
HAFA Short Sale What may not be required
Net sale proceeds equal or exceed minimum acceptable net proceeds
The possible closing date.
Net sale proceeds less than minimum acceptable net proceeds
The Servicer may indicate its disapproval of the proposed sale
Net sale proceeds less than minimum acceptable net proceeds
The Servicer must also evaluate the terms of the offer
HAFA Short Sale request received, but Borrower not previously evaluated for HAMP
If Borrower has an executed sales contract that would result in a short payoff of the Mortgage.
The Servicer must clearly communicate information to the Borrower
HAFA Short Sale request received, but Borrower not previously evaluated for HAMP
The Servicer must process the sales contract in accordance with the requirements of a short payoff
Extensions of SSA
A recommendation to Freddie Mac to extend the SSA if
(i) The Borrower has fully complied with the SSA
(ii) The Servicer believes an extension will result in an offer
Extensions of SSA
The Servicer must submit a recommendation for an extension no fewer than 15 days prior to the expiration
"Request for Extension of SSA" to HAFA@freddiemac.com
Must also provide recommendations relating to the marketing of the Mortgaged Premises
Extensions of SSA
If Freddie Mac approves the extension, must prepare a written extension agreement
The extension agreement must also amend other terms of the SSA
If an extension is not recommended nor approved, must consider the Borrower for a HAFA Deed-in-Lieu
Closing, reporting and remitting requirements Within five Business Days, the
Servicer must submit copies of the documents listed in the following slide to Freddie Mac
Via fax at (571) 382-4910 (or as otherwise directed)
Required Documents
Proceeds check or wire communication notice
Copy of the final sales contract, including any addenda
Final HUD-1 Proof that subordinate liens have
been paid and commitment from the subordinate lien holder(s) to release the lien(s)
Closing, reporting and remitting requirements The Servicer must comply with the
reporting and remitting requirements of Closing, reporting and remittance
The Servicer must advance from its own funds
Closing, reporting and remitting requirements Servicers must refer to and comply
with the additional requirements of : Closing, Reporting and remittance Remitting additional proceeds and
requesting reimbursement for expenses.
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